<PAGE>   1
                       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 quarterly period ended September 30, 1997

                         Commission File Number 0-19841

                               i-STAT CORPORATION
             (Exact name of registrant as specified in its charter)




Delaware                                                             22-2542664 
--------                                                             ---------- 
(State or other jurisdiction of                                (I.R.S. employer
incorporation or organization)                              Identification No.)

303 College Road East, Princeton, New Jersey                            08540
(Address of Principal Executive Offices)                              (Zip Code)

                                 (609) 243-9300
              (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 [ ]

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

Class                                                           October 31, 1997
-----                                                           ----------------
Common Stock, $ .15 par value                                   13,137,168 
<PAGE>   2
                              i-STAT CORPORATION
                               TABLE OF CONTENTS

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I   FINANCIAL INFORMATION

         ITEM 1 - Financial Statements

         Consolidated Condensed Statements of Operations for the three
           months and nine months ended September 30, 1997 and 1996............3

         Consolidated Condensed Balance Sheets
           as of September 30, 1997 and December 31, 1996......................4

         Consolidated Condensed Statements of Cash Flows for the nine months
           ended September 30, 1997 and 1996...................................5

         Notes to Consolidated Condensed Financial Statements..............6 - 7

         ITEM 2 - Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.....................8 - 11

PART II  OTHER INFORMATION

         ITEM 1 - Legal Proceedings ..........................................12

         ITEM 6 - Exhibits and Reports on Form 8-K ...........................13

SIGNATURES ...................................................................14




                                       2
<PAGE>   3
                               i-STAT CORPORATION

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
           (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
                                  (unaudited)


<TABLE>
<CAPTION>
                                                       Three Months Ended                      Nine Months Ended
                                                          September 30,                           September 30,
                                               --------------------------------        --------------------------------
                                                    1997                1996                1997                1996
                                                    ----                ----                ----                ----
<S>                                            <C>                 <C>                 <C>                 <C>         
Net sales ..............................       $      9,645        $      7,772        $     26,597        $     20,923
Cost of sales ..........................              7,893               6,650              21,484              19,085
                                               ------------        ------------        ------------        ------------
                Gross profit ...........              1,752               1,122               5,113               1,838
                                               ------------        ------------        ------------        ------------
Operating expenses:
         Research and development ......              1,547               1,512               4,974               4,196
         General and administrative ....              1,525               1,386               4,503               4,047
         Sales and marketing ...........              3,617               2,724               9,686               8,639
                                               ------------        ------------        ------------        ------------
                Total operating expenses              6,689               5,622              19,163              16,882
                                               ------------        ------------        ------------        ------------
                      Operating loss ...             (4,937)             (4,500)            (14,050)            (15,044)
                                               ------------        ------------        ------------        ------------
Other income (expense), net ............                561                 491               1,196               1,646
                                               ------------        ------------        ------------        ------------

Net loss ...............................       $     (4,376)       $     (4,009)       $    (12,854)       $    (13,398)
                                               ============        ============        ============        ============

Net loss per share .....................       $      (0.29)       $      (0.30)       $      (0.90)       $      (1.01)
                                               ============        ============        ============        ============

Shares used in computing
         net loss per share ............         15,273,690          13,326,127          14,224,786          13,311,853
                                               ============        ============        ============        ============
</TABLE>


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

                                       3
<PAGE>   4


                               i-STAT CORPORATION
                      CONSOLIDATED CONDENSED BALANCE SHEETS
           (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                   September 30,  December 31,            
                                                                       1997          1996
                                                                    ---------     ---------
         ASSETS

<S>                                                                <C>            <C>
Current assets:

  Cash and cash equivalents ....................................    $  12,833     $  28,417

  Short-term investments .......................................       22,976            --

  Accounts receivable, net .....................................        4,745         4,948

  Inventories ..................................................        8,854         7,788

  Prepaid expenses and other current assets ....................          753           955 
                                                                    ---------     ---------
        Total current assets ...................................       50,161        42,108

Plant and equipment, net of accumulated depreciation of
  $14,990 and $12,564 ..........................................       11,648        11,534

Other assets ...................................................        1,698         1,723
                                                                    ---------     ---------
        Total assets ...........................................    $  63,507     $  55,365
                                                                    =========     =========

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable .............................................    $   1,483     $   1,537

  Accrued expenses .............................................        3,946         3,754

