<PAGE>



                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                  FORM 10-QSB



(Mark one)

  [X]    QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the quarterly period ended March 31, 1997

  [ ]    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

         For the transition period from ____________ to _____________

                        Commission file number  0-26998
                                               ---------

                      ALCOHOL SENSORS INTERNATIONAL, LTD.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

          New York                                      11-310 4480
-------------------------------               ---------------------------------
(State or other jurisdiction of               (IRS Employer identification No.)
incorporation or organization)

                    11 Oval Drive, Islandia, New York 11722
                   ---------------------------------------- 
                   (Address of principal executive offices)

                                 516-342-1515
                          ---------------------------
                          (Issuer's telephone number)

                                Not Applicable
             ----------------------------------------------------
             (Former name, former address and former fiscal year,
                         if changed since last report)

         Check whether the issuer (1) filed all reports required to be filed
by section 13 or 15 (d) of the Exchange Act during the past 12 months ( or for
such shorter period that the registrant was required to file such report (s),
and (2) has been subject to such filing requirements for the past 90 days. 
Yes [X]  No [ ]

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

         Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ]  No [X]

                     APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:

         Common Stock, $.001 par value - 8,741,018 shares outstanding as of
May 14, 1997.

Transitional Small Business Disclosure Format:  Yes       No  X
                                                   -----    -----

<PAGE>

                                     INDEX

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY



PART I.       FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS (UNAUDITED)

              Condensed consolidated balance sheets - December 31, 1996 and
              March 31, 1997 (Unaudited).

              Condensed consolidated statements of operations - Three months
              ended March 31, 1997 and 1996 (Unaudited).

              Condensed consolidated statements of cash flows - Three months
              ended March 31, 1997 and 1996 (Unaudited).

              Notes to condensed consolidated financial statement -

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

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







<PAGE>



PART I.  ITEM 1

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY

                     CONDENSED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                  March 31, 1997
                                                      December 31, 1996             (Unaudited)
                                                      -----------------             -----------
<S>                                                        <C>                     <C>       
         ASSETS
Current assets:
      Cash and cash equivalents......................      $3,042,051              $1,838,732
      Accounts receivable............................          16,392                   2,562
      Inventory......................................         287,462                 478,795
      Prepaid expenses...............................         138,295                 116,744
                                                        -------------            ------------
         Total current assets........................       3,484,200               2,436,833
Fixed assets-net.....................................         367,618                 346,618
Other assets ........................................          23,084                  23,084
                                                        -------------            ------------
             TOTAL...................................      $3,874,902              $2,806,535
                                                        =============              ==========

      LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
      Accounts payable...............................        $703,955                $453,904
      Accrued expenses...............................         215,802                 152,267
      Due to Related Party...........................         153,513                  99,336
      Loans payable and accrued interest
         to officers/stockholders....................         282,880                 285,466
      Note payable...................................         500,000                 500,000
      Deposits.......................................          10,000                  10,000
                                                        -------------            ------------
         Total current liabilities...................       1,866,150               1,500,973
                                                        -------------            ------------

      Accrued litigation settlement cost.............       1,208,813                  64,969
                                                        -------------            ------------

      STOCKHOLDERS' EQUITY
SeriesA nonredeemable, 9% cumulative preferred stock 
      3,000,000 shares authorized, 833,333 issued and
      outstanding (liquidation value $2,563,125).....       2,500,000               2,500,000
Common stock $.001 par value, 25,000,000 shares
      authorized, 8,776,690 issued at
      December 31, 1996 and 8,796,690
       issued at March 31, 1997......................           8,777                   8,797
Additional paid-in capital...........................      11,419,483              12,593,307

Accumulated deficit..................................     (12,900,000)            (13,633,351)
Accumulated foreign currency translation
      adjustment.....................................         (5,633)                  (5,472)
                                                        -------------            -------------
             TOTAL...................................       1,022,627               1,463,281
                                                        -------------            ------------
Less treasury stock, at cost, 55,672 shares
      of common stock................................       (222,688)                (222,688)
                                                            ---------            -------------
Total Stockholders' equity...........................         799,939               1,240,593
                                                        -------------            ------------
         TOTAL.......................................      $3,874,902              $2,806,535
                                                           ==========            ============
</TABLE>



                  The attached notes are made a part hereof.



