ACCUMED INTERNATIONAL INC, S-3/A, 1996-12-17

ACCUMED INTERNATIONAL INC
S-3/A, 1996-12-17
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1996
REGISTRATION NO. 333-04715

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

ACCUMED INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 36-4054899
-------- ----------
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

900 N. FRANKLIN STREET, SUITE 401
CHICAGO, ILLINOIS 60610
(312) 642-9200
- --------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

PETER P. GOMBRICH
CHIEF EXECUTIVE OFFICER
ACCUMED INTERNATIONAL, INC.
900 N. FRANKLIN STREET, SUITE 401
CHICAGO, ILLINOIS 60610
(312) 642-9200
- --------------------------------------------------------------------------------
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPY TO:
JOYCE L. WALLACH, ESQ.
ACCUMED INTERNATIONAL, INC.
900 N. FRANKLIN STREET, SUITE 401
CHICAGO, ILLINOIS 60610
(312) 642-9200
FAX (312) 642-8684

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.

If only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered
on a delayed on continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [x]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

<PAGE> 2

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF OFFERING AGGREGATE
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE FEE
---------- ---------- ------------ ----- ---
<S> <C> <C> <C> <C>
Common Stock,
No Par Value 7,821,600 shares $3.00 $23,464,800 $7,111
Common Stock
Underlying Warrants
and Options 1,946,174 shares $3.00 $ 5,838,522 $1,770
Total 9,767,774 shares $3.00 $29,303,322 $8,880(2)
</TABLE>

(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended, based on $3.00 per share, the average of the high and
low sales prices reported for the Common Stock on December 16, 1996.

(2) Registration fee in the aggregate of $22,515 was previously paid upon
filing the Registration Statement on May 30, 1996 relating to an
aggregate of 8,161,779 shares. Additional filing fee of $1,460 based on
registration of an additional 1,605,995 shares.

2
<PAGE> 3
PROSPECTUS

9,767,774 SHARES

ACCUMED INTERNATIONAL, INC.

COMMON STOCK

This Prospectus relates to 9,767,774 (the "Shares") of Common Stock, par
value $0.01 per share (the "Common Stock"), of AccuMed International, Inc. (the
"Company" or "AccuMed") of which 1,946,174 shares (the "Underlying Shares") are
underlying Common Stock Purchase Warrants (the "Warrants") or stock options (the
"Stock Options"). The Company will not receive any of the proceeds from any
sales of the Shares, but will receive aggregate gross proceeds if all of the
Warrants and Stock Options are exercised to acquire the Warrant Shares for cash
at their respective current exercises prices. The Registration Statement of
which this Prospectus forms a part has been filed pursuant to the terms of the
Warrants and Warrant Agreements and several registration rights agreements
between the Company and holders of the Warrants and Shares, respectively.
(Holders of Warrants, Stock Options and Shares are collectively referred to as
the "Selling Securityholders.") See "Selling Securityholders."

The Shares of Common Stock may be offered and sold from time to time by
the Selling Securityholders through ordinary brokerage transactions in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of the sale or at negotiated prices (this
"Offering"). See "Risk Factors," "Selling Securityholders" and "Plan of
Distribution."

The closing price for the Common Stock on December 16, 1996, as reported
on the National Association of Securities Dealers Automated Quotation System
("Nasdaq"), was $3.06 per share.

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS".

------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

No underwriting commissions or discounts will be paid by the Company in
connection with this Offering. Estimated expenses payable by the Company in
connection with this Offering are approximately $70,000.

This date of this Prospectus is December ___, 1996.

<PAGE> 4

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices: New York Regional Office, 7 World Trade Center, Room 1400, New
York, New York 10048 and Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material may also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Common Stock is quoted on the
Nasdaq National Market and reports and other information regarding the Company
may be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.

Additional information regarding the Company and the securities offered
hereby is contained in the Registration Statement on Form S-3 (Registration No.
333-04715) of which this Prospectus forms a part, and the exhibits thereto filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Company and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be inspected without charge at, and copies may
be obtained at prescribed fees from, the office of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549.

The Company furnishes shareholders with annual reports containing audited
financial statements and other periodic reports as the Company may deem to be
appropriate or as required by law or the rules of the National Association of
Securities Dealers, Inc.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents which have heretofore been filed by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), are incorporated by reference herein and shall be deemed
to be a part hereof:

(1) The Company's Annual Report on Form 10-KSB for the year ended September
30, 1995.

(2) The Company's Current Report on Form 8-K filed with the Commission on
January 16, 1996.

(3) The Company's Current Report on Form 8-K filed with the Commission on
January 17, 1996.

(4) The Company's Current Report on Form 8-K filed with the Commission on
January 19, 1996.

(5) The Company's Amendment No. 1 to the Current Report on Form 8-K/A filed
with the Commission on January 24, 1996.

(6) The Company's Transition Report on Form 10-KSB for the transition period
ended December 31, 1995.

(7) The Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1996.

<PAGE> 5

(8) The Company's Quarterly Report on Form 10-QSB for the quarter ended June
30, 1996.

(9) The Company's Amendment No. 1 to its Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1996.

(10) The Company's Current Report on Form 8-K filed with the Commission on
October 30, 1996.

(11) The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1996.

(12) The description of the Common Stock contained in the Company's Amendment
No. 1 to Registration Statement on Form 8-A/A filed with the Commission on
January 2, 1996.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference in this Prospectus (not including
exhibits and other information that is incorporated by reference unless the
exhibits are themselves specifically incorporated by reference). Requests for
such documents should be directed to AccuMed International, Inc., located at 900
N. Franklin Street, Suite 401, Chicago, Illinois 60610, Attn: Leonard R. Prange,
Chief Financial Officer and Corporate Vice President, telephone (312) 642-9200.

The following are trade names and trademarks of the Company used in this
Prospectus: the "Alamar" logo and name, alamarBlue(TM), AccuMed, Inc., AccuMed
International, Inc., the "AccuMed" logo and name, AcCell(TM), TracCell(TM),
MacroVision(TM), Sensititre(R), SensiTouch(TM), ARIS(TM), AutoReader(TM),
AutoInnoculator(TM) Relational Cytopathology Reference Guide(TM), FluoreTone(TM)
48, MacCell(TM) and SpeciFind(TM).

The Company's address is 900 N. Franklin Street, Suite 401, Chicago,
Illinois 60610, and its telephone number is (312) 642-9200.

<PAGE> 6
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus, including information under
"Risk Factors," and the financial statements incorporated herein. Special Note:
Certain statements set forth below constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. See
"Special Note Regarding Forward-Looking Statements" on page 2 for additional
factors relating to such statements.

THE COMPANY

AccuMed designs, manufactures and markets diagnostic screening products
for clinical diagnostic laboratories serving the cytopathology and microbiology
markets. The Company's primary focus is on the development of cytopathology
products that support the review and analysis of Pap smears in order to improve
the quality of cell analysis and increase accuracy and productivity in the
laboratory. The Company commenced sales of its initial cytopathology product,
the AcCell(TM) Series 2000 automated slide handling and microscopy workstation,
at the end of the first quarter of 1996. The Company is currently testing a
prototype specimen mapping workstation, the TracCell(TM) 2000, which
automatically pre-screens Pap smear slides to identify and create a computerized
map of empty space and certain non-clinically relevant portions of the specimen
to permit a more efficient analysis of the test slide. The Company filed a
510(k) pre-market notification with the FDA relating to the TracCell 2000 in
November 1996. As of May 1996, the Company has an agreement with Olympus America
Inc. ("Olympus America"), a leading supplier of microscopes to the cytopathology
market, pursuant to which Olympus America has exclusive third party distribution
rights to the AcCell Series 2000 and, if successfully developed and cleared for
marketing by the FDA and other applicable regulatory authorities, the TracCell
2000 in North, Central and South America.

An estimated 440,000 new cases of cervical cancer are reported annually
worldwide. The American Cancer Society estimates that, in the United States in
1996, 15,700 women will be diagnosed with invasive cervical cancer and 4,900
women will die of cervical cancer. Furthermore, in 1996, an estimated 65,000
American women will be diagnosed with cervical carcinoma in situ, a precancerous
condition. However, virtually all cervical cancer cases can be effectively
treated with timely intervention if detected early. The Pap smear is currently
the most widely-used screening test for early detection of cervical cancer and
related precancerous conditions. It is estimated that in 1996 over 150 million
Pap smear specimens will be screened worldwide, including over 50 million in the
United States. According to the American Cancer Society, widespread and regular
use of the Pap smear as a screening test is believed to have contributed to a
greater than 70% decrease in mortality from cervical cancer in the United States
in the past 45 years.

Initial Pap smear testing is performed by specially trained professionals
known as cytotechnologists, who use a microscope to screen and interpret up to
100 Pap smear slides per day. In general, this process is complex and tedious,
and is prone to error. Over 90% of specimens reviewed are negative. Even
non-negative specimens may contain only 20 to 30 abnormal cells out of a total
of as many as 50,000 to 300,000 cells on the slide. As a result, slide
interpretation errors can be caused by fatigue of the cytotechnologist and the
habituation effect of constantly viewing predominantly negative specimens.
According to the Journal of the American Medical Association, clinical
laboratories generally experience false negative Pap smear diagnosis rates of 5%
to 30%. In addition, conventional Pap smear testing is subject to administrative
errors and exposes clinical laboratories to the risk of litigation and
consequent liability.

<PAGE> 7

The Company's cytopathology products are intended to provide
cost-effective solutions to many of the problems of conventional Pap smear
testing without significantly modifying existing laboratory practices. The
Company's AcCell Series 2000 workstation is an interactive computer-controlled
slide handling and precision microscopy workstation that is supported with a
comprehensive data management system. The TracCell 2000 is designed to
automatically pre-screen Pap smear slides to identify and create a computerized
map of empty space and certain non-clinically relevant material. The Company has
completed clinical trials of the TracCell 2000 and in November 1996 filed a
510(k) with the FDA with respect to the TracCell 2000. Tests conducted by the
Company suggest that the TracCell 2000, by locating and mapping such empty space
and non-clinically relevant material, can eliminate 15% to 50% of the slide area
required to be reviewed by a cytotechnologist. The Company believes that the
AcCell Series 2000 and the TracCell 2000 have the potential to reduce
cytotechnologist fatigue and habituation, reduce the time needed to evaluate
specimens, and allow the cytotechnologist to focus on more thoroughly evaluating
potential abnormalities. The Company is also developing software and hardware
for a second generation, fully automated, high volume mapping product, the
TracCell 2500, and is developing a series of related educational and testing
products. There can be no assurance that any such products will be successfully
developed or marketed.

The Company also develops, manufactures and markets in vitro diagnostic
microbiology products for the clinical laboratory, veterinary and pharmaceutical
markets. The Company offers the microbiology laboratory a variety of FDA-cleared
products, under the trade name Sensititre(R), for the minimum inhibitory
concentration and identification ("MIC/ID") testing of bacteria suspected of
causing infections and for measuring the susceptibility of such bacteria to
different types and concentrations of antibiotics. In September 1996, the
Company entered into an agreement with Fisher Scientific Company, a leading
distributor of clinical laboratory products, operating through its Curtin
Matheson Scientific Division ("CMS"), pursuant to which CMS has been granted
exclusive rights to distribute the Company's microbiology products marketed
under the Sensititre trade name in the United States. AccuMed's microbiology
products include disposable test kits and a range of automated instruments. The
Company also markets alamarBlue(TM), a proprietary, non-toxic indicator reagent
that measures cell growth for in vitro testing. The Company is developing an
automated instrument designed to read the results of a Kirby-Bauer method
susceptibility test (the "KB Reader") and FluoreTone(TM) 48, a diagnostic
microbiology test panel and an automated reading instrument. There can be no
assurance that any such products will be successfully developed or marketed.

AccuMed's objective is to establish the AcCell Series 2000 and the
TracCell 2000 as the leading microscopy workstations for the primary screening
and analysis of cytology specimens while developing other new cytopathology and
microbiology products. The key elements of the Company's strategy include: (i)
establishing the AcCell Series 2000 and, if cleared for marketing by the FDA and
other applicable regulatory authorities, the TracCell 2000 in the worldwide Pap
smear screening market through distribution agreements and strategic alliances
with major market participants, (ii) exploiting other applications for the
Company's cytopathology technology such as histology and pathology laboratory
work, (iii) continuing to acquire, develop and enhance technologies that
complement the Company's existing technology base and (iv) integrating the
Company's proprietary microbiology technologies into new products.

On October 3, 1996, the Company consummated an underwritten public
offering of 3,000,000 shares of Common Stock (the "Public Offering"), pursuant
to which the Company received net proceeds of approximately $11.7 million.