  Deferred revenue .............................................          871         3,240
                                                                    ---------     ---------
        Total current liabilities ..............................        6,300         8,531
                                                                    ---------     ---------
Stockholders' equity:

  Preferred Stock, $.10 par value, shares authorized 7,000,000:

        Series A Junior Participating Preferred Stock, $.10
        par value, 1,500,000 shares authorized; none issued ....           --            --

        Series B Preferred Stock, $.10 par value,
        2,138,702 shares authorized and issued .................          214           214

  Common Stock, $.15 par value, shares authorized 25,000,000;
    shares issued 13,135,990 at September 30, 1997 
    11,215,214 at December 31, 1996 ............................        1,970         1,682

  Additional paid-in capital ...................................      209,405       186,434

  Other, net ...................................................         (228)         (196)

  Accumulated deficit ..........................................     (154,154)     (141,300)
                                                                    ---------     ---------
        Total stockholders' equity .............................       57,207        46,834
                                                                    ---------     ---------
        Total liabilities and stockholders' equity .............    $  63,507     $  55,365
                                                                    =========     =========
</TABLE>


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


                                       4
<PAGE>   5
                               i-STAT CORPORATION
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                          September 30,
                                                                  -----------------------------
                                                                     1997               1996
                                                                     ----               ----
<S>                                                               <C>                <C>
Cash flows from operating activities:
   Net loss ....................................................   $(12,854)          $(13,398)
   Adjustments to reconcile net loss to net cash 
      used in operating activities .............................        252               (121)
   Change in assets and liabilities ............................       (360)             1,375
                                                                   ---------          ---------
      Net cash used in operating activities ....................    (12,962)           (12,144)
                                                                   ---------          ---------

Cash flows from investing activities:
   Purchases of investments ....................................    (22,976)                --
   Sale of investments .........................................         --              2,025
   Purchase of equipment .......................................     (2,731)            (3,930)
   Other .......................................................       (127)              (116)
                                                                   ---------          ---------
      Net cash used in investing activities ....................    (25,834)            (2,021)
                                                                   ---------          ---------

Cash flows from financing activities:
   Proceeds from sale of Common Stock ..........................     23,259                366
   Purchase of Treasury Stock ..................................         --                 (2)
                                                                   ---------          ---------
   Net cash provided by financing activities ...................     23,259                364
                                                                   ---------          ---------

Effect of currency exchange rate changes on cash ...............        (47)               (93)
                                                                   ---------          ---------
Net decrease in cash and cash equivalents ......................    (15,584)           (13,894)
Cash and cash equivalents at beginning of period ...............     28,417             47,494
                                                                   ---------          ---------
Cash and cash equivalents at end of period .....................    $12,833            $33,600
                                                                    =======            =======
</TABLE>

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

                                       5
<PAGE>   6


                               i-STAT CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  (unaudited)

1.    BASIS OF PRESENTATION

      The information presented as of September 30, 1997 and 1996, and for the
      periods then ended, is unaudited, but includes all adjustments (consisting
      only of normal recurring accruals) which the management of i-STAT
      Corporation (the "Company") believes to be necessary for the fair
      presentation of results for the periods presented. The results for the
      interim periods are not necessarily indicative of results to be expected
      for the year. The year end consolidated condensed balance sheet data was
      derived from the audited financial statements, but does not include all
      disclosures required by generally accepted accounting principles. These
      condensed financial statements should be read in conjunction with the
      Company's audited financial statements for the year ended December 31,
      1996, including the Notes thereto, which were included as part of the
      Company's Annual Report on Form 10-K, File No. 0-19841.

2.    NET LOSS PER SHARE

      Net loss per share is calculated using the weighted average number of
      common shares and preferred shares outstanding for all periods presented.
      Preferred shares have been included in the calculation since their date of
      issuance as they are convertible into common shares on a 1:1 basis and
      have substantially the same characteristics as common stock. Options
      outstanding are not included in the calculation as they are anti-dilutive.

      In February 1997, the Financial Accounting Standards Board ("FASB") issued
      SFAS No. 128 - "Earnings Per Share" which specifies computation and
      disclosure requirements for earnings per share and is effective for
      financial statements issued after December 15, 1997. The Company does not
      anticipate that there will be a material impact on the Company's per share
      data from the implementation of this standard when adopted.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
      No. 130 "Reporting Comprehensive Income" which establishes standards for
      the reporting and display of comprehensive income and its components in a
      full set of financial statements. The Company is required to adopt this
      standard in 1998 and believes the principle component of comprehensive
      income will be foreign currency translation.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
      No. 131 "Disclosures about Segments of an Enterprise and Related
      Information" which establishes standards for the way that public business
      enterprises report information about operating segments, geographic areas,
      products and major customers. The Company is required to adopt this
      standard in 1998 and is currently evaluating the impact of this standard.