<PAGE>




              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)




                                                      Three Months
                                                         Ending
                                                     March 31, 1997
                                               --------------------------
                                                     1996            1997
                                                     ----            ----

Net sales...................................           --          $1,043
Cost of goods sold..........................           --             563
                                                ---------       ---------
Gross profit................................           --             480

Costs and expenses:
    Cost of merchandise shipped -
      subsequently recalled (Note C)........     $262,354              --
    Research and development................      111,156          87,703
    Selling, general
    and administrative......................      605,955         663,934
                                                  -------       ---------
Loss from operations........................     (979,465)       (751,157)
Interest and other income...................       35,997          27,027
Interest expense............................       (8,996)         (9,221)
                                                ----------      ----------
NET (LOSS)..................................    $(952,464)      $(733,351)
                                                ==========      ==========


Net loss per common share...................        $(.11)          $(.09)
                                                ==========      ==========



Weighted average number of
shares outstanding..........................    8,418,170       8,737,685
                                                =========       =========











                  The attached notes are made a part hereof.

<PAGE>

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                                           March 31,
                                                                                   ------------------------
                                                                                   1996                1997
                                                                                   ----                ----
<S>                                                                               <C>            <C>         
Cash flows from operating activities:
    Net (loss) .................................................................  $  (952,464)   $  (733,351)
    Adjustments to reconcile net (loss) to net cash (used in) operating
               activities:
    Depreciation and amortization ..............................................       14,000         21,000
    Changes in operating assets and liabilities:
          (Increase) Decrease in accounts receivable ...........................       (1,131)        13,830
          (Increase) in inventory ..............................................     (251,274)      (191,333)
          (Increase) Decrease in prepaid expenses
               and other current assets ........................................      (41,219)        21,551
          (Decrease) is due to related party ...................................                     (54,177)
          Increase (Decrease) in accounts payable and  accrued
               expenses ........................................................        2,512       (313,584)
          Increase in deposit ..................................................        3,481           --
          Increase in accrued interest to officers .............................         --            2,584
          Other ................................................................         --              161
                                                                                  -----------    -----------
        Net cash (used in) operating activities ................................   (1,226,095)    (1,233,319)
                                                                                  -----------    -----------
Cash flows from investing activities:
     Sales of marketable securities ............................................      502,176           --
     Acquisition of fixed assets ...............................................      (31,236)          --
                                                                                  -----------    -----------
        Net cash provided by financing activities ..............................      470,940           --
                                                                                  -----------    -----------
Cash flows from financing activities:
     Proceeds from sale of common stock ........................................        4,350         30,000
     Proceeds from notes payable ...............................................      400,000           --
                                                                                  -----------    -----------
           Net cash provided by financing activities ...........................      404,350         30,000
                                                                                  -----------    -----------
NET (DECREASE) IN CASH .........................................................     (350,805)    (1,203,319)
Cash -- beginning of period ....................................................      524,231        304,205
                                                                                  -----------    -----------
CASH -- END OF PERIOD ..........................................................  $   173,426    $ 1,838,732
                                                                                  ===========    ===========

Supplemental disclosure of non-cash financing activities:
         In March 1997, certain officers and members of management contributed
         315,000 shares of stock to the Company to settle litigation for
         approximately $1,444,000 


Supplemental disclosure of cash flow information:
         Interest paid during the period .......................................       $2,694         $6,635
</TABLE>




                  The attached notes are made a part hereof.
<PAGE>

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

(NOTE A) -- BASIS OF PRESENTATION AND THE COMPANY

         (1)      Basis of presentation

         The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-QSB and
Article 3 of Regulations S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principals
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included. Operating results for the three month
period ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997.

         The balance sheet at December 31, 1996 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting principals
for complete financial statements. For further information, refer to the
audited financial statements and footnotes thereto included in the annual
report on Form 10-KSB/A No. 1.