RECENT DEVELOPMENTS

On October 15, 1996, the Company acquired a two-thirds equity interest in
Oncometrics Imaging Corp. ("Oncometrics") for aggregate consideration of

5
<PAGE> 8

$4.0 million in cash. Of such consideration, $2.0 million was paid to
Oncometrics' parent company, Xillix Technologies Corp. ("Xillix"), for
outstanding Oncometrics stock and $2.0 million was paid to Oncometrics for newly
issued Oncometrics stock. Oncometrics is developing an automated instrument
designed to capture and analyze images from microscope slides that have been
stained using Oncometrics' proprietary staining method. Prototypes of the
Oncometrics instrument have been developed which are capable of isolating small
variations in cell nucleus DNA, which can assist the cytotechnologist in
detecting lung cancer in an early stage of development. The Company believes
that the Oncometrics technology may potentially have applications in the early
detection of cervical cancer as well.

On October 15, 1996, the Company also acquired all the outstanding shares
of common stock (the "RADCO Stock") of RADCO Ventures, Inc., a Delaware
corporation ("RADCO"), and retired approximately $1.2 million in aggregate
principal amount of certain promissory notes sold by RADCO to its initial
investors (the "RADCO Notes") at an aggregate cost to the Company of
approximately $1.4 million in cash (the "RADCO Acquisition"). RADCO was formed
in March 1996, for the purpose of developing a diagnostic microbiology test
panel and automated reading instrument known as the FluoreTone 48. RADCO was
initially capitalized through private placements of units consisting of an
aggregate of 400,000 shares of RADCO Stock, the RADCO Notes and warrants to
purchase an aggregate of 687,500 shares of the Company's Common Stock, with a
weighted average exercise price of $3.73 per share. In consideration for
issuance of such warrants, the Company received 10% of the outstanding RADCO
Stock.

Effective on November 15, 1996, RADCO, which became a wholly-owned
subsidiary of the Company upon consummation of the RADCO Acquisition, was merged
with and into the Company pursuant to a Merger Agreement between the Company and
RADCO. At the effective time of the Merger, the Company assumed all the assets,
rights and liabilities of RADCO which ceased to exist as a separate corporate
entity.

BACKGROUND

The Company was incorporated in California in June 1988 under the name
Alamar Biosciences, Inc. Prior to December 29, 1995, the Company was engaged in
developing, manufacturing and marketing microbiology products, including
alamarBlue and certain diagnostic test kits under the name Alamar. AccuMed,
Inc., an Illinois corporation, was formed in February 1994 and was engaged in
researching and developing cytopathology products. Effective January 1995,
AccuMed, Inc. acquired the Sensititre microbiology business by purchasing
certain assets of a division of Radiometer America, Inc. and purchasing from
Radiometer (UK) Limited all of the shares of Sensititre Limited, an English
registry company (renamed AccuMed International Limited, "Sensititre," and
collectively, such businesses are referred to as "AccuMed, Inc."). On December
29, 1995, AccuMed, Inc. merged with and into the Company (the "Merger"). The
Company then changed its name to AccuMed International, Inc., reincorporated
under Delaware law and changed its fiscal year end from September 30 to December
31. The Company is currently seeking to enter into an agreement pursuant to
which a third party would manufacture the Company's Alamar microbiology
products, other than alamarBlue. However, there can be no assurance that such an
agreement can be reached. If such an agreement is not reached, the Company
intends to cease manufacturing such products.

The Company's principal executive offices are located at 900 North
Franklin Street, Suite 401, Chicago, Illinois 60610, and its telephone number is
(312) 642-9200.

<PAGE> 9

THE OFFERING

Securities offered............ 9,767,774 shares of Common Stock offered by the
Selling Securityholders.
Common Stock outstanding
after the Offering (1)...... 23,930,344 shares (which assumes the exercise
of Warrants and Stock Options to acquire
1,946,174 Underlying Shares to be sold in the
Offering).

Use of Proceeds............... The Company will not receive any proceeds from
the sale of the Common Stock by the Selling
Securityholders. Proceeds to the Company
pursuant to warrant exercises by the Selling
Securityholders, estimated to be approximately
$3,850,000 if all the Underlying Shares are
issued pursuant to cash exercises of the
Warrants and Stock Options, will be used by the
Company for general corporate purposes,
including research and development, sales and
marketing, manufacturing equipment and
facilities and working capital.
Nasdaq National
Market Symbol................ ACMI

(1) Based upon shares outstanding at December 12, 1996, of which (i) 940,955
shares are subject to forfeiture if certain specified earnings per share or
stock price performance thresholds are not met during 1997; (ii) 69,308
shares are subject to forfeiture if the Company is unable through August
1997 to perfect and maintain rights free of liens in certain recently
acquired patents; and (iii) 116,000 shares are subject to forfeiture if
certain milestones under a microbiology product development agreement are
not achieved. Excludes: (i) an aggregate of 5,912,605 shares reserved for
issuance upon exercise of warrants outstanding at December 12, 1996, with a
weighted average exercise price of $3.21 per share; (ii) an aggregate of
1,780,678 shares reserved for issuance upon the exercise of stock options
outstanding at December 12, 1996, including options to purchase 283,666
shares the granting of which is subject to stockholder approval of an
amendment increasing the shares available under the 1995 Stock Option Plan,
with a weighted average exercise price of $2.55 per share; and (iii) an
aggregate of 401,575 shares reserved for issuance upon exercise of options
available for future grant under the Company's stock option plans, including
216,334 shares the reservation of which is subject to stockholder approval
of such amendment.

RISK FACTORS

The statements that are not historical facts or statements of current status
contained in this Prospectus are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995) (the "Reform Act") that
involve risks and uncertainties, including, but not limited to, the risks set
forth in "Risk Factors." Actual results may differ materially. The decision of
whether to make an investment in the Common Stock involves an analysis of
certain risks, including but not limited to, the risk factors set forth in this
Prospectus. Each potential investor is urged to carefully consider the risks
inherent in the Company's significant and continuing operating losses, the
regulatory environment in which the Company operates, and the volatility of the
Company's stock price. See "Risk Factors."

<PAGE> 10

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors, in addition to the other information in this Prospectus.
Special Note: Certain statements set forth below constitute "forward-looking
statements" within the meaning of the Reform Act. See "Special Note Regarding
Forward-Looking Statements" on page 2 for additional factors relating to such
statements.

LIMITED RELEVANT OPERATING HISTORY; SIGNIFICANT OPERATING LOSSES;
ACCUMULATED DEFICIT; SUBSTANTIAL COSTS OF INTEGRATION AND CONSOLIDATION;
UNCERTAINTY OF PROFITABILITY. The Company was formed in 1988 under the name
Alamar Biosciences, Inc. and was engaged primarily in research and development
of microbiology products based on the alamarBlue technology. Prior to the
Merger, the Company never realized any significant revenues from product sales.
AccuMed, Inc. was incorporated in February 1994 and, effective January 1995,
acquired the Sensititre microbiology business. Until such acquisition, AccuMed,
Inc. had no revenues and operations consisted of a limited amount of
cytopathology research and development. Accordingly, although the Sensititre
business had a significant operating history and revenues from sales, AccuMed,
Inc., as a separate entity, had very limited operating history prior to the
Merger. Upon consummation of the Merger, the operations of the Company and
AccuMed, Inc. were combined, and the Company began to develop, manufacture and
sell both the alamarBlue and the Sensititre microbiology products and recently
began to commercialize certain AccuMed cytopathology products. Thus, the Company
has a limited relevant operating history upon which an evaluation of its
prospects can be made. Such prospects must be considered in light of the risks,
expenses and difficulties frequently encountered in establishing a new business
in a continually evolving industry with an increasing number of market entrants
and intense competition as well as the risks, expenses and difficulties
encountered in the shift from development to commercialization of new products
based on innovative technology.

The Company has incurred significant net operating losses in each fiscal
quarter since its inception. For the fiscal years ended September 30, 1994 and
1995, and for the transition period ended December 31, 1995, and the nine months
ended September 30, 1996, the Company's net losses were approximately $3.1
million, $3.8 million, $5.7 million and $5.9 million, respectively. Losses for
the fiscal years ended September 30, 1994 and 1995 and for the transition period
ended December 31, 1995 relate solely to the Company's operations prior to the
Merger. As of September 30, 1996, the Company had an accumulated deficit of
approximately $28.6 million. Losses are expected to continue for the foreseeable
future until such time, if ever, as the Company is able to attain sales levels
sufficient to support its operations. There can be no assurance that the Company
will be able to implement successfully its operating strategy, generate
increased revenues or ever achieve profitable operations. See "- Uncertainty of
Market Acceptance and Initial Investment in Cytopathology Products."

UNCERTAINTY OF MARKET ACCEPTANCE AND INITIAL INVESTMENT IN CYTOPATHOLOGY
PRODUCTS. The Company has generated limited revenues from the sale of its
cytopathology products to date. The Company's success, growth and profitability
will depend primarily on market acceptance of the AcCell Series 2000 and the
TracCell 2000, if cleared for marketing by the FDA and other applicable
regulatory authorities, for use in connection with cervical cancer screening by
cytopathology laboratories. Market acceptance will depend on the Company's
ability to demonstrate to such laboratories that the limitations associated with
conventional Pap smear screening and analysis can be cost effectively addressed
by its products. There can be no assurance that the Company can demonstrate that
the high initial cost of equipping existing laboratories with the AcCell Series
2000 and the TracCell 2000, if cleared for marketing by the FDA and other
applicable regulatory authorities, will be offset by a reduction in costs
associated with increased efficiency and decreased malpractice liability risks

<PAGE> 11
resulting from more accurate diagnoses, better data management capability and
better documentation of slide review procedures. The Company believes that many
clinical laboratories offer Pap smear tests at lower gross margins than other
tests in order to receive orders for other, higher margin, laboratory tests. As
a result, clinical laboratories may be reluctant or unwilling to accept the
additional costs related to installing and utilizing the AcCell Series 2000 and
the TracCell 2000. Furthermore, clinical laboratories have recently been
presented with a variety of new products claimed to improve the cervical cancer
screening process either through changing the slide preparation method,
automating the re-examination or rescreening of conventional specimens
previously diagnosed as negative or rescreening such specimens using reagents to
detect certain RNA/DNA hybrid cells claimed to indicate the presence of cervical
cancer. This proliferation of competing claims, products and approaches to
cervical cancer screening may cause market confusion which could result in a
laboratory maintaining its current equipment and practices or delaying a
decision of whether to purchase the Company's products or a competing product.
See "- Technological Change and Competition."

LIMITED NUMBER OF CUSTOMERS. Due in part to a recent trend toward
consolidation of clinical laboratories, the Company expects that the number of
potential domestic customers for its cytopathology products will decrease. Due
to the relative size of the largest U.S. laboratories, it is likely that a
significant portion of the sales of the AcCell Series 2000 and the TracCell
2000, if cleared for marketing by the FDA and other applicable regulatory
authorities, will be concentrated among a relatively small number of customers.
In order to promote acceptance in the market, the Company will need to foster an
awareness of and acceptance by these potential customers of the AcCell Series
2000 and the TracCell 2000 and of the benefits of such systems over current
methods. The Company's dependence on sales to large laboratories may strengthen
the purchasing leverage of these potential customers. There can be no assurance
that the Company will be successful in selling its products, or that any such
sales will result in sufficient revenue to allow the Company to become
profitable.

DELAYED OR UNSUCCESSFUL PRODUCT DEVELOPMENT. The Company's growth and
profitability will depend, in part, upon its ability to complete development of
and successfully introduce new products, including the TracCell 2000. The
Company will likely be required to undertake time-consuming and costly
development activities and seek regulatory approval for new products. There can
be no assurance that the Company will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of new
products, that regulatory clearance or approval of these or any new products
will be granted on a timely basis, if ever, or that the new products will
adequately meet the requirements of the applicable market or achieve market
acceptance. The completion of the development of any of the Company's products
under development remains subject to all the risks associated with the
commercialization of new products based on innovative technologies, including
unanticipated technical or other problems, manufacturing difficulties and the
possible insufficiency of the funds allocated for the completion of such
development, which could result in a change in the design, delay in the
development or the abandonment of such products. Consequently, there can be no
assurance that any of the Company's products under development will be
successfully developed or manufactured or, if developed and manufactured, that
such products will meet price or performance objectives, be developed on a
timely basis or prove to be as effective as competing products. The inability to
successfully complete development of a product or application, or a
determination by the Company, for financial, technical or other reasons, not to
complete development of any product or application, particularly in instances in
which the Company has made significant capital expenditures, could have a
material adverse effect on the Company's business, financial condition and
results of operations and could cause the Company to reassess its business
strategy. Such reassessment could lead to changes in the Company's overall
business plan, including the relative emphasis on current, as well as future,
products. See "- Government Regulation."