3.    INVENTORIES

      Inventories consist of the following:

<TABLE>
<CAPTION>
                         September 30, 1997    December 31, 1996
                         ------------------    -----------------
                                (In thousands of dollars)
<S>                      <C>                  <C>
Raw materials                 $2,264               $2,477
Work in process                2,075                1,596
Finished goods                 4,515                3,715
                              ------               ------
                              $8,854               $7,788
                              ======               ======
</TABLE>

4.    COMMON STOCK

      On June 26, 1997, the Company issued and sold to accredited investors
      1,850,000 shares of the Common Stock. The net proceeds for the shares was
      approximately $23.1 million.


                                       6
<PAGE>   7
                               i-STAT CORPORATION
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  (unaudited)

                                  (continued)

5.    COMMITMENTS AND CONTINGENCIES

      The Company is a defendant in a case entitled Nova Biomedical Corporation,
      Plaintiff v . i-STAT Corporation, Defendant . The Complaint, which was
      filed in the United States District Court for the District of
      Massachusetts on June 27, 1995, alleges infringement by i-STAT of Nova's
      U.S. Patent No. 4,686,479. The Plaintiff seeks unspecified damages and
      that the damages be trebled. Nova also is asking for attorneys' fees and
      prejudgment interest. The case currently is in the preliminary stages of
      discovery. The Company is contesting the case vigorously and does not
      believe that it has infringed the Nova patent. The Company has obtained an
      opinion from recognized patent counsel to the effect that no infringement
      has occurred. However, if the plaintiff should prevail in this matter, it
      could have a material impact on the financial position, results of
      operations and cash flows of the Company. The Company has asserted
      counterclaims under the antitrust laws alleging that Nova commenced the
      action knowing that the patent was not infringed and that it had reason to
      believe that the patent was invalid and unenforceable.

      The Company is a defendant in a class action complaint entitled Susan
      Kaufman, on behalf of herself and all others similarly situated,
      Plaintiff, v . i-STAT Corporation, William P . Moffitt, Lionel N.
      Sterling, Imants R. Lauks and Matthias Plum, Jr . The class action was
      brought by Susan Kaufman on her behalf and on behalf of all purchasers of
      the Company's Common Stock between May 9, 1995 and March 19, 1996. The
      complaint, which was filed in the Superior Court of New Jersey in Mercer
      County on June 19, 1996, alleges New Jersey common law "fraud on the
      market" in connection with certain sales of i-STAT stock by the Company's
      chief executive officer, chief technology officer and two outside
      directors during a nine-month period. The plaintiffs seek unspecified
      compensatory damages, interest and payment of all costs and expenses
      incurred in connection with the class action. The Company believes the
      complaint is without merit and intends to vigorously contest it. However,
      if the plaintiff should prevail in this matter, it could have a material
      impact on the financial position, results of operation and cash flows of
      the Company.

      The Company is a defendant in a case entitled Customedix Corporation,
      Plaintiff v . i-STAT Corporation, Defendant . The Complaint, which was
      filed in the United States District Court for the District of Connecticut
      on December 26, 1996, alleges infringement by i-STAT of Customedix's U.S.
      Patent No. 4,342,964. The Plaintiff seeks injunctive relief and an
      accounting for i-STAT's profits and the damages to Customedix from such
      alleged infringement. The case currently is in the preliminary stages of
      discovery. The Company intends to contest the case vigorously and does not
      believe that it has infringed the Customedix patent. The Company has
      obtained an opinion from recognized patent counsel to the effect that no
      infringement has occurred. However, if the plaintiff should prevail in
      this matter, it could have a material impact on the financial position,
      results of operation and cash flows of the Company.