         (2)      The Company

         Alcohol Sensors International, Ltd., ("the Company") was incorporated
on February 14, 1992, for the development and commercial exploitation of a
Breath Alcohol Ignition Interlock Device ("BAIID"). In October 1996, the
Company incorporated a subsidiary in the United Kingdom, Alcohol Sensors
Europe, Plc of which it owns 80% of the outstanding stock. All significant
intercompany balances and transactions have been eliminated.

(NOTE B) -- SIGNIFICANT ACCOUNTING POLICIES

         (1)      Loss per share of common stock:

         Net loss per share of common stock is based on the weighted average
number of shares outstanding during each period.

         (2)      Inventory

         Inventory consisting of electronic components, is stated at the lower
of cost (first in - first out basis) or market. Inventory is comprised of
finished goods, work in process, and components.

(NOTE C:)         PRODUCT RECALL

         In the late spring of 1996, the Company became aware of
inconsistencies in certain integral components manufactured for the Company
and other manufacturing and quality control problems. The Company discontinued
manufacturing of the Sens-O-Lock(TM) units and recalled its product. In the
accompanying statement of operations for the quarter ended March 31, 1996, the
Company has adjusted for sales returns related to the subsequent recall of its
product.

         The Company then determined it would develop a new technology to
improve its Sens-O-Lock units rather than re-visit the then existing
technology and solve the manufacturing and production difficulties. The
Company chose to pursue the path of the new technology to better position its
product in the market place. During the second quarter of 1996, the Company
wrote down its inventory by approximately $556,000.

(NOTE D:)         NOTE PAYABLE

         The Company has a line of credit of $500,000, bearing interest at the
prime rate, and is secured by a $500,000 certificate of deposit. The amount
outstanding at March 31, 1997 was $500,000.


                                      6
<PAGE>



              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
              NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)

(NOTE E:)         LEGAL PROCEEDINGS AND SETTLED LITIGATION

         The Company was named as a defendant in an action commenced in the
United States District Court for the Eastern District of New York in July
1996. The plaintiff had sought $9 million in damages plus 100,000 shares of
the Company's stock, alleging he performed certain work for the Company as an
independent contractor and was never compensated for the services he
performed. The Company's position is that the plaintiff in this action failed
to provide the services as contracted and was not entitled to receive any
payment. Defendant had submitted its answer and Management believes the claims
alleged in this lawsuit are frivolous and is defending the action vigorously.
At this time, it is too early to determine the outcome of this action and,
therefore, the Company has not made any provision in the accompanying
financial statements.

         In July 1996, the Company and certain of its officers were named as
defendants in an action commenced in the Supreme Court of the State of New
York, Orange County, by two individuals claiming an equity interest in the
Company, as well as damages of $18.5 million, based upon a purported agreement
with another company, Alcohol Sensors, Inc., with which the claimants, certain
officers of the Company and others were affiliated in 1989, and a claim that
one of the plaintiffs is the inventor of the technology that the Company is
using. Management agreed to settle this action in February, 1997, subject to
the approval of the Court, for a total of 315,000 shares of the Company's
common stock and certain members of management have donated their private
shares in March 1997, to provide for the settlement.

         The Company and certain of its officers were named as defendants in
an action commenced in the United States District Court for the Eastern
District of New York in March 1996, by a stockholder seeking $2 million in
alleged damages as a result of the Company's handling of a prior action, BARRY
BEYER, ET AL V. ALCOHOL SENSORS INTERNATIONAL, LTD., ET AL. This previous
action was settled for a total of $382,675. In connection therewith, certain
members of management contributed 55,672 of their private shares of stock to
the Company along with $107,642 in cash. As a result of the Beyer settlement,
management believes this settlement renders the claims of the present action
without merit and is vigorously defending the present action.

         This Company was served with a Demand to Arbitrate and a Statement of
Claim by an individual who had performed engineering services for the Company
on a consulting basis. Claimant sought $650,000 and 114,449 shares of stock in
damages. The Company settled this matter in a Mediation Conference and has
agreed to transfer to claimant 27,500 shares of stock in full satisfaction of
all claims in this action. The Company accrued the settlement in December
1996.

         The Company was recently served with a Demand to Arbitrate by a
former employee. Claimant is seeking $75,000 and approximately 36,000 stock
options as damages. The Company has recently filed its answer to this demand.
At this time, it is too early to determine the outcome of this action and
therefore the Company has not made any provision in the accompanying financial
statements.