<PAGE> 12

LIMITED SALES, MARKETING AND DISTRIBUTION EXPERIENCE; DEPENDENCE ON
THIRD PARTY DISTRIBUTORS. In order for the Company to increase revenues and
achieve profitability, the Company's products, particularly its current and
proposed cytopathology products, must achieve a significant degree of market
acceptance. The Company has only limited experience marketing and selling its
cytopathology products. The Company intends to distribute its cytopathology and
human, clinical microbiology products primarily through a limited number of
distributors. The Company has only recently entered into its current
distribution arrangements. With respect to cytopathology products, the Company
has entered into an exclusive, three year distribution agreement for North,
Central and South America (the "Olympus Territory") with Olympus America. With
respect to human, clinical microbiology products marketed under the Sensititre
trade name, the Company has entered into an exclusive, four year distribution
agreement for the United States with CMS. The Company will be required to enter
into additional distribution arrangements in order to achieve broad distribution
of its products. There can be no assurance that the Company will be able to
maintain the distribution arrangements with Olympus America or CMS or that the
Company will be able to enter into and maintain arrangements with additional
distributors on acceptable terms, or on a timely basis, if ever. The Company
will be dependent upon these distributors to assist it in promoting market
acceptance of and demand for its products. In addition, because the Company
intends to rely on a limited number of distributors, sales to these distributors
could account for a significant portion of the Company's revenues. There can be
no assurance that these distributors will devote the resources necessary to
provide effective sales and marketing support to the Company. In addition, the
Company's distributors may give higher priority to the products of other medical
suppliers or their own products, thus reducing their efforts to sell the
Company's products. If any of the Company's distributors becomes unwilling or
unable to promote, market and sell its products, the Company's business,
financial condition and results of operations would be materially adversely
affected. Further, Olympus America is the exclusive distributor of the AcCell
Series 2000 and, if cleared for marketing by the FDA and other regulatory
agencies, the TracCell 2000 in the Olympus Territory and CMS is the exclusive
distributor of the Sensititre microbiology products in the United States, and
other distributors also may be granted exclusive distribution rights. To the
extent any exclusive distributor fails to adequately promote, market and sell
the Company's products, the Company may not be able to secure a replacement
distributor until after the term of the distribution contract is complete or
until such contract can otherwise be terminated.

TECHNOLOGICAL CHANGE AND COMPETITION. The Company's AcCell Series 2000
currently faces and the TracCell 2000, if cleared for marketing by the FDA and
other applicable regulatory authorities, will face competition from companies
that have developed or may be developing competing systems. The Company believes
that many of the Company's existing and potential competitors possess
substantially greater financial, marketing, sales, distribution and technical
resources than the Company, and more experience in research and development,
clinical trials, regulatory matters, manufacturing and marketing. The Company is
aware of two companies that currently market imaging systems to re-examine or
rescreen conventional Pap smear specimens previously diagnosed as negative as
well as two companies that are developing devices for the preparation and
analysis of Pap smear slides. The Company is aware that at least one such
company has submitted an imaging system for use as a primary means of screening
Pap smear slides under a pre-market approval application (a "PMA") to the FDA
under the United States Food, Drug and Cosmetic Act (the "FD&C Act"). Another
company markets a manual rescreening test claimed to detect the presence of
cervical cancer using reagents to detect certain RNA/DNA hybrid cells. If any
company currently marketing rescreening products receives FDA clearance or
approval for use of its product as a primary screening system to replace or work
in conjunction with conventional Pap smear screening or if automated analysis
systems are developed and receive FDA clearance or approval, the use of
conventional Pap smear screening could be substantially affected and the

<PAGE> 13
Company's business, financial condition and results of operations could be
materially adversely affected.

The market for the Company's current and, if developed, proposed
microbiology products is highly competitive, and the Company competes with
numerous well-established foreign and domestic companies, most of which possess
substantially greater financial, technical, marketing, personnel and other
resources than the Company and have established reputations for success in the
development, sale and service of manual and/or automated in vitro diagnostic
testing products. A significant portion of the MIC/ID testing market in the
United States is controlled by two companies, MicroScan, Inc., a wholly-owned
subsidiary of Dade International, Inc. ("MicroScan"), and bioMerieux Vitek, a
division of bioMerieux, a French company ("bioMerieux Vitek"). Difco
Laboratories, Inc. ("Difco") has been issued a U.S. patent covering technology
related to the alamarBlue technology covered in one of the Company's patents.
There can be no assurance that Difco, which has substantially greater resources
and experience in research, development, manufacturing and marketing than the
Company, will not use its patented technology to develop products that will
compete directly with the Company's microbiology products.

The medical diagnostics industry is characterized by rapid product
development and technological advances. There can be no assurance that other
technologies or products that are functionally similar to those of the Company
are not currently available or under development, or that other companies with
expertise and resources that would encourage them to attempt to develop and
market competitive products will not develop new products that compete directly
with the Company's products. The Company's products could be rendered obsolete
or uneconomical by the introduction and market acceptance of competing products,
technological advances of the Company's current or potential competitors, or by
other approaches. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competition,
including the development and commercialization of new products and technology,
will not have a material adverse effect on the Company's business, financial
condition and results of operations.

GOVERNMENT REGULATION. The Company's products and manufacturing
processes are regulated by state and federal authorities, including the FDA and
comparable authorities in certain states and other countries. Failure to comply
with the FD&C Act and applicable regulatory requirements can result in, among
other things, civil and criminal fines, product recalls, detentions, seizures,
injunctions and criminal prosecutions.

United States regulatory requirements promulgated under the FD&C Act
provide that many of the Company's products may not be shipped in interstate
commerce without prior authorization from the FDA. Such authorization is based
on a review by the FDA of a product's safety and effectiveness for its intended
uses. Medical devices may be authorized by the FDA for marketing either pursuant
to a pre-market notification under Section 510(k) of the FD&C Act (a "510(k)
Notification") or a PMA under the FD&C Act. The process of obtaining clearances
or approvals from the FDA and other applicable regulatory authorities can be
expensive, uncertain and time consuming, frequently requiring several years from
the commencement of clinical trials or submission of data to the receipt of
regulatory approval.

A 510(k) Notification, among other things, requires an applicant to show
that its products are "substantially equivalent" in terms of safety and
effectiveness to existing products that are currently permitted to be marketed
in the United States. An applicant is permitted to begin marketing a product in
the United States as to which it has submitted a 510(k) Notification at such
time as the FDA issues a written finding of substantial equivalence. Requests
for additional information may delay the market introduction of certain of an
applicant's products and, in practice, initial clearance of products often takes

<PAGE> 14

substantially longer than the FDA pre-market notification review period of 90
days.
A PMA consists of the submission to the FDA of information sufficient to
establish independently that a device is safe and effective for its intended
use. A PMA must be supported by extensive data, including preclinical and
clinical trial data, as well as extensive literature to prove the safety and
effectiveness of the device. By statute, the FDA is required to respond to a PMA
within 180 days from the date of its submission; however, the approval process
usually takes substantially longer, often as long as several years. During the
review period, the FDA may conduct extensive reviews of the Company's
facilities, deliver multiple requests for additional information and
clarifications and convene advisory panels to assist in its determination.

FDA clearances and approvals, if granted, may include significant
limitations on the intended uses for which a product may be marketed. FDA
enforcement policy strictly prohibits the promotion of cleared or approved
medical devices for non-approved or "off-label" uses. In addition, product
clearances or approvals may be withdrawn for failure to comply with regulatory
standards or the occurrence of unforeseen problems following initial marketing.

Under current interpretation of FDA regulations, marketing of the AcCell
Series 2000 in the United States does not require FDA clearance or approval.
Marketing of the TracCell 2000 in the United States, however, does require
pre-marketing clearance or approval by the FDA. The Company has completed
clinical trials of the TracCell 2000 and in November 1996 filed a 510(k)
Notification with the FDA seeking such clearance. There can be no assurance that
the FDA will clear the TracCell 2000 for marketing in the United States on a
timely basis, if ever.

Under current interpretation of FDA regulations, marketing of the
Company's MIC/ID microbiology products in the United States requires FDA
clearance through the 510(k) Notification process. With respect to the Company's
MIC/ID testing products, 510(k) Notifications must be filed and cleared with
respect to each antibiotic used. The Company may submit applications to add
individual antibiotics to those previously cleared as the market warrants.
However, there can be no assurance that clearances will continue to be obtained
or that obtained clearances will not be withdrawn.

At the current time, alamarBlue is marketed for use in the industrial
and research markets and therefore does not require FDA clearance or approval.
The FDA could change its interpretation of the regulations and require a 510(k)
Notification or PMA submission which, if pursued, may not be cleared or approved
or, if approved, may contain significant limitations on the intended uses for
which the product is marketed.

Marketing in the United States of the Company's products under
development may require additional FDA clearances or approvals. For example, the
Company's proposed automated pre-screening specimen mapping workstation, the
TracCell 2500, if developed, may not be sold in the United States unless and
until the Company has obtained FDA clearance or approval, either through a
510(k) Notification or a PMA. In addition, marketing in the United States of the
Company's proposed KB Reader and other proposed microbiology products, if
developed, is likely to require FDA clearance through 510(k) Notifications. The
Company is currently conducting research and development with respect to such
products and has not yet begun clinical trials. There can be no assurance that
any such products will be developed or, if developed, that such products will be
cleared or approved for marketing by the FDA or other applicable regulatory

<PAGE> 15
authorities or, if such clearance or approval is received, that it will not be
withdrawn.

Sales of medical devices outside the United States are subject to
foreign regulatory requirements that vary from country to country. The time
required to obtain approval by a foreign country may be longer or shorter than
that required for FDA clearance or approval, and the requirements may differ.
Export sales of certain devices that have not received FDA marketing clearance
or approval generally are subject to both FDA export permit requirements and, in
some cases, general U.S. export regulations. In order to obtain a FDA export
permit, the Company may be required to provide the FDA with documentation from
the medical device regulatory authority of the country in which the purchaser is
located. No assurance can be given that foreign regulatory approvals will be
granted on a timely basis, if ever, or that the Company will not be required to
incur significant costs in obtaining or maintaining its foreign regulatory
approvals.

The Company intends to seek qualification for its international
manufacturing operations under the International Standards Organization ("ISO")
9001 Series of Standards, and is seeking the "CE" mark for the AcCell Series
2000 and proposed products. The CE mark is recognized by countries that are
members of the European Union and the European Free Trade Association and,
effective in 1998, will be required to be affixed to all medical devices sold in
the European Union. The AcCell Series 2000 is expected to be certified as
complying with CE mark requirements upon completion of the CE mark qualification
process which is underway; however, no assurance can be given that the Company
will obtain the CE mark for the AcCell Series 2000 or any proposed products or
satisfy ISO 9001 standards, or that any product that the Company may develop or
commercialize will obtain the CE mark or will obtain any other required
regulatory clearance or approval on a timely basis, if ever.

The Company is subject to certain FDA registration, record-keeping and
reporting requirements, and most of the Company's manufacturing facilities are
obligated to follow FDA Good Manufacturing Practice ("GMP") regulations and are
subject to periodic FDA inspection. Any failure to comply with GMP regulations
or any other FDA or other government regulations could have a material adverse
effect on the Company's business, financial condition and results of operations.

In July 1996, the Company received from the FDA a warning letter
regarding certain procedures used in connection with the manufacture of its
microbiology products at the Sensititre facility in the United Kingdom. In such
letter, the FDA stated that the Company manufactured sterile products at such
facility and was not in compliance with GMP regulations relating to the
manufacture of sterile products. On August 7, 1996, the Company submitted a
written response to the FDA asserting that the products manufactured at the
Sensititre facility are not sterile. The FDA has acknowledged in writing that
the products are not represented as sterile and accepted the Company's GMP
responses as adequate. The FDA has indicated that it will verify the Company's
implementation during its next inspection and that import of the Company's
devices will be permitted to continue.

Federal, state and foreign regulations regarding the manufacture and
sale of healthcare products and diagnostic devices are subject to future change.
The Company cannot predict what material impact, if any, such changes might have
on its business. Future changes in regulations or enforcement policies could
impose more stringent requirements on the Company, compliance with which could
adversely affect the Company's business. Such changes may relax certain
requirements, which could prove beneficial to the Company's competitors and thus
adversely affect the Company's business. In addition, regulations of the FDA,
including GMP regulations, and state and foreign laws and regulations, depend
heavily on administrative interpretations, and there can be no assurance that
future interpretations made by the FDA, or other applicable regulatory
authorities, with

<PAGE> 16
possible retroactive effect, will not adversely affect the Company. See
"- Technological Change and Competition."

In addition to the regulations directly pertaining to the Company and
its products, many of the Company's existing and potential customers are subject
to extensive regulation and governmental oversight. Regulatory changes in the
healthcare industry that adversely affect the business of the Company's
customers could have a material adverse effect on the Company's business,
financial condition and results of operations.

There can be no assurance that the Company will be able to obtain
necessary regulatory approvals or clearances in the United States or
internationally on a timely basis, if ever. Delays in the receipt of, or failure
to receive, such approvals or clearances, the loss of previously received
approvals or clearances, 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.

DEPENDENCE ON KEY EMPLOYEES. The Company believes that its success will
depend to a significant extent upon the efforts and abilities of a small group
of executive, scientific and marketing personnel, and in particular on Peter P.
Gombrich, the Company's Chairman of the Board, Chief Executive Officer and
President. The loss of the services of one or more of these key personnel could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the Company's future success will depend
upon its ability to continue to attract and retain qualified scientific and
management personnel who are in great demand. There can be no assurance that the
Company will be successful in attracting and retaining such personnel.