                                       7
<PAGE>   8
                               i-STAT CORPORATION

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

      The Company develops, manufactures and markets medical diagnostic products
for blood analysis (collectively, the "i-STAT System" ) that provide healthcare
professionals with immediate and accurate critical diagnostic information at the
point of patient care. The Company markets and distributes the i-STAT System in
the United States and Canada principally through its own direct sales and
marketing organization, in Japan through Japanese marketing partners, in Europe
through Hewlett-Packard Company ("HP") and in South America and Asia through
selected distribution channels. The Company and HP also jointly market the
i-STAT System into the critical care departments of hospitals in the United
States which meet certain criteria. The Company is actively planning market
introduction into other foreign markets, including but not limited to, through
its arrangements with HP.

      The Company's revenues are affected principally by the number of hospitals
using the i-STAT System and the rate at which i-STAT's disposable cartridges are
used by these hospitals. This, in turn, is highly dependent upon the willingness
of hospitals to adapt their traditional blood diagnostic testing approaches to
the point-of-care system advocated by the Company. During 1996 the Company began
to focus its marketing efforts primarily on potential large scale adopters of
the i-STAT System . Such high volume customers tend to require a longer sales
cycle because the objective is to have these customers reengineer or replace
their "stat" lab departments with the i-STAT System rather than use the
i-STAT System as a supplement to their existing arrangements. To further this
strategy, in the first quarter of 1997 the Company expanded its policy of
offering substantial price discounts to high volume users. The Company believes
that this strategy will accelerate the rate of market penetration for its
products and thus have a beneficial long-term effect upon revenue growth.
However, the near-term rate of growth in sales revenue and gross margin will be
adversely impacted by both the longer sales cycle and the lower cartridge prices
that such high volume customers may receive.

      Pursuant to a technology collaboration between the Company and HP, in May
1997 HP introduced a patient monitoring system (the "Integrated Analyzer") which
integrates all of the blood diagnostics capabilities of the i-STAT System. In
the long-term, the Company hopes to realize significant cartridge revenue growth
and royalty revenues from the sale of the Integrated Analyzer by HP. However, in
the near-term revenue growth from sales of the Integrated Analyzer is expected
to be insignificant because of the uncertainties associated with new product
introduction and because some of the initial purchasers of the Integrated
Analyzer will be existing users of the hand-held analyzer sold by the Company.

RESULTS OF OPERATIONS

      THREE MONTHS ENDED SEPTEMBER 30, 1997

      The Company generated revenues of approximately $9.6 million and $7.8
million for the three months ended September 30, 1997 and 1996, respectively,
including international revenues (as a percentage of total revenues) of $3.1
million (32.2%) and $2.4 million (31.5%), respectively. Sales to the Company's
Japanese marketing partners represented approximately 19.1% and 23.5% of the
Company's worldwide sales for the three months ended September 30, 1997 and
1996, respectively (including recognition of deferred Japanese revenue of
approximately $0.8 million in each period).

      The $1.9 million (24.1%) increase in revenues was primarily due to
increased shipment volume of the Company's cartridges reflecting higher
cartridge consumption by existing hospital customers and the addition of new
hospital customers in the U.S. and internationally. Worldwide cartridge
shipments increased 47.3% to 1,171,875 units in the three months ended September
30, 1997, from 795,567 units in the three months ended September 30, 1996.
Revenues from the increased cartridge shipments were partially offset by lower
worldwide average selling prices per cartridge, which declined from
approximately $5.68 to $5.18 per cartridge in the same periods. Cartridge
average selling prices are expected to continue to decline as the customer mix
shifts to higher volume customers receiving lower cartridge prices. Analyzer and
other equipment sales accounted for approximately $0.3 million of the increase
in revenues.

      Gross profit increased by approximately $0.6 million to $1.7 million in
the quarter ended September 30, 1997, compared with a gross profit of $1.1
million in the quarter ended September 30, 1996. The improvement in gross profit
was primarily due to increased shipment volume of the Company's cartridges. To
the extent that sales volume increases, the Company expects its gross profit to
improve as manufacturing costs (including direct labor and a large component of
overhead) are spread over a larger number of product units.


                                       8
<PAGE>   9
                               i-STAT CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (continued)


      The Company incurred research and development costs (as a percentage of
sales) of approximately $1.5 million (16.0%) and $1.5 million (19.5%) for the
three months ended September 30, 1997 and 1996, respectively, consisting of
costs associated with the personnel, material, equipment and facilities
necessary for conducting new product development. The Company's current research
and development program includes the development of tests for the measurement of
creatinine, ionized magnesium and coagulation. In October 1997, the Company
received Food and Drug Administration clearance to market its creatinine test
pursuant to a 510(k) Notification. Sales of products using the creatinine sensor
are expected to commence in early 1998. The Company also is studying the
development of tests to measure enzymes, hematology parameters (such as
platelets and white blood cell counts) and other analytes. Consequently,
research and development expenditures are expected to increase during 1997 -
1999. The amount and timing of such increase will depend upon numerous factors
including the level of activity at any point in time, the breadth of the
Company's development objectives, the availability of capital to fund new
product development and the success of its development programs.