ITEM 2.           MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION 
                  AND RESULTS OF OPERATION

GENERAL

         ALCOHOL SENSORS INTERNATIONAL, LTD. ("ASI" and the "Company") was
incorporated in February, 1992 to market and sell its patent pending line of
ignition interlock devices to the corporate/commercial and individual markets
under the Sens-O-Lock brand name. The Company's equipment is designed to
detect, evaluate and assist in the prevention of an alcohol impaired driver
from operating a vehicle.

<PAGE>



                ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY

         Since inception, ASI has been engaged primarily in research and
development. In late 1995, the Company's Sens-O-Lock(TM) unit was certified to
be in compliance with National Highway Traffic Safety Administration ("NHTSA")
guidelines and several individual states including New York, California and
Texas. In early Spring of 1996, the Company began shipping its first series of
Sens-O-Lock(TM). In the late Spring of 1996, the Company became aware of
inconsistencies in certain integral components manufactured for the Company
and other manufacturing, and quality control problems. Despite field testing,
these problems were primarily of the type and nature that were not detectable
until the product was out in the field in a variety of environments and uses,
As a result, in late spring 1996, the Company discontinued manufacturing of
the Sens-O-Lock(TM) units.

         Up until the Company had discontinued production, the Company had
sold approximately 700 units over a two month period. The Company still has
several of its original units in the market that are still in operation today.
ASI has recalled the units which have been sold, but not all those units which
had been sold were returned.

         While the Company had been manufacturing its initial Sens-O-Lock(TM),
its engineers were conducting research and development on what the Company
believed would be its next and improved technology. Management believed that
this new technology would antiquate all others that were being utilized at
that time, both by its competitors and itself. Rather than re-visiting the
present technology and attempting to solve the manufacturing and production
difficulties it had experienced, management chose to pursue the path of the
new technology since it believed that this would ultimately place the Company
in a far better position with regard to its competitors and the overall
marketplace of its products. This resulted in the Company writing down
inventory in the second quarter of 1996 in the amount of approximately
$556,000.00.

         As a result of halting production of its original series, the Company
stopped selling its product which resulted in the cessation of revenues.
Management determined that the best use of the Company's limited resources
would be to research and develop the new technology.

         The development of this new technology, which has been developed in
cooperation with a third party with whom the Company has signed an exclusive
contract has taken longer to bring to market than had been anticipated. The
manufacturing process is being refined to meet the Company's strictest
procedures and economic manufacturing requirements, before being placed into
the production process.

         In determining to pursue this new technology for long term
competitive advantages, management considered that this technology would not
be available for a number of months. The Company, therefore, spent funds on
research and development it previously believed would not be necessary.
However, management believes the decision it made was in the long term best
interest of the Company. Management has reduced the Company's workforce and
other operating expenses, including deferring management's salaries by
approximately 50% until the Sens-O-Lock(TM) is ready for production.

         The new technology for the advanced Sens-O-Lock(TM) product is in the
final stages of development. However, during pre-production testing in the
earlier part of this year, additional research and development was found to be
necessary. This ultimately resulted in a delay in production currently
estimated to be several months. The delay period has also allowed engineering
time to enhance software requirements for foreign markets bringing these on
line concurrent with domestic production.

         The Company continues to evaluate other sensing technologies
currently in the industry primarily to ensure that ASI's proprietary
technology remains cutting edge and at the forefront of breath alcohol
detection.

         Once research and development is completed the Company will begin
conducting various tests upon the prototypes that will be built. These
pre-production prototypes will be placed in U.S. and European automobiles in
June 1997. The Company then expects to be retooling, completing final parts
procurement and preparing for production during late July and August, with
initial production and shipment expected in September 1997. Afterwards, the
product will undergo certification testing. Management believes that a product
will be available in the second half of 1997.