PROTECTION OF INTELLECTUAL PROPERTY. The Company relies on a combination
of patents, licensing arrangements, trade names, trademarks, trade secrets,
know-how and proprietary technology and policies and procedures for maintaining
the secrecy of trade secrets, know-how and proprietary technology in order to
secure and protect its intellectual property rights. The Company has been issued
a Great Britain patent and has filed or been assigned ten U.S. patent
applications (one of which has been abandoned) and eight foreign patent
applications covering certain aspects of its cytopathology products. The Company
has been issued two U.S. patents and has filed or been assigned two U.S. patent
applications, one Japanese patent application and one Canadian patent
application related to its microbiology products. Additional U.S. and foreign
patent applications covering the Company's cytopathology products are being
prepared. The Company holds certain licenses on several U.S. and foreign patents
and other intellectual property rights regarding aspects of the technology
embodied in the Sensititre product line and is the licensee of certain automated
cell analysis technology. The Company holds a U.S. patent and has received a
notice of intent to grant a related European patent with respect to a portion of
the alamarBlue microbiology technology.

None of the Company's pending patent applications have been granted as
of the date of this Prospectus, and there can be no assurance that any such
patent application will result in an issued patent. The Company may, in the
future, file additional patent applications; however, there can be no assurance
that the Company will be successful in obtaining approval of any future patent
applications it files with respect to its technologies. In addition, since
patent applications in the United States are maintained in secrecy until patents
issue, and since publications of discoveries in the scientific or patent
literature tend to lag behind actual discoveries by several months, the Company
cannot be certain that the Company or other relevant patent application filer
was the first creator of inventions covered by pending patent applications or
that such persons were the first to file patent applications for such
inventions.

<PAGE> 17
There also can be no assurance that any patents, patent applications and
patent licenses will adequately cover the Company's technologies. Protection
relating to portions of such technologies may be challenged or circumvented by
competitors, and other portions may be in the public domain or protectable only
under state trade secret laws.

The Company owns two U.S. trademark registrations for the trademark
"Sensititre," has filed U.S. trademark applications for the trademarks "AcCell,"
"MacCell," "FluoreTone," "SpeciFind," "Relational Cytopathology Review Guide,"
"MacroVision" and "TracCell" and is currently preparing one more trademark
application for filing. The Company may file additional U.S. and foreign
trademark applications in the future. However, no trademark registrations have
yet been granted to the Company, and there can be no assurance that any such
registrations will be granted. In addition, there can be no assurance that third
parties have not or will not adopt or register marks that are the same or
substantially similar to those of the Company, or that such third parties will
not be entitled to use such marks to the exclusion of the Company. Selecting new
trademarks to resolve such situations could involve significant costs, including
the loss of goodwill already gained by the marks previously used.

The Company relies for protection of its trade secrets, know-how and
proprietary technology on nondisclosure and confidentiality agreements with its
employees, consultants, distributors, suppliers, researchers and advisors. There
can be no assurance that such agreements will provide meaningful protection for
the Company's trade secrets, know-how or proprietary technology in the event of
any unauthorized use or disclosure of such information. In addition, others may
obtain access to, or independently develop, technologies or know-how similar to
that of the Company.

There can be no assurance that the Company's patents, patent
applications, patent licenses, trademarks and trade secret protections will
adequately protect the Company from potential infringement or misappropriation
by third parties. Historically, the Company has been required to undertake
costly litigation to enforce its intellectual property rights. Although the
Company is not currently aware of any potential infringement, future litigation
by the Company may be necessary to enforce its patent rights, as well as to
protect its trade secrets, know-how and proprietary technology, or to determine
the scope and validity of the proprietary rights of others. Any such litigation
could result in substantial cost to and diversion of effort by the Company.

The Company's success will also depend on its ability to avoid
infringement of patent or other proprietary rights of others. The Company is not
aware that it is infringing any such rights of a third party, nor is it aware of
proprietary rights of others for which it will be required to obtain a license
in order to develop its products. However, there can be no assurance that the
Company is not infringing the proprietary rights of others, or that the Company
will not be required to defend itself against claimed infringement of the rights
of others. Adverse determinations in any such litigation could subject the
Company to significant liability to third parties, could require the Company to
seek licenses from third parties and could prevent the Company from
manufacturing, selling or using certain of its products or technologies, any of
which could have a material adverse effect on the Company.

POTENTIAL FLUCTUATIONS IN FUTURE QUARTERLY RESULTS. The Company expects
that its operating results will fluctuate significantly from quarter to quarter
in the future and will depend on various factors, many of which are outside the
Company's control. These factors include the success of the marketing efforts of
the Company and its distribution partners, the likelihood, timing and costs
associated with obtaining necessary regulatory clearances or approvals, the
timing and level of expenditures associated with expansion of sales and
marketing activities and overall operations, the Company's ability to cost
effectively expand manufacturing capacity and maintain consistently acceptable
yields, the

<PAGE> 18
timing of establishment of strategic distribution arrangements and the success
of the activities conducted under such arrangements, changes in demand for the
Company's products, order cancellations, competition, changes in government
regulation and other factors, the timing of significant orders from and
shipments to customers, and general economic conditions. These factors are
difficult to forecast, and these or other factors could have a material adverse
effect on the Company's business, financial condition and results of operations.

Fluctuations in quarterly demand for products may adversely affect the
continuity of the Company's manufacturing operations, increase uncertainty in
operational planning, disrupt cash flow from operations and increase the
volatility of the Company's stock price. The Company's expenditures are based in
part on the Company's expectations as to future revenue levels and to a large
extent are fixed in the short term. If revenues do not meet expectations, the
Company's business, financial condition and results of operations could be
materially adversely affected. The Company believes that period to period
comparisons of its operating results are not necessarily meaningful and should
not be relied upon as indications of future performance. As a result of the
foregoing factors, it is likely that in some future quarter the Company's
revenue or operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
could be materially adversely affected.

Additionally, if specified earnings per share or stock price performance
thresholds are met during 1997, contingencies will be satisfied with respect to
940,955 shares of Common Stock and warrants to purchase 63,472 shares of Common
Stock issued in connection with the Merger and an amount equal to the fair
market value of such securities at the date on which such contingencies are
satisfied is expected to be recorded as goodwill and amortized over ten years.
Under the terms of the Agreement and Plan of Reorganization relating to the
Merger (the "Merger Agreement"), such contingencies will be satisfied if, during
1997, (i) earnings, on a fully diluted basis, exceed $0.03 per share of Common
Stock or (ii) the fair market value of the Common Stock equals or exceeds $2.50
per share for a period of 45 consecutive trading days. Furthermore, the Company
acquired a two-thirds equity interest in Oncometrics for approximately $4.0
million in cash. It is expected that the allocation of the purchase price
payable in connection with the Oncometrics Acquisition will include
approximately $1.6 million of acquired in-process research and development and
approximately $1.1 million of purchased technology. The purchased technology is
expected to be amortized over the expected useful life of such technology,
currently anticipated to be ten years, with the acquired in-process research and
development expensed in the Company's consolidated statement of operations as a
non-cash charge against operations in the period of acquisition. The Company has
also acquired the remaining outstanding shares of Common Stock of RADCO and
retired approximately $1.2 million in aggregate principal amount of RADCO Notes
at an aggregate cost to the Company of approximately $1.4 million in cash.
Approximately $800,000 of the purchase price payable in connection with the
RADCO Acquisition has been allocated to acquired in-process research and
development and charged against operations in the Company's consolidated
statement of operations in the period of acquisition, the fourth quarter of
1996. To the extent that the accounting treatments described above change, the
Company's reported results of operations may be adversely affected. In addition,
if the Company determines in accordance with its existing accounting policy that
the undiscounted future operating cash flows from its operations are
insufficient to support the aggregate amount of its unamortized goodwill, the
Company will be required to reflect an impairment charge in the amount of
unrecoverable goodwill against then current earnings.

SIGNIFICANT CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL CAPITAL. The
Company has and intends to continue to expend substantial funds for research and
product development, scale-up of cytopathology manufacturing capacity, reduction
of accounts payable, possible acquisitions, and

16
<PAGE> 19
other working capital and general corporate purposes. Although the Company
believes that existing cash balances, interest thereon and internally generated
funds will be sufficient to finance the Company's projected operations through
at least the next twelve months, there can be no assurance to that effect. The
Company's future liquidity and capital requirements will depend upon numerous
factors, including the costs and timing of expansion of manufacturing capacity,
the costs, timing and success of the Company's product development efforts, the
costs and timing of potential acquisitions, the extent to which the Company's
existing and new products gain market acceptance, competing technological and
market developments, the progress of commercialization efforts by the Company
and its distributors, the costs involved in preparing, filing, prosecuting,
maintaining, enforcing and defending patent claims and other intellectual
property rights, developments related to regulatory and third party
reimbursement matters, including the Clinical Laboratory Improvement Amendments
of 1988 ("CLIA"), and other factors. If additional financing is needed, the
Company may seek to raise additional funds through public or private financings,
collaborative relationships or other arrangements. The Company currently has no
commitments with respect to sources of additional financing, and there can be no
assurance that any such financing sources, if needed, would be available to the
Company or that adequate funds for the Company's operations, whether from the
Company's revenues, financial markets, collaborative or other arrangements with
corporate partners or from other sources, will be available when needed or on
terms satisfactory to the Company. The failure of the Company to obtain adequate
additional financing may require the Company to delay, curtail or scale back
some or all of its research and development programs, sales and marketing
efforts, manufacturing operations, clinical studies and regulatory activities
and, potentially, to cease its operations. Any additional equity financing may
involve substantial dilution to the Company's then-existing stockholders.

NEED TO MANAGE EXPANDING OPERATIONS. The Company will be required to
expand its operations, particularly in the areas of sales and marketing and
manufacturing. Such expansion will likely result in new and increased
responsibilities for management personnel and place significant strain upon the
Company's management, operating and financial systems and resources. To
accommodate any such growth and compete effectively, the Company may be required
to implement and/or improve its information systems, procedures and controls,
and to expand, train, motivate and manage its work force. The Company's future
success will depend to a significant extent on the ability of its current and
future management personnel to operate effectively, both independently and as a
group. There can be no assurance that the Company's personnel, systems,
procedures and controls will be adequate to support the Company's future
operations. Any failure to implement and improve the Company's operational,
financial and management systems or to expand, train, motivate or manage
employees as required by future growth, if any, could have a material adverse
effect on the Company's business, financial condition and results of operations.

RISK OF LITIGATION; RISK OF PRODUCT RECALLS; POTENTIAL UNAVAILABILITY OF
INSURANCE. Commercial screening of Pap smear tests has been characterized by
significant malpractice litigation. The Company faces a risk of exposure to
product liability, errors and omissions or other claims if the use of its AcCell
Series 2000 or any future potential products, including the TracCell 2000, is
alleged to have contributed to or resulted in a false negative diagnosis. While
neither the AcCell Series 2000 nor the TracCell 2000 is purported to offer any
clinical diagnosis, there can be no assurance that the Company will avoid
significant litigation. The Company also faces the possibility that defects in
designs or manufacture of its products could result in product recall.

The Company currently maintains a product liability insurance policy
providing maximum coverage of $10.0 million and per occurrence coverage of $10.0
million. The medical device industry in general has experienced increasing
difficulty in obtaining and maintaining reasonable product liability coverage,

17
<PAGE> 20
and substantial increases in insurance premium costs in many cases have rendered
coverage economically impractical. There can be no assurance that the Company's
existing product liability insurance will be adequate or continue to be
available, or that additional product liability insurance will be available to
the Company when needed or at a reasonable cost. An inability to maintain
insurance at acceptable costs or otherwise protect against potential product
liability could prevent or inhibit the continued commercialization of the
Company's products. In addition, a product liability claim in excess of relevant
insurance coverage or a product recall could have a material adverse effect on
the Company's business, financial condition and results of operations.

ENVIRONMENTAL REGULATION. The Company is subject to a variety of local,
state, federal and foreign government regulations relating to the storage,
discharge, handling, emission, generation, manufacture and disposal of toxic,
infectious and other hazardous substances used to manufacture the Company's
products. The failure to comply with current or future regulations could result
in the imposition of substantial fines against the Company, suspension of
production, alteration of its manufacturing processes or cessation of
operations. There can be no assurance that the Company will not be required to
incur significant costs to comply with any such laws and regulations in the
future, or that such laws or regulations will not have a material adverse effect
on the Company's business, financial condition and results of operations. Any
failure by the Company to control the use, disposal, removal or storage of, or
to adequately restrict the discharge of, or assist in the cleanup of, hazardous
chemicals or hazardous, infectious or toxic substances could subject the Company
to significant liabilities, including joint and several liability under certain
statutes. The imposition of such liabilities could have a material adverse
effect on the Company's business, financial condition and results of operations.

UNCERTAINTY OF PROFITABLE CYTOPATHOLOGY MANUFACTURING. The Company has
only recently developed the AcCell Series 2000 and marketing and sales of the
AcCell Series 2000 have only recently begun. The Company is also currently
developing the manufacturing processes for the TracCell 2000. There can be no
assurance that the Company will be able to sell sufficient numbers of systems or
develop volume manufacturing processes that will lead to the cost-effective
manufacture of the AcCell Series 2000 or the TracCell 2000. The Company also
faces the possibility that defects in designs or manufacture of its products
could result in product recall.