      The Company incurred general and administrative expenses (as a percentage
of sales) of approximately $1.5 million (15.8%) and $1.4 million (17.8%) for the
three months ended September 30, 1997 and 1996, respectively. General and
administrative expenses consisted primarily of salaries and benefits of
personnel, office costs, professional fees and other costs necessary to support
the Company's infrastructure.

      The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $3.6 million (37.5%) and $2.7 million (35.0%) for the
three months ended September 30, 1997 and 1996, respectively, consisting
primarily of salaries, benefits, travel, and other expenditures for sales
representatives, product literature, market research, clinical studies and other
sales and marketing costs. The dollar increase from year to year is attributable
to increased marketing activities, higher commissions on increasing sales, and
the hiring of management and other marketing personnel necessary to support the
Company's planned growth in product sales.

      The increase in other income, net, to $0.6 million for the three months
ended September 30, 1997, from $0.5 million for the three months ended September
30, 1996 primarily reflects higher interest income earned on higher cash and
cash equivalent balances following the issuance of Common Stock in June 1997
(see "Liquidity and Capital Resources," below).

      Net losses for the three months ended September 30, 1997 increased 9.2
percent to $4.4 million, or 29 cents per share, compared with a net loss of $4.0
million, or 30 cents per share, for the third quarter of 1996. The weighted
average number of shares used in computing net loss per share was 15.274 million
and 13.326 million in the 1997 and 1996 periods, respectively. The increase in
the number of shares in 1997 primarily reflects the private placement of 1.850
million shares in June 1997.

NINE MONTHS ENDED SEPTEMBER 30,1997

      The Company generated revenues of approximately $26.6 million and $20.9
million for the nine months ended September 30, 1997 and 1996, respectively,
including international revenues (as a percentage of total revenues) of $8.2
million (30.8%) and $7.1 million (33.5%), respectively. Sales to the Company's
Japanese marketing partners represented approximately 19.7% and 27.2% of the
Company's worldwide sales for the nine months ended September 30, 1997 and 1996,
respectively (including recognition of deferred Japanese revenue of
approximately $2.4 million and $2.3 million for the nine months ended September
30, 1997 and 1996).

      The $5.7 million (27.1%) increase in revenues was primarily due to
increased shipment volume of the Company's cartridges reflecting higher
cartridge consumption by existing hospital customers and the addition of new
hospital customers in the U.S. and internationally. Worldwide cartridge
shipments increased 49.7% to 3,213,543 units in the nine months ended September
30, 1997, from 2,146,592 units in the nine months ended September 30, 1996.
Revenues from the increased cartridge shipments were partially offset by lower
worldwide average selling prices per cartridge, which declined from
approximately $5.82 to $5.39 per cartridge in the same periods. Cartridge
average selling prices are expected to continue to decline as the customer mix
shifts to higher volume customers receiving lower cartridge prices. Analyzer and
other equipment sales accounted for approximately $0.9 million of the increase
in revenues. The increase primarily reflects the commencement of shipments in
the second quarter of 1997 of components for the HP Integrated Analyzer,
partially offset by lower revenues from sales of the Company's hand-held
analyzer.


                                       9
<PAGE>   10
                               i-STAT CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (continued)

      Gross profit increased by approximately $3.3 million to $5.1 million in
the nine months ended September 30, 1997 compared with a gross profit of $1.8
million in the nine months ended September 30, 1996. The improvement in gross
profit was primarily due to increased shipment volume of the Company's
cartridges. To the extent that sales volume increases, the Company expects gross
profit to improve as manufacturing costs (including direct labor and a large
component of overhead) are spread over a larger number of product units. The
improvement in gross margin also reflects improvements in factory yields and
productivity.

      The Company incurred research and development costs (as a percentage of
sales) of approximately $5.0 million (18.7%) and $4.2 million (20.1%) for the
nine months ended September 30, 1997 and 1996, respectively, consisting of costs
associated with the personnel, material, equipment and facilities necessary for
conducting new product development. The Company's research and development
program is discussed above.