         Management believes that Alcohol Sensors International, Ltd.'s
products as currently designed will be superior in performance to those of its
competitors in many respects, including accuracy and reliability which
obviates the need for calibration. Further, the Company's product is available
with a multi-lingual speech guide for user operation.
<PAGE>

                ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY

         The Company is continuing its development of a network of independent
representatives and dealers covering most of the Continental United States to
sell, install and service its products. The Company's business strategy will
concentrate on penetrating three markets - the mandate market by obtaining
approval in states which require convicted drunk drivers to install an
ignition interlock device after one or more convictions; the voluntary market
which includes parents of teenage drivers; and the commercial market
comprising fleet owners of truck, buses and taxi fleets, and will seek
insurance discounts to help drive the market for its products.

         In October, 1996 the Company, along with Michael Ghazarian, formed a
European subsidiary, Alcohol Sensors Europe, Plc ("ASE") for the supervision
of all of its manufacturing needs. Mr. Ghazarian is a Director of ASI, as well
as the managing director of Digital Vehicle Security Systems, the company that
had signed an agreement with ASI to be the exclusive distributor of ASI's
products in Europe. With the formation of ASE, Digital Vehicle Security
Systems has assigned to ASE its exclusive distribution rights with ASI. ASI is
the owner of 80% of ASE, with Mr. Ghazarian owning the remaining 20%.

         Mr. Ghazarian is also the director/owner of Scarico UK, Ltd., which
manufactures electronic components in a manufacturing cooperative located in
Varese, Italy. It is the intention of the Company to have its products
manufactured by Scarico.

RECENT DEVELOPMENTS

         On April 17, 1997, ASI underwent a management change due to a serious
medical condition to its President and Chief Executive Officer, Mr. Robert B.
Whitney.

         Robert B. Whitney, a founder of the Company, informed the Company and
its Board of Directors that his physical condition had deteriorated to such a
point over the past few months that he found it increasingly difficult to
carry out the duties of his position.

         At an emergency Board of Directors meeting held on Thursday, April
17, 1997, the Company had decided that Dr. Steven A. Martello would assume the
role of Acting President and assume the responsibilities for the Company's
finances on a day to day basis effective immediately, thereby relieving Mr.
Whitney of all administrative duties.

         At this same meeting, the following management changes were also
resolved:

  o   Mr. Michael A. Sylvester will retain his titles of Treasurer and
      Chief Financial Officer, and in addition, will serve as Executive
      Vice President of Sales.

  o   Mr. John T. Ruocco will continue in his duties as Sr. Executive Vice
      President and will assist Mr. Sylvester in establishing sales and
      distribution channels.

  o   Mr. Michael Ghazarian will remain as head of all engineering,
      research and development, manufacturing and production.

  o   Mr. Joseph M. Lively, Esq. will retain the title of Corporate
      Counsel, and has been appointed as Acting Vice President and Chief
      Operating Officer.

         On May 7, 1996, the Board of Directors unanimously passed a
resolution which made the appointment of Dr. Martello as Acting President,
permanent.

RESULTS OF OPERATIONS

         Three Months Ended March 31, 1997, and March 31, 1996

         The Company had net sales of $1,043 for the three months ended March
31, 1997 and after adjusting for the subsequent recall of its product had no
net sales for the three months ended March 31, 1996.

         For the three months ended March 31, 1996, the Company has recorded
costs of $262,354 associated with the product shipped during the period and
subsequently recalled.




<PAGE>

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY

         The Company recognized a loss from operations for the three months
ended March 31, 1997 in the amount of $751,157, as compared to $979,465 for
the three months ended March 31, 1996. Expenditures on research and
development decreased to $87,703 for the period, compared to $111,156 for the
prior period, a decrease of approximately $23,453 or 21%. General
administrative expenses increased to $663,934 for the period compared to
$605,955 for the prior period, an increase of approximately S57,979 or 10%,
reflecting an increase in funds used in marketing and selling its product, and
has just recently instituted its conservation of funds. During the three
months ended March 31, 1997, the Company recognized $27,027 interest and other
income as compared with S35,997 in the three months ended March 31, 1996.