DEPENDENCE ON SUPPLIERS. Certain key components and raw materials used in
the manufacturing of the Company's products are currently obtained from single
vendors. Although the Company believes that alternative sources for such
components and raw materials are available, any supply interruption in a
single-sourced component or raw material would have a material adverse effect on
the Company's ability to manufacture products until a new source of supply were
qualified. There can be no assurance that the Company would be successful in
qualifying additional sources on a timely basis, if ever. Failure to do so would
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, an uncorrected impurity or a supplier's
variation in a raw material, either unknown to the Company or incompatible with
the Company's manufacturing process, could have a material adverse effect on the
Company's ability to manufacture certain of its products.

IMPACT OF MEDICARE, MEDICAID AND OTHER THIRD PARTY REIMBURSEMENT. In the
United States, some Pap smear screenings and MIC/ID tests are currently paid for
by the patient directly, and the level of reimbursement by third party payers
that do provide reimbursement varies considerably. Third party payers
(Medicare/Medicaid, private health insurance, health administration authorities
in foreign countries and other organizations) may affect the demand, pricing or
relative attractiveness of the Company's products and services by regulating the
frequency and maximum amount of reimbursement for Pap smear screening and MIC/ID
testing provided by such payers or by not providing any reimbursement at all.

18
<PAGE> 21
Restrictions on reimbursement for Pap smear screening and MIC/ID testing may
limit the price that the Company can charge for its products or reduce the
demand for them. In addition, if the level of reimbursement provided by Medicare
and Medicaid is significantly below the amount laboratories and hospitals charge
patients to perform Pap smear screening and MIC/ID testing, respectively, the
size of the potential market available to the Company may be reduced. There can
be no assurance that the level of reimbursement for Pap smear screening and
MIC/ID testing will achieve, or be maintained at, levels necessary to permit the
Company to generate substantial revenues or be profitable.

In the international market, reimbursement by private third party
medical insurance providers, including governmental insurers and providers,
varies from country to country. In certain countries, the Company's ability to
achieve significant market penetration may depend upon the availability of third
party or governmental reimbursement.

UNCERTAINTY AND POSSIBLE NEGATIVE EFFECTS OF HEALTH CARE REFORM. The
health care industry is undergoing fundamental changes that are the result of
political, economic and regulatory influences. In the United States,
comprehensive programs have been proposed that seek to control the escalation of
health care expenditures within the economy. Reforms that have been, and may be,
considered include controls on health care spending through limitations on the
increase in private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups and other
fundamental changes to the health care delivery system. Health care reform
could, for example, result in a reduction in the recommended frequency of Pap
smear screening or limitations on reimbursement which would likely reduce the
demand for the Company's cytopathology products. Demand for the Company's MIC/ID
products could be similarly affected. The Company anticipates that Congress and
state legislatures will continue to review and assess cost containment measures,
alternative health care delivery systems and methods of payment, and that public
debate of these issues will likely continue. Due to uncertainties regarding the
outcome of health care reform initiatives and their enactment and
implementation, the Company cannot predict what reforms will be proposed or
adopted or the effect that such proposals or their adoption may have on the
Company. There can be no assurance that future health care legislation or other
changes in the administration or interpretation of government health care or
third party reimbursement programs will not have a material adverse effect on
the Company's business, financial condition and results of operations.

INTERNATIONAL SALES AND OPERATIONS RISKS. The Company sells microbiology
products and intends to sell its cytopathology and any future products to
customers both domestically and internationally. International sales and
operations may be limited or disrupted by the imposition of government controls,
export license requirements, political instability, trade restrictions, changes
in tariffs or difficulties in staffing and managing international operations.
Foreign regulatory authorities often establish product standards different from
those in the United States and any inability to obtain foreign regulatory
approvals on a timely basis could have a material adverse effect on the
Company's international business operations. Additionally, the Company's
business, financial condition and results of operations may be adversely
affected by increases in duty rates and difficulties in obtaining required
licenses and permits. There can be no assurance that the Company will be able to
successfully commercialize its products, or any future products, in any foreign
market.

POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the shares of the
Company's Common Stock, like that of the common stock of many other medical
products and high technology companies, has in the past been, and is likely in
the future to continue to be, highly volatile. Factors such as fluctuations in
the Company's operating results, announcements of technological innovations or
new commercial products by the Company or competitors, government regulation,
changes in the current structure of the health care financing and payment

19
<PAGE> 22
systems, developments in or disputes regarding patent or other proprietary
rights, economic and other external factors and general market conditions may
have a significant effect on the market price of the Common Stock. Moreover, the
stock market has from time to time experienced extreme price and volume
fluctuations which have particularly affected the market prices for medical
products and high technology companies and which have often been unrelated to
the operating performance of such companies. These broad market fluctuations, as
well as general economic, political and market conditions, may adversely affect
the market price of the Company's Common Stock. In the past, following periods
of volatility in the market price of a company's common stock, securities class
action litigations have occurred against the issuing company. There can be no
assurance that such litigation will not occur in the future with respect to the
Company. Such litigation could result in substantial costs and 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. Any
adverse determination in such litigation could also subject the Company to
significant liabilities.

LACK OF DIVIDENDS. The Company has never paid cash or other dividends
on its Common Stock and does not anticipate paying any cash dividends on its
Common Stock in the foreseeable future. See "Dividend Policy."

AUTHORIZATION AND POTENTIAL ISSUANCE OF PREFERRED STOCK; DELAWARE
ANTI-TAKEOVER LAW. The Company's Certificate of Incorporation authorizes the
issuance of Preferred Stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
Preferred Stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
the Company's Common Stock. Although the Company does not currently intend to
issue any shares of its Preferred Stock, in the event of issuance, such shares
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. There can be no
assurance that the Company will not, under certain circumstances, issue shares
of its Preferred Stock. Furthermore, the Company may in the future adopt other
measures that may have the effect of delaying, deferring or preventing a change
in control of the Company. Certain of such measures may be adopted without any
further vote or action by the stockholders, although the Company has no present
plans to adopt any such measures. The Company is also afforded the protections
of Section 203 of the Delaware General Corporation Law, which could delay or
prevent a change in control of the Company, impede a merger, consolidation or
other business combination involving the Company or discourage a potential
acquiror from making a tender offer or otherwise attempting to obtain control of
the Company.

SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of Common
Stock in the public market, or the possibility of such sales occurring, could
adversely affect prevailing market prices for the Common Stock or the future
ability of the Company to raise capital through an offering of equity
securities. As of December 12, 1996, the Company has outstanding 21,984,170
shares of Common Stock, warrants to purchase 5,912,605 shares of Common Stock
and options to purchase 1,780,678 shares of Common Stock. Of the outstanding
shares, (i) 940,955 shares are subject to forfeiture if certain specified
earnings per share or stock price thresholds are not met during 1997; (ii)
69,308 shares are subject to forfeiture if the Company is unable through August
1997 to perfect and maintain rights free of liens in certain recently acquired
patents; and (iii) 116,000 shares are subject to forfeiture if certain
milestones under a microbiology product development agreement are not achieved.
As of December 12, 1996, 11,889,251 shares have been sold or are available for
immediate sale in the public market pursuant to effective registration
statements or exemptions from registration under the Securities Act of 1933, as
amended (the "Securities Act"), subject in the case of certain holders to the
limitations applicable to affiliates pursuant to Rule 144 under the Securities
Act. An additional 1,733,875

20
<PAGE> 23

shares of Common Stock that were issued in connection with the Merger will
become available for immediate sale in the public market on June 30, 1997 upon
the expiration of certain restrictions placed on such shares in connection with
the Merger (including 380,649 of such shares currently subject to forfeiture).
The directors, executive officers and certain securityholders of the Company,
who hold in the aggregate 8,242,276 of the remaining outstanding shares have
entered into "lock-up" agreements with Vector Securities International, Inc. and
Tucker Anthony Incorporated, as representatives of the Underwriters (the
"Representatives") in the public offering of Common Stock effective October 3,
1996 (the "Public Offering"). In accordance with such lock-up agreements, an
aggregate of 1,584,004 shares of Common Stock will become available for
immediate sale in the public market commencing 91 days after the date of the
Public Offering, 583,997 shares will become available for immediate sale in the
public market commencing 181 days after the date of the Public Offering and
5,074,275 shares (including 560,306 of such shares currently subject to
forfeiture) will become available for immediate sale in the public market
commencing 271 days after the date of the Public Offering, subject in the case
of certain holders to the limitations applicable to affiliates pursuant to Rule
144, and, with respect to 116,000 shares, release from escrow. The remaining
69,308 shares were issued in August 1996 and are restricted securities under
Rule 144 and may not be sold unless registered or pursuant to an applicable
exemption from registration. Holders of approximately 1,387,500 of the
outstanding warrants have entered into lock-up agreements with the
Representatives restricting the sale of shares underlying such warrants in the
public market for a period of 60 days from the date of the Public Offering.
Holders of an additional 2,595,808 of the outstanding warrants have entered into
lock-up agreements restricting the sale of such warrants and the shares
underlying such warrants for a period of 90 days with respect to 865,270
warrants, 180 days with respect to 865,269 warrants and 270 days with respect to
865,269 warrants. The Company has registered the issuance of 2,190,492 shares of
Common Stock issuable upon the exercise of options currently outstanding or
available to be granted pursuant to the Company's stock option plans. Such
shares are available for immediate sale in the public market upon exercise of
the options, subject in the case of certain holders to the limitations
applicable to affiliates pursuant to Rule 144 and, in the case of 500,000
shares, stockholder approval of an amendment increasing the authorized shares
available under the 1995 Stock Option Plan. Holders of approximately 756,700 of
such options have executed lock-up agreements with the Representatives
restricting the sale of such shares in the public market for a period of 90 days
with respect to 185,567 option shares, 180 days with respect to 185,567 option
shares and 270 days with respect to 385,566 option shares, in each case,
following the date of the Public Offering. The Company has also agreed that it
will not, without the prior written consent of the Representatives, offer, sell
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock for a period of 180 days following the date of the
Public Offering other than pursuant to existing stock option plans or upon the
exercise of outstanding warrants. The Representatives may, in their sole
discretion and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements. The Registration Statement of
which this Prospectus forms a part covers the resale of 9,767,774 shares of
Common Stock (including shares of Common Stock underlying the Stock Options and
Warrants), of which approximately 6,900,000 of such shares (including shares
underlying the Stock Options and Warrants) are subject to the lock-up agreements
described above. Following the expiration of the applicable lock-up periods,
such shares will be available for immediate sale in the public market without
limitation.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Shares of
Common Stock by the Selling Securityholders. If the holders exercise the
Warrants and Stock Options for cash to acquire all the Underlying Shares, the
Company will

21
<PAGE> 24
receive aggregate gross proceeds of approximately $3,850,000 at the respective
current exercise prices which will be used as unallocated working capital.
Certain of the Warrants have cashless exercise features which, if utilized, will
result in no proceeds to the Company upon exercise of such Warrants. The Company
has agreed to pay certain expenses in connection with this Offering, currently
estimated to be approximately $70,000.

<PAGE> 25
PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "ACMI." On December 16, 1996, the last reported sale price of the Common
Stock on the Nasdaq National Market was $3.06 per share. The table below sets
forth, for the periods indicated, the range of high and low sales prices for the
Common Stock on the Nasdaq National Market. At December 16, 1996, the Company
had approximately 286 stockholders of record.

<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1994 Fiscal Year
First Quarter .............................. $ 4.13 $ 2.13
Second Quarter ............................. 3.00 1.75
Third Quarter .............................. 2.75 1.00
Fourth Quarter ............................. 2.63 1.25

1995 FISCAL YEAR
First Quarter .............................. $ 1.75 $ 0.31
Second Quarter ............................. 1.75 0.50
Third Quarter .............................. 1.50 0.81
Fourth Quarter ............................. 1.50 0.75

TRANSITION PERIOD (1)
October 1, 1995 through December 31, 1995 .. $ 1.69 $ 1.00

1996 FISCAL YEAR (1)
First Quarter .............................. $ 6.25 $ 1.06
Second Quarter ............................. 9.38 4.88
Third Quarter .............................. 7.00 4.16
Fourth Quarter (through December 16, 1996) . 5.06 2.63
</TABLE>

- -----------

(1) On December 31, 1995, the Company changed its fiscal year end from
September 30 to December 31.