      The Company incurred general and administrative expenses (as a percentage
of sales) of approximately $4.5 million (16.9%) and $4.0 million (19.3%) for the
nine months ended September 30, 1997 and 1996, respectively. General and
administrative expenses consisted primarily of salaries and benefits of
personnel, office costs, professional fees, and other costs necessary to support
the Company's infrastructure. The increase primarily reflects the Company's
increased need for management personnel and other services to support its
continuing growth.

      The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $9.7 million (36.4%) and $8.6 million (41.3%) for the
nine months ended September 30, 1997 and 1996, respectively, consisting
primarily of salaries, benefits, travel and other expenditures for sales
representatives, product literature, market research, clinical studies and other
sales and marketing costs. The dollar increase from year to year is attributable
to increased marketing activities, higher commissions on increasing sales, and
the hiring of management and other marketing personnel necessary to support the
Company's planned growth in product sales.

      The decrease in other income, net, to $1.2 million for the nine months
ended September 30, 1997, from $1.6 million for the nine months ended September
30, 1996, primarily reflects lower interest income earned on lower cash and cash
equivalents balances in 1997.

      Net losses for the nine months ended September 30, 1997 decreased 4.1
percent to $12.9 million, or 90 cents per share, compared with a net loss of
$13.4 million, or $1.01 per share, for the same period last year. The weighted
average number of shares used in computing net loss per share was 14.225 million
and 13.312 million in the 1997 and 1996 periods, respectively. The increase in
the number of shares in 1997 primarily reflects the private placement of 1.850
million shares in June 1997.

LIQUIDITY AND CAPITAL RESOURCES

      At September 30, 1997, the Company had cash, cash equivalents, and
short-term investments of approximately $35.8 million, an increase of $7.4
million from the December 31, 1996 balance of approximately $28.4 million. The
increase primarily reflects net proceeds of approximately $23.1 million from the
private placement of Common Stock in June 1997, partially offset by
approximately $13.0 million of cash used in operating activities and equipment
purchases of approximately $2.7 million during the nine months ended September
30, 1997. Working capital increased by approximately $10.3 million from $33.6
million to $43.9 million during the same period, primarily reflecting the
increase in cash, cash equivalents, and short-term investments, and the
reduction of deferred revenue by approximately $2.4 million, reflecting the
amortization of deferred Japanese revenue. The Company expects its existing
funds to be sufficient to meet its obligations and its liquidity and capital
requirements for the near term. The Company regularly monitors capital raising
alternatives in order to take advantage of opportunities to supplement its
current working capital upon favorable terms, including joint ventures,
strategic corporate partnerships or other alliances and the sale of equity
and/or debt securities. The Company's need, if any, to raise additional funds to
meet its working capital and capital requirements will depend upon numerous
factors, including the results of its product marketing and sales activities,
its new product development efforts, manufacturing efficiencies and competitive
conditions.


                                       10
<PAGE>   11
                               i-STAT CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (continued)


      The impact of inflation and foreign currency translation on the Company's
business has been minimal and is expected to be minimal for the near-term.

      This management's discussion and analysis of financial condition and
results of operation contains both historical financial information and forward
looking statements. The Company operates in a high technology, emerging market
environment that involves significant risks and uncertainties which may cause
actual results to vary from such forward looking statements and to vary
significantly from reporting period to reporting period. These risks include,
among others, competition from existing manufacturers and marketers of blood
analysis products who have greater resources than the Company, the uncertainty
of new product development initiatives, difficulties in transferring new
technology to the manufacturing stage, market resistance to new products and
point-of-care blood diagnosis, domestic and international regulatory
constraints, uncertainties of international trade, pending and potential
disputes concerning ownership of intellectual property, dependence upon
strategic corporate partners for assistance in development of new markets and
other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission.
<PAGE>   12
                               i-STAT CORPORATION


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a defendant in a case entitled Nova Biomedical Corporation,
Plaintiff v . i-STAT Corporation, Defendant. The Complaint, which was filed in
the United States District Court for the District of Massachusetts on June 27,
1995, alleges infringement by i-STAT of Nova's U.S. Patent No. 4,686,479. The
Plaintiff seeks unspecified damages and that the damages be trebled. Nova also
is asking for attorneys' fees and prejudgment interest. The case currently is in
the preliminary stages of discovery. The Company is contesting the case
vigorously and does not believe that it has infringed the Nova patent. The
Company has obtained an opinion from recognized patent counsel to the effect
that no infringement has occurred. However, if the plaintiff should prevail in
this matter, it could have a material impact on the financial position, results
of operations and cash flows of the Company. The Company has asserted
counterclaims under the antitrust laws alleging that Nova commenced the action
knowing that the patent was not infringed and that it had reason to believe that
the patent was invalid and unenforceable.