         The loss for the three months ended March 31, 1997 was $733,351 or
$.09 per share compared to $952,464 or $.11 per share for the three months
ended March 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

         On November 9, 1995, the Company successfully completed its initial
public offering selling 1,000,000 Units, each comprised of two shares of
common stock, one redeemable Class "A" common stock purchase warrant
exercisable after November 9, 1996 at $3.75 per share and 1/2 redeemable Class
"B" common stock purchase warrant exercisable after November 9, 1996 at $5.00
per share. On December 19, 1995 the Underwriters' overallotment option of
150,000 Units was exercised in full. The Company's net proceeds from its
initial public offering were approximately $5,800,000. In 1996 through March
31, 1997, the Company received $466,000 from the exercise of warrants. The
Company has loans and accrued interest to officers of approximately $300,000
which it intends to repay from cash generated from operations. The Company has
obtained a $500,000 line of credit with Bank of New York at 5.25% as secured
by a $500,000 Certificate of Deposit.

         As A result of the Company's decision to halt production and shipment
of its original interlock series, ASI had, no stream of revenues. The Company
halted production due to problems in late spring of 1996 that were encountered
during the manufacturing process, performed by third party contractors. The
Company wrote off approximately $556,000 of inventory in the second quarter of
1996 as a result of these problems. This, coupled with the cost of the
research and development of its new technology, created a strain on the
Company's financial situation.

         In approximately October, 1996, the Company found it necessary to
look for additional funding. It was management's original intent to raise $2.5
million by means of an exempt offering pursuant to Rule 506 under Regulation D
of the SEC Act of 1934. ASI had taken significant steps in raising the
necessary capital by this route when it was presented with the unique
opportunity to obtain this funding from a large insurance company.

         In December 1996, the Company completed a transaction with American
International Insurance Company ("AIIC"), a subsidiary of American
International Group, Inc., whereby AIIC made a $2.5 million investment in ASI
in return for Convertible Preferred Stock and Warrants.

         This capital infusion has allowed the Company to continue its
research and development with regard to the new technology and to purchase
components for the manufacture of the Company's products and to continue
Company operations.

         Management believes that its current cash investments and future
funds from the sale of its WeatherEye(TM) products will be sufficient to
operate the Company through the end of 1997. In order to preserve its cash,
management substantially reduced its operating expenses and deferred
approximately 50% of management's salaries.

         The Company has established a plan of operations in which it intends
to purchase raw materials, components and manufacturing services to complete
units which will be sold to the Company's dealer network. The Company intends
to fund research and development, including engineering, personnel costs,
laboratory equipment, purchases, rental costs and independent laboratory
testing services. The Company may find the need to raise additional capital
for purposes of continuing operations, to obtain components parts and for
manufacturing. Management believes that this subject should be addressed at
the completion of the research and development stage of the interlock device.
There can be no assurance that such capital will be available on terms
acceptable to the Company on a timely basis or at all.


<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         See Footnote D to Financial Statement

ITEM 2.  CHANGES IN SECURITIES

         NONE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         NONE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         NONE

ITEM 5.  OTHER INFORMATION

         NONE

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         NONE


<PAGE>




Exhibit 11

              ALCOHOL SENSORS INTERNATIONAL, LTD. AND SUBSIDIARY
                         COMPUTATION OF LOSS PER SHARE
                                  (UNAUDITED)



                                                   Three Months Ended
                                                        March 31,
                                                        ---------
                                                1996                1997
                                                ----                ----

Net (loss)..............................      $ (952,464)          $(733,351)

Cumulative dividend of preferred stock..              --             (63,125)
                                            ------------        ------------

Net (loss) attributable to common
    stock...............................      $ (952,464)          $(796,476)
                                            ============        ============

Shares:
Weighted average number of common
   shares outstanding...................       8,418,170           8,793,357
                                            ============        ============


(Loss) per common share.................           $(.11)              $(.09)
                                            ============        ============








<PAGE>




                                  SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                               ALCOHOL SENSORS INTERNATIONAL, LTD.
                               (Registrant)



May 15, 1997                   By:  /s/
                                   ------------------------------------------
                                    Dr. Steven A. Martello
                                    President





May 15, 1997                   By:  /s/
                                   ------------------------------------------
                                    John T. Ruocco
                                    Sr. Executive Vice President





May 15, 1997                   By:  /s/
                                   ------------------------------------------
                                    Michael A. Sylvester
                                    Executive Vice President Sales, Treasurer,
                                    Chief Financial Officer