<PAGE> 26
BUSINESS

AccuMed designs, manufactures and markets diagnostic screening products
for clinical diagnostic laboratories serving the cytopathology and microbiology
markets. The Company's primary focus is on the development of cytopathology
products that support the review and analysis of Pap smears in order to improve
the quality of cell analysis and increase accuracy and productivity in the
laboratory. The Company commenced sales of its initial cytopathology product,
the AcCell Series 2000 automated slide handling and microscopy workstation, at
the end of the first quarter of 1996. The TracCell 2000 is a specimen mapping
workstation, which automatically pre-screens Pap smear slides to identify and
create a computerized map of empty space and certain non-clinically relevant
portions of the specimen to permit a more efficient analysis of the test slide.
The Company has completed clinical trials of the TracCell 2000 and in November
1996 filed a 510(k) Notification with the FDA with respect to the TracCell 2000.
In May 1996, the Company entered into an agreement with Olympus America, a
leading supplier of microscopes to the cytopathology market, pursuant to which
Olympus America has exclusive third party distribution rights to the AcCell
Series 2000 and, if cleared for marketing by the FDA and other applicable
regulatory authorities, the TracCell 2000 in the Olympus Territory.

The Company also develops, manufactures and markets in vitro diagnostic
human clinical microbiology products for the clinical laboratory, veterinary and
pharmaceutical markets. The Company offers the microbiology laboratory a variety
of FDA-cleared products, under the trade name Sensititre, for the MIC/ID testing
of bacteria suspected of causing infections and for measuring the susceptibility
of such bacteria to different types and concentrations of antibiotics. AccuMed's
microbiology products include disposable test kits and a range of automated
instruments. In September 1996, the Company entered into an agreement with CMS,
division of Fisher Scientific Company, a leading distributor of clinical
laboratory products, pursuant to which CMS has been granted exclusive rights to
distribute the Company's Sensititre human clinical microbiology products in the
United States. The Company also markets alamarBlue, a proprietary, non-toxic
indicator reagent that measures cell growth for in vitro testing. The Company is
developing the KB Reader, an automated instrument designed to read the results
of a Kirby-Bauer method susceptibility test. The Company is also developing the
Flourotone 48, a diagnostic microbiology test panel and an automated reading
instrument. There can be no assurance that any such products will be
successfully developed or marketed.

CYTOPATHOLOGY

Cervical Cancer Screening

An estimated 440,000 new cases of cervical cancer are reported annually
worldwide. The American Cancer Society estimates that, in 1996 in the United
States, 15,700 women will be diagnosed with invasive cervical cancer and 4,900
women will die of cervical cancer. However, virtually all cervical cancer cases
can be effectively treated with timely intervention if detected early. The

<PAGE> 27
treatment of cervical cancer after it reaches the invasive stage, however, may
require surgery and chemotherapy or radiation treatments, which are difficult,
expensive and may be unsuccessful. Cervical cancer is preceded by curable
precancerous lesions that progress without symptoms over a period of years until
they become invasive, penetrating the cervical epithelium (cellular covering)
and entering the bloodstream or lymph system. In 1996, an estimated 65,000
American women will be diagnosed with cervical carcinoma in situ, a precancerous
condition. In order to detect precancerous lesions, gynecologists in the United
States typically recommend annual screening examinations for all women over the
age of 18.

The Pap smear is currently the most widely-used screening test for early
detection of cervical cancer and related precancerous conditions. Pap smear
tests are generally performed by an estimated 4,500 clinical laboratories in the
United States, including hospital laboratories, commercial laboratories,
reference laboratories and gynecologists' office laboratories. It is estimated
that in 1996 over 150 million Pap smear specimens will be screened worldwide,
including over 50 million in the United States. According to the American Cancer
Society, widespread and regular use of the Pap smear as a screening test is
believed to have contributed to a greater than 70% decrease in mortality from
cervical cancer in the United States in the past 45 years.

Pap Smear Tests

The conventional Pap smear testing process begins with the collection of a
cervical specimen during a gynecological examination. The physician then
manually smears the specimen onto a microscope slide, which is then submitted to
the clinical laboratory for cytopathological microscopic examination, along with
patient data such as medical history, day in menstrual cycle, family history and
known risk factors. Gathering and collating these patient data, which are
critical to the proper evaluation of a specimen, is a time-consuming and
labor-intensive process at both the physician's office and the laboratory. The
laboratory administrative personnel who gather such data are also responsible
for manually recording the results of the Pap smear tests and ensuring that both
the slide and paperwork provided to the cytotechnologist relate to the same
patient.

At the laboratory, a cytotechnologist, a medical professional with special
training in the examination and interpretation of human cells, conducts an
initial microscopic review of a prepared slide. The cytotechnologist screens
each slide with a microscope to differentiate diseased or abnormal cells from
healthy cells based on numerous physical characteristics, including size, shape
and structural details of the cells and nuclei. Other factors considered are the
texture of the specimen, the structure of cell grouping, background of the smear
and the patient medical data supplied by the referring physician. Typically,
each Pap smear specimen is then classified in accordance with The Bethesda
System for Reporting Cervical/Vaginal Cytologic Diagnoses into one of several
categories ranging from normal (negative) to cancerous. Any specimen classified
as other than negative is generally referred to a senior cytotechnologist and
then a pathologist for further review and final diagnosis. A woman with an
abnormal Pap smear test may have a repeat Pap smear test or undergo costly
colposcopy and biopsy procedures.

Cytotechnologists are regulated under CLIA, which requires cytology
laboratories to perform proficiency testing and quality control by testing
cytotechnologists to assure a minimum competence level. Pap smear screening is
exceedingly complex and tedious work. Cytotechnologists are required by CLIA to
screen 100% of each Pap smear slide, which when done correctly requires six to
eight minutes of microscope viewing per slide. Over 90% of specimens reviewed
are negative. Even non-negative specimens may contain only 20 to 30 abnormal
cells out of a total of as many as 50,000 to 300,000 cells on the slide. As a
result, slide interpretation errors can be caused by fatigue of the
cytotechnologist and the habituation effect of constantly viewing predominantly
negative specimens.

<PAGE> 28
To potentially reduce the effects of fatigue and habituation, CLIA limits to 100
the number of slides that a cytotechnologist is permitted to screen in a day,
and many states and foreign countries have established even lower slide-per-day
limits. Although CLIA permits a cytotechnologist to review up to 100 Pap smear
slides per day, management estimates that, as a practical matter, the manual
review process requiring 100% slide review limits the ability of the
cytotechnologist to reviewing an average of 60 slides per day.

In conducting the conventional Pap smear screening, cytotechnologists are
required to locate and review information from the patient's file, load and
position the slide on the microscope stage, manually move the slide and
continually focus the microscope on as many as 400 fields of view per slide.
They then place a mark on selected abnormal cells on the slide and manually
record the diagnosis. CLIA requires that at least 10% of specimens classified as
negative be rescreened for quality control. Rescreening is accomplished either
by the methods described above or by rescreening instruments. See "-
Competition."

Conventional Pap Smear Test Limitations

The conventional Pap smear screening process has significant limitations,
primarily relating to how individual cytotechnologists and administrative
personnel analyze slides, diagnose, record the results of such analysis,
document the screening process and gather and collate relevant patient data. Any
breakdown in this process could result in slide interpretation errors,
administrative errors and increased potential for litigation/liability risks.

Slide Interpretation Errors. The process of screening and interpreting a Pap
smear test is complex and tedious, and is prone to error due to the difficulty
of properly locating, evaluating and categorizing subtle changes in a very small
number of cells among a vastly larger cell population as well as the fact that
most of the specimens reviewed are classified as negative. In addition,
cytotechnologists are usually encouraged by laboratory economics to review as
many slides as possible within the current CLIA constraint of 100 per day. As a
result, slide interpretation errors can be caused by cytotechnologist fatigue
and the habituation effect of constantly viewing predominantly negative
specimens. A false negative diagnosis may allow the disease to progress to a
later stage of development before being detected, thereby requiring a more
expensive and invasive course of treatment and diminishing the likelihood of
successful treatment. According to the Journal of the American Medical
Association, clinical laboratories generally experience false negative diagnosis
rates of 5% to 30%.

Administrative Errors. Gathering accurate patient data and ensuring that the
data are correctly matched with the patient's slides provide significant
administrative challenges. Laboratories employ full-time administrative
personnel to assemble patient data, enter patient data on a physical report and
collate that data with the corresponding slide. However, the volume of
information that must be processed and organized manually can lead to
mismatching errors which, in turn, may lead to diagnostic errors.

Litigation/Liability Risks. Failure by a laboratory to properly diagnose a Pap
smear specimen can result in significant legal liability. Because there are no
current means to objectively demonstrate what procedures were conducted by the
cytotechnologist or that 100% of the slide was reviewed, suits claiming
negligent misdiagnosis are difficult to defend and may result in unwarranted
liability.

Cytopathology Products

AccuMed's primary focus is on the development and marketing of
cytopathology products that support the review and analysis of cervical Pap
smears, including slide management and mapping and critical data management
functions. The Company's products are designed to automate multiple aspects of
the Pap smear screening process without significantly modifying existing

<PAGE> 29

laboratory practices. The Company's current cytopathology products are the
AcCell Series 2000 workstations. The Company has completed clinical testing of
the TracCell 2000 slide mapping workstation, and in November 1996 filed a 510(k)
Notification with the FDA with respect to the TracCell 2000. The Company is
developing software and hardware for a second generation, fully automated, high
volume, mapping product, the TracCell 2500, to augment its workstation product
offering. The Company is also developing a series of educational and testing
products.

The AcCell Series 2000. The AcCell Series 2000 workstations consist of the
AcCell 2000 and the AcCell 2001. The AcCell 2000 is an interactive
computer-controlled slide handling and precision microscopy workstation that is
supported with comprehensive data management capabilities. The workstation
consists of a high quality precision microscope (supplied by the Company or the
customer), a computer-controlled moveable stage, a bar code reader, a
proprietary slide marking mechanism (the "dotter"), an optional personal
computer for the data management system and a stage-control mouse developed by
the Company. The system operates in a Microsoft Windows(R) environment using the
Company's proprietary software. The AcCell 2001 contains all the features of the
AcCell 2000 in addition to an automated cassette slide loading and unloading
system which handles up to 30 slides per cassette. The AcCell 2001 is designed
to be used in conjunction with a TracCell 2000.

The AcCell Series 2000 can be linked to the gynecologist's office and to
the laboratory's internal information system in order to provide computerized
support, from the time of entering patient information when the specimen is
taken through the time of generating reports at the laboratory and doctor's
office and finally to billing of the patient or payor. After specimen collection
by the gynecologist, the gynecologist's staff, using software provided by the
Company through the laboratory either on a network or on a disk, enters the
patient's relevant medical history into the system and generates a bar code that
is placed on the slide and the hard copy of the work order sent with the slide
to the laboratory. The bar code contains basic patient information such as the
patient's name and date of specimen collection. The slides and patient data,
either in electronic format or hard copy, are then transferred from the
gynecologist to the clinical laboratory for review.

At the laboratory, the slide is assigned by the laboratory administrator
to the cytotechnologist for review. The slide is placed, either manually or
automatically, on the AcCell stage and is read by the bar code reader to ensure
that proper patient data is displayed on the computer monitor for
cytotechnologist review. The slide is then automatically moved under the
microscope, and the microscope is power-focused by the cytotechnologist. The
AcCell Series 2000 automatically moves the stage under the microscope in a
pattern and at a speed selected by the cytotechnologist that the
cytotechnologist can override at any time. As the slide is moved under the
microscope, the cytotechnologist records into the system's memory the exact
coordinates of abnormal cells by clicking a button on the stage-control mouse.
At the conclusion of the review, selected abnormal cells are automatically
marked by the dotter with a small physical dot on the slide so that they may be
relocated easily for further manual review. The AcCell Series 2000 will record a
complete analysis only after 100% of the slide has been scanned or a sufficient
number of abnormal cells have been located to designate the slide as potentially
positive. Typically, review of a single slide takes five to seven minutes using
the AcCell Series 2000.

After completing review of the slide, the cytotechnologist selects the
appropriate diagnosis from a table in the data management system. The data
management system records all aspects of the Pap smear screening and saves the
information for future review. The AcCell Series 2000 generates management
reports, records the exact location of marked cells for a given specimen,
digitally stores relevant information and provides full documentation for

<PAGE> 30
laboratory quality control and regulatory compliance. The Company believes that
by providing a variety of automated features and a comprehensive data management
system, the AcCell Series 2000 has the potential to reduce the risk of human
slide reading and administrative error.

To extend the functionality of the AcCell Series 2000, several system
configuration options are available, and multiple workstations can be networked
together within a laboratory. The MacroVision(TM), a proprietary image
enhancement system, can be attached to the AcCell platform in order to allow a
cytotechnologist to view on a monitor the specimen being reviewed under the
microscope. The Company is currently developing proprietary telepathology
software which, if developed, would enable the AcCell workstation to be operated
remotely using the Company's MacroVision product.

Although the Pap smear test is the largest volume cytology test, the
cytopathology laboratory routinely conducts other tests based on samples from
numerous organs and areas of the body, all of which require precision microscopy
and careful management of data to be effectively implemented. Although the
Company is not currently developing any products for these applications, the
Company believes that its AcCell technology may be adapted for use in connection
with the analysis of these tests in a manner similar to that of Pap smear tests.

The TracCell 2000. The TracCell 2000 is a pre-screening, mapping and slide
handling product designed to identify and create a computerized map of empty
space and certain non-clinically relevant areas on the slide and thereby reduce
the amount of matter on the specimen that must be reviewed by the
cytotechnologist using the AcCell Series 2000. Much of the material contained in
a Pap smear specimen is not clinically relevant to cervical cancer screening. In
addition to human cells, a typical Pap smear slide contains a certain amount of
vacant space, blood, mucus and other non-clinically relevant material.
Currently, the cytotechnologist is required to review all portions of the slide,
including those portions that are not relevant to diagnosis, because there is no
basis upon which to distinguish such material until it is reviewed manually
under the microscope.

The TracCell 2000 is designed to first evaluate whether a sample is
properly stained and has sufficient material to be statistically significant.
The TracCell 2000 then automatically pre-screens the slide to locate and create
a computerized map of empty space and certain non-clinically relevant material.
In tests conducted by the Company, it has been demonstrated that the TracCell
2000 can eliminate from 15% to 50% of the slide area to be reviewed. As a
result, the Company believes that the TracCell 2000 has the potential to reduce
the time needed to evaluate specimens and allow the cytotechnologist to focus on
more thoroughly evaluating potential abnormalities.

The TracCell 2000 is designed to be used before the slide is reviewed
using the AcCell 2001. A single TracCell 2000 is designed to support up to five
AcCell 2001 instruments based on normal laboratory usage. The TracCell 2000
creates a pre-screening pattern for the slide based on the computerized map,
which is used by the AcCell 2001 to automatically move the slide to the relevant
area and automatically focus the microscope during the cytotechnologist's
review. If the cytotechnologist wants to alter the pre-screened sequence, he or
she can override the system for a particular slide. Regardless of whether the
cytotechnologist chooses to override the prescribed sequence, the system is
designed to facilitate and document 100% review of the slide. The TracCell 2000,
if cleared by the FDA or other applicable regulatory authorities for marketing,
will be marketed with software for which the laboratory will pay a software
license fee each time a slide is reviewed. There can be no assurance that the
FDA or other applicable regulatory authorities will clear the TracCell 2000 or
that the TracCell 2000 will be successfully marketed. See "Risk Factors -
Uncertainty of Market Acceptance and Initial Investment in Cytopathology
Products," "- Delayed or Unsuccessful Product Development" and "- Government
Regulation."

<PAGE> 31

The TracCell 2500. The Company is developing a second generation specimen
pre-screening and slide mapping product, the TracCell 2500, to further automate
the mapping process. The TracCell 2500, if successfully developed, will
eliminate not only empty space, debris and other material eliminated by the
TracCell 2000, but will also eliminate certain normal cellular material. The
Company believes, based on preliminary studies it has conducted, that the
technology embodied in the TracCell 2500 may be capable of further reducing the
portion of the specimen required to be reviewed by the cytotechnologist. Further
testing and development and additional resources are necessary to determine
whether a commercially viable TracCell 2500 instrument can be developed.
Development of the TracCell 2500 is subject to all of the risks associated with
the development of new products based on innovative technologies and new
software, including unanticipated technical or other problems and the possible
insufficiency of the funds allocated for the completion of such development,
which could result in a change in the design, delay in the development, or
abandonment of such products. There can be no assurance that the Company will
successfully develop the TracCell 2500, that the TracCell 2500 will be cleared
or approved for marketing by the FDA or other applicable regulatory authorities,
or that the TracCell 2500 will be successfully marketed. See "'Risk Factors -
Uncertainty of Market Acceptance and Initial Investment in Cytopathology
Products," "- Delayed or Unsuccessful Product Development," "- Significant
Capital Requirements; Dependence on Proceeds of the Offering; Possible Need for
Additional Capital" and "- Government Regulation."

Cytopathology Educational and Training Products. The Company has recently
developed the MacroVision feature, a specially modified AcCell product for
on-screen specimen review. This system can also be used by teaching institutions
and laboratories to provide hands-on cytotechnology training through a single
microscope. Cytotechnologists are required by CLIA to attain and maintain
minimum standards of competence, and cytology laboratories are charged with
ensuring that their cytology professionals meet such competency standards
through continuing training and testing. Current training and testing involve
the use of multiple microscopes or specialized microscopes equipped with
multiple eyepieces which are difficult to use. Using the MacroVision feature,
the teacher or trainer can display the specimen being reviewed on one or more
computer monitors. The monitor can be viewed directly by the students or can be
linked with other computers and monitors to provide remote or even off-site
viewing. For testing purposes, AccuMed is also developing a glass slide
Proficiency Testing Station that provides automated scoring of the screener's
locator and identification skills on user defined test slide sets.

In addition, the Company is developing the Relational Cytopathology
Reference Guide (the "Reference Guide"), a library of electronically stored,
digitized cell images. The Reference Guide may be used in training to allow
students to analyze typical and atypical specimens as slides are being reviewed.
In the clinical laboratory, the Reference Guide is being designed to provide a
reference database to assist the cytotechnologist and cytopathologist in Pap
smear analysis. Each of the Company's educational products is being designed to
record and document continuing education activity to assist in compliance with
CLIA requirements.

Interest in Oncometrics

In October 1996, the Company acquired a two-thirds interest in
Oncometrics. Oncometrics was formed in 1995 as a wholly-owned subsidiary of
Xillix to complete the development of an automated instrument designed to be
used in the detection, diagnosis and prognosis of early-stage cancer by
measuring the DNA in cells on microscope slides. Oncometrics is developing a
proprietary high resolution image cytometer that uses a solid state microscope,
a high resolution digital camera, proprietary image analysis software and high
speed computer processors to capture and analyze cell images from a microscope
slide that has been stained using Oncometrics' proprietary staining method.
Prototypes of the

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Oncometrics instrument have been developed that are capable of isolating small
variations in cell nucleus DNA, which assists the cytotechnologist in detecting
lung cancer in an early stage of development. Because the presence of cancer
cells can cause changes in the nuclear DNA of normal cells, in some cases the
Oncometrics instrument can detect cancer even in the absence of cells with
visibly detectable disease.

Oncometrics has demonstrated the feasibility of its technology as it
applies to the detection of early cancer in lung mucus. Oncometrics believes
that its technology may be potentially applied to other types of cancer, such as
cervical cancer.

Oncometrics is currently testing several prototypes of its instrument with
scientists and cancer research institutions. There can be no assurance that
Oncometrics or the Company will successfully develop this instrument for lung or
cervical or other cancer applications or, if developed, that this instrument
will be approved for marketing by the FDA or other applicable regulatory
authorities or that it will be successfully marketed. See "Risk Factors -
Delayed or Unsuccessful Product Development" and "- Government Regulation."

Cytopathology Sales and Marketing

Pap smear screening is performed in approximately 4,500 laboratories in
the United States. The Company is currently marketing the AcCell Series 2000
workstations to the clinical laboratory market, primarily in the United States.
In order to expand its markets, the Company is implementing a dual-track
marketing strategy pursuant to which it intends to enter into distribution
arrangements with major market participants, as well as establish a direct
marketing group to support the marketing activities of its distribution
partners. The Company intends to tailor its marketing strategy by region and
country as appropriate to address significant differences among such markets.

The AcCell Series 2000 is distributed in the Olympus Territory by Olympus
America pursuant to an exclusive agreement entered into in May 1996. The Company
currently has six personnel dedicated to sales, marketing and client services
relating to the Company's cytopathology products.

Olympus America is a leading supplier of precision microscopes to the
cytology market in the United States and throughout the Olympus Territory. The
Olympus Agreement grants to Olympus America exclusive third party distribution
rights to the AcCell Series 2000 and the TracCell 2000, if cleared for marketing
by the FDA and other applicable regulatory authorities, in the Olympus Territory
through May 1999. The AcCell Series 2000 products have been incorporated with
the Olympus microscope and are marketed under and labeled with the Olympus
America and AcCell names. The TracCell 2000, if cleared for marketing by the FDA
and other applicable regulatory authorities, is also expected to be incorporated
with the Olympus microscope and to be similarly marketed and labeled. The
Olympus Agreement permits the Company to conduct direct sales efforts in the
Olympus Territory and direct or indirect sales efforts throughout the world.
Olympus America is required to purchase specified minimum units of the AcCell
Series 2000 in each year of the term, although direct sales by the Company in
the Olympus Territory can be used to satisfy the minimum purchase obligation.
Olympus America has a right of first refusal to distribute in the Olympus
Territory certain additional cytopathology products that may be developed by
AccuMed. The Company's direct sales staff has worked in concert to train the
Olympus America sales team and to support their efforts at industry trade shows
and conventions, and are compensated directly by Olympus America for providing
training and installation support for the distributed products.

MICROBIOLOGY

<PAGE> 33

The Company develops, manufactures and markets in vitro diagnostic tests
for the clinical laboratory, veterinary and pharmaceutical markets. The Company
offers the microbiology laboratory a variety of FDA-cleared products, under the
trade name Sensititre, for identifying bacteria suspected of causing infections
and measuring the susceptibility of such bacteria to different types and
concentrations of antibiotics. In September 1996, the Company entered into an
agreement (the "CMS Agreement") with CMS whereby CMS has been granted exclusive
rights to distribute the Company's Sensititre product line in the United States.

AccuMed's microbiology products include a series of disposable test kits
and a range of automated instruments. The Company also markets alamarBlue, a
proprietary, non-toxic indicator reagent that measures cell growth for in vitro
testing. The Company is conducting research and development of the KB Reader, an
automated instrument designed to read the results of a Kirby-Bauer method
susceptibility test. The Company is also conducting research and development of
the FluoreTone 48, a diagnostic microbiology test panel and an automated reading
instrument. There can be no assurance that any such products will be
successfully developed, that such products will be cleared or approved for
marketing by the FDA or other applicable regulatory authorities, or that such
products will be successfully marketed. See "Risk Factors - Delayed or
Unsuccessful Product Development" and "- Government Regulation."

Background

MIC/ID testing by hospitals and laboratories assists physicians, other
health care professionals and veterinarians in determining the most effective
course of treatment for bacterial infections. MIC/ID testing technology measures
the ability of organisms or cells to grow in different combinations and
concentrations of an antibiotic or other introduced substance. By measuring
growth, MIC/ID testing products can, for example, provide physicians and
veterinarians guidance in determining which antibiotics are most effective in
treating a given case of bacterial infection.

Current MIC/ID testing technology consists of (i) a variety of
methodologies employing a plastic panel with a matrix of testing microwells and
(ii) the Kirby-Bauer disk diffusion method. Panel testing technology involves
the placement of a solution known as a "reagent" containing selected antibiotics
in a matrix of microwells and adding to each microwell a broth which contains a
sample of the patient's blood or other fluid in which bacteria may be present.
After an incubation period, the effectiveness of the antibiotic can be
determined by observing chemical changes to the solution. By constructing a
matrix of testing wells with specific antibiotics in increasing concentrations,
it is possible to determine not only the effectiveness of a given antibiotic but
also the minimum required dosage. Kirby-Bauer testing involves placing paper
disks impregnated with a selected antibiotic in a culture containing bacterium
and observing, after the incubation period, whether the bacterium continues to
grow in proximity to the disk. The results of a Kirby-Bauer test determine
whether a given antibiotic is effective against the bacterium, but, unlike panel
testing, offer no information as to the minimum dosage required.

Microbiology Products

Sensititre. Sensititre, which was acquired by the Company in 1995, first began
offering MIC/ID testing products over 15 years ago. Sensititre was one of the
first companies to introduce a range of systems for MIC/ID testing utilizing
microwell panel technology. The Sensititre products incorporate a range of
accessories including substrate strips, dosing heads, broths, and test panels
for both susceptibility and identification applications. The Sensititre panels
have significant advantages over competitors, including a two-year shelf life
and the ability to be stored at room temperature. The Sensititre product line
also includes four automated instruments, each of which uses compatible
technologies,

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and allows customers to upgrade without replacing the entire system. The
AutoReader(TM) is a microprocessor-based fluorimeter designed to automatically
and rapidly measure intensity levels of fluorescence from MIC/ID testing panels.
ARIS(TM) is a fully automated panel handling, incubating and reading instrument
that offers robotic processing of testing plates. SensiTouch(TM) is a device
that guides the user through the manual reading of Sensititre susceptibility
test panels and transmits the data to a host computer. The AutoInoculator(TM) is
a rapid microprocessor-controlled dispensing instrument designed to
automatically deliver the proper amount of the patient's specimen to a
Sensititre test panel. The Company also offers the Sensititre Automated
Microbiology System, which is a sophisticated data management system that
provides a wide range of data tracking and reporting capabilities.

alamarBlue. The Company manufactures and markets alamarBlue, a proprietary,
non-toxic, water-soluble indicator reagent that measures cell growth for in
vitro testing. alamarBlue has applications in biological research, bacteria
testing, toxicity testing for consumer products, and pharmaceutical and
therapeutic research. For example, companies that produce consumer products such
as soaps, shampoos, lotions or cosmetics can conduct in vitro cell culture
toxicity tests in lieu of live animal testing. The Company has marketed a series
of MIC/ID panel tests using alamarBlue under the trade name Alamar. The Company
is currently seeking to enter into an agreement pursuant to which a third party
would manufacture the Company's Alamar microbiology products, other than
alamarBlue, although there can be no assurance that such an agreement can be
reached. If such an agreement is not reached, the Company intends to cease
manufacturing such products.

In October 1995, the Company entered into the Becton Agreement pursuant to
which Becton has rights in and to the Company's alamarBlue technology and
related trade secrets, know-how and patent rights (the "Licensed Technology")
for the production and sale of disposable anti-microbial testing panels. The
worldwide license is exclusive to Becton for certain applications in the
microbiology market; however, the license permits the Company to continue to
exploit the Licensed Technology, subject to certain restrictions on the
Company's ability to sublicense the Licensed Technology or to engage in
significant transactions with substantial competitors of Becton. Becton is
obligated to pay royalties on net sales of any product which encompasses or
incorporates the Licensed Technology for five years following the first
commercial use of the Licensed Technology, subject to certain conditions and
restrictions, and Becton has paid the Company a total of $3.5 million, which
includes $500,000 creditable against future royalties. To the Company's
knowledge, as of the date of this Prospectus, Becton has not produced or sold
any products incorporating the Licensed Technology.

KB Reader. In February 1996, the Company entered into a license and
distribution agreement with Biokit, S.A., Barcelona, Spain, to develop a low
cost KB Reader designed to read automatically the results of a Kirby-Bauer
method susceptibility test. Currently, most laboratories interpret the results
of a disk diffusion test visually and manually enter the test result. The
Company has licensed from Biokit, S.A. certain software algorithms that are
intended to be integrated into the hardware being developed by the Company.
The Company has developed a prototype KB Reader and expects to begin clinical
trials some time during 1997. The Company has an exclusive worldwide license to
manufacture and market the KB Reader, except that Biokit, S.A. has exclusive
rights to market the KB Reader in Italy and may also market the KB Reader in any
country in which the Company does not at such time directly or indirectly market
the KB Reader. Development of the KB Reader is subject to all of the risks
associated with the development of new products based on innovative technologies
and new software, including unanticipated technical or other problems and the
possible insufficiency of the funds allocated for the completion of such
development, which could result in a change in the design, delay in the
development, or abandonment of such products. Consequently, there can be no
assurance that the KB Reader will be successfully developed, that the KB Reader
will be cleared for

<PAGE> 35

marketing by the FDA or other applicable regulatory authorities or that the KB
Reader will be successfully marketed. See "Risk Factors - Delayed or
Unsuccessful Product Development," "- Significant Capital Requirements;
Possible Need for Additional Capital" and "- Government Regulation."

FluoreTone 48

The Company is conducting research and development of the FluoreTone 48, a
diagnostic microbiology test panel and an automated reading instrument.
Development of the FluoreTone 48 is subject to all of the risks associated with
the development of new products based on innovative technologies and new
software, including unanticipated technical or other problems and the possible
insufficiency of the funds allocated for the completion of such development,
which could result in a change in the design, delay in the development, or
abandonment of such products. Consequently, there can be no assurance that the
FluoreTone 48 will be successfully developed, that the FluoreTone 48 will be
cleared or approved for marketing by the FDA or other applicable regulatory
authorities or that the FluoreTone 48 will be successfully marketed. See "Risk
Factors - Delayed or Unsuccessful Product Development," "- Significant Capital
Requirements; Possible Need for Additional Capital" and "- Government
Regulation."

Microbiology Sales and Marketing

The Company's Sensititre products are marketed in the pharmaceutical,
veterinary laboratory and clinical/hospital reference laboratory markets. The
Company's Sensititre human clinical microbiology products will be distributed in
the United States pursuant to the CMS Agreement entered into with CMS in
September 1996. The CMS Agreement grants to CMS exclusive rights to distribute
the Company's Sensititre human clinical microbiology products in the United
States. The CMS Agreement contains no minimum purchase obligation. The Company
is required to provide training and technical support to the sales personnel and
customers of CMS. The CMS Agreement expires on December 31, 2000; however, it
may be terminated without cause by either party upon six months' prior written
notice. The Company markets alamarBlue directly to industrial and research
customers, including the biotechnology industry. Prior to execution of the CMS
Agreement, the Company marketed its microbiology products in the United States
through a seven-person direct sales staff and in certain foreign countries
through exclusive diagnostic manufacturers and distributors. Most sales to the
veterinary market are through direct sales. alamarBlue is being marketed by the
Company, primarily to industrial and research customers, directly through
advertising and trade shows.

COMPETITION

The Company believes that the principal competitive factors in the market
for both cytopathology and microbiology products include functionality and
product features, effectiveness of the product in standard medical practice, the
cost of the product to the laboratory and the demonstrated cost/benefit
justification for purchasing new products. The Company believes that it is also
important to provide products that enhance and assist standard practice rather
than products that require completely new practices.

The Company's AcCell Series 2000 currently faces and the TracCell 2000, if
successfully developed and cleared for marketing by the FDA and other applicable
regulatory authorities, will face competition from companies that have developed
or may be developing competing systems. The Company believes that many of the
Company's existing and potential competitors possess substantially greater
financial, marketing, sales, distribution and technical resources than the
Company, and more experience in research and development, clinical trials,
regulatory matters, manufacturing and marketing. The Company is aware of two

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<PAGE> 36
companies that currently market imaging systems to re-examine or rescreen
conventional Pap smear specimens previously diagnosed as negative as well as two
companies that are developing devices for the preparation and analysis of Pap
smear slides. The Company is aware that at least one such company has submitted
an imaging system for use as a primary means of screening Pap smear slides under
a PMA application. Another company markets a manual rescreening test claimed to
detect the presence of cervical cancer using reagents to detect certain RNA/DNA
hybrid cells. If any company currently marketing rescreening products receives
FDA clearance or approval for use of its product as a primary screening system
to replace or work in conjunction with conventional Pap smear screening or if
automated analysis systems are developed and receive FDA clearance or approval,
the use of conventional Pap smear screening could be substantially affected and
the Company's business, financial condition and results of operations would be
materially adversely affected.

The market for the Company's current and, if developed, proposed
microbiology products is highly competitive, and the Company competes with
numerous well-established foreign and domestic companies, many of which possess
substantially greater financial, technical, marketing, personnel and other
resources than the Company and have established reputations for success in the
development, sale and service of manual and/or automated in vitro diagnostic
testing products. A significant portion of the MIC/ID testing market in the
United States is controlled by MicroScan and bioMerieux Vitek. These companies
market a range of medically related products and have resources far greater than
those of the Company. Difco has been issued a U.S. patent covering technology
related to the alamarBlue technology covered in one of the Company's patents.
There can be no assurance that Difco, which has substantially greater resources
and experience in research, development, manufacturing and marketing than the
Company, will not use its patented technology to develop products that will
compete directly with the Company's microbiology products.

The medical diagnostics industry is characterized by rapid product
development and technological advances. The Company expects its competitors to
continue to attempt to improve the design and performance of their current
products and to introduce new systems and processes with improved
price/performance characteristics. There can be no assurance that other
technologies or products that are functionally similar to those of the Company
are not currently available or under development, or that other companies with
expertise and resources that would encourage them to attempt to develop and
market competitive products will not develop new products that compete directly
with the Company's products. The Company's products could be rendered obsolete
or uneconomical by the introduction and market acceptance of competing products,
technological advances of the Company's current or potential competitors, or by
other approaches. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competition,
including the development and commercialization of new products and technology,
will not have a material adverse effect on the Company's business, financial
condition and results of operations.

MANUFACTURING

The Company assembles and tests its cytopathology products at its Chicago
manufacturing facility. The Company's microbiology products are manufactured at
the Company's GMP-approved manufacturing facility in England. The Company is
currently seeking to enter into an agreement pursuant to which a third party
would manufacture the Company's Alamar microbiology products, other than -
alamarBlue. However, there can be no assurance that such an agreement can be
reached. If such an agreement is not reached, the Company intends to cease
manufacturing such products. The Company believes that it has sufficient
manufacturing capacity to meet production requirements for the foreseeable
future. Product components are purchased or are custom fabricated by third party
vendors. The Company has purchased and modified the stage-control mouse for use

<PAGE> 37

with the AcCell Series 2000 but is currently developing a proprietary
stage-control mouse which it expects to manufacture along with the AcCell
Series 2000. The Company has only recently begun to scale up its manufacturing
capacity for the AcCell Series 2000. The Company is currently developing the
manufacturing processes for the TracCell 2000. There can be no assurance that
the Company will be able to sell sufficient numbers of systems or develop volume
manufacturing processes that will lead to the cost-effective manufacture of the
AcCell Series 2000 or the TracCell 2000. See "Risk Factors - Uncertainty of
Profitable Cytopathology Manufacturing."

Certain key components and raw materials used in the manufacturing of the
Company's products are currently provided by single-source vendors. Although the
Company believes that alternative sources for such components and raw materials
are available, any supply interruption in a single-sourced component or raw
material would have a material adverse effect on the Company's ability to
manufacture products until a new source of supply were qualified. There can be
no assurance that the Company would be successful in qualifying additional
sources on a timely basis, if ever, which would have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, an uncorrected impurity or a supplier's variation in a raw material,
either unknown to the Company or incompatible with the Company's manufacturing
process, could have a material adverse effect on the Company's ability to
manufacture products. See "Risk Factors - Dependence on Suppliers."

RESEARCH AND DEVELOPMENT

The Company's research and development efforts are focused on introducing
new products as well as enhancement of its existing products. The Company
believes that a commitment to research and development is critical to its
ability to achieve its strategic plan. During the fiscal years ended September
30, 1994 and 1995, the three month transition period ended December 31, 1995
(during which the Company had suspended research and development activities
prior to consummation of the Merger) and the nine months ended September 30,
1996, the amounts recorded for research and development were $580,000, $387,000,
$4.0 million and $4.8 million, respectively. Of the amounts recorded for the
three month transition period ended December 31, 1995 and the nine months ended
September 30, 1996, $4.0 million and $5.3 million, respectively, reflected
certain significant non-cash charges against operations representing the
write-off of in-process research and development acquired in connection with the
Merger.

INTELLECTUAL PROPERTY

The Company relies on a combination of patents, licensing arrangements,
trade names, trademarks, trade secrets, know-how and proprietary technology and
policies and procedures for maintaining the secrecy of trade secrets, know-how
and proprietary technology in order to secure and protect its intellectual
property rights. The Company has been issued a Great Britain patent and has
filed or been assigned ten U.S. patent applications (one of which has been
abandoned) and eight foreign patent applications covering certain aspects of its
cytopathology products. The Company has been issued two U.S. patents and has
filed or been assigned two U.S. patent applications, one Japanese patent
application and one Canadian patent application related to its microbiology
products. Additional U.S. and foreign patent applications covering the Company's
cytopathology products are being prepared. The Company holds certain licenses on
several U.S. and foreign patents and other intellectual property rights
regarding aspects of the technology embodied in the Sensititre product line and
is the licensee of certain automated cell analysis technology. The Company holds
a U.S. patent and has received a notice of intent to grant a related European
patent with respect to a portion of the alamarBlue microbiology technology.

<PAGE> 38

None of the Company's pending patent applications have been granted as of
the date of this Prospectus, and there can be no assurance that any such patent
application will result in an issued patent. The Company may, in the future,
file additional patent applications; however, there can be no assurance that the
Company will be successful in obtaining approval of any future patent
applications it files with respect to its technologies. In addition, since
patent applications in the United States are maintained in secrecy until patents
issue, and since publications of discoveries in the scientific or patent
literature tend to lag behind actual discoveries by several months, the Company
cannot be certain that the Company or other relevant patent application filer
was the first creator of inventions covered by pending patent applications or
that such persons were the first to file patent applications for such
inventions.

There also can be no assurance that any patents, patent applications and
patent licenses will adequately cover the Company's technologies. Protections
relating to portions of such technologies may be challenged or circumvented by
competitors, and other portions may be in the public domain or protectable only
under state trade secret laws.

There can be no assurance that the Company's patents, patent applications,
patent licenses, trademarks and trade secret protections will adequately protect
the Company from potential infringement or misappropriation by third parties.
Historically, the Company has been required to undertake costly litigation to
enforce its intellectual property rights. Although the Company is not currently
aware of any potential infringement, future litigation by the Company may be
necessary to enforce its patent rights, as well as to protect its trade secrets,
know-how and proprietary technology, or to determine the scope and validity of
the proprietary rights of others. Any such litigation could result in
substantial cost to and diversion of effort by the Company.

<PAGE> 39

licenses from third parties and could prevent the Company from manufacturing,
selling or using certain of its products or technologies, any of which could
have a material adverse effect on the Company.

GOVERNMENT REGULATION

The Company's products and manufacturing processes are regulated by state
and federal authorities, including the FDA and comparable authorities in certain
states and other countries. Failure to comply with the FD&C Act and any
applicable regulatory requirements can result in, among other things, civil and
criminal fines, product recalls, detentions, seizures, injunctions and criminal
prosecutions.

United States regulatory requirements promulgated under the FD&C Act
provide that many of the Company's products may not be shipped in interstate