The Company is a defendant in a class action complaint entitled Susan Kaufman,
on behalf of herself and all others similarly situated, Plaintiff, v. i-STAT
Corporation, William P . Moffitt, Lionel N. Sterling, Imants R. Lauks and
Matthias Plum, Jr . The class action was brought by Susan Kaufman on her behalf
and on behalf of all purchasers of the Company's Common Stock between May 9,
1995 and March 19, 1996. The complaint, which was filed in the Superior Court of
New Jersey in Mercer County on June 19, 1996, alleges New Jersey common law
"fraud on the market" in connection with certain sales of i-STAT stock by the
Company's chief executive officer, chief technology officer and two outside
directors during a nine-month period. The plaintiffs seek unspecified
compensatory damages, interest and payment of all costs and expenses incurred in
connection with the class action. The Company believes the complaint is without
merit and intends to vigorously contest it. However, if the plaintiff should
prevail in this matter, it could have a material impact on the financial
position, results of operation and cash flows of the Company.

The Company is a defendant in a case entitled Customedix Corporation, Plaintiff
v. i-STAT Corporation, Defendant . The Complaint, which was filed in the
United States District Court for the District of Connecticut on December 26,
1996, alleges infringement by i-STAT of Customedix's U.S. Patent No. 4,342,964.
The Plaintiff seeks injunctive relief and an accounting for i-STAT's profits and
the damages to Customedix from such alleged infringement. The case currently is
in the preliminary stages of discovery. The Company intends to contest the case
vigorously and does not believe that it has infringed the Customedix patent. The
Company has obtained an opinion from recognized patent counsel to the effect
that no infringement has occurred. However, if the plaintiff should prevail in
this matter, it could have a material impact on the financial position, results
of operation and cash flows of the Company.


                                       12
<PAGE>   13
                              i-STAT CORPORATION

ITEM  6. EXHIBITS AND REPORTS ON FORM 8-K


      (a)   Exhibits


            3.1   Restated Certificate of Incorporation (Form S-8/S-3
                  Registration Statement, File No. 33-48889)*

            3.2   By-Laws (Form 10-K for fiscal year ended December 31, 1996)*

            3.3   Certificate of Designation, Preferences and Rights of Series A
                  Preferred Stock (Form 8-K, dated July 10, 1995 and amended on
                  September 11, 1995)*

            3.4   Certificate of Designation, Preferences and Rights of Series B
                  Preferred Stock (Form 8-K, dated July 10, 1995 and amended on
                  September 11, 1995)*

            4.1   Stockholder Protection Agreement, dated as of June 26, 1995,
                  between Registrant and First Fidelity Bank, National
                  Association (Form 8-K, dated July 10, 1995 and amended on
                  September 11, 1995)*

            27    Financial Data Schedule

            *     These items are hereby incorporated by reference from the
                  exhibits of the filing or report indicated (except where
                  noted, Commission File No. 0-19841) and are hereby made a part
                  of this Report.

      (b)   Reports on Form 8-K

            During the quarter for which this Report on Form 10-Q is filed, no
            reports on Form 8-K were filed.


                                       13
<PAGE>   14
                               i-STAT CORPORATION

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



DATE: November 5, 1997



                                           i-STAT CORPORATION
                                               (Registrant)


                                       BY:  /s/William P. Moffitt
                                            ---------------------
                                               William P. Moffitt
                                               President and Chief
                                               Executive Officer
                                               (Principal Executive Officer)


                                       BY:  /s/Roger J. Mason
                                            ----------------------
                                               Roger J. Mason
                                               Vice President of Finance,
                                               Treasurer and Chief
                                               Financial Officer
                                               (Principal Financial Officer and
                                               Accounting Officer)


                                       14
<PAGE>   15
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.           DESCRIPTION
-----------           ---------- -
<S>                   <C>
   27                 Financial Data Schedule
</TABLE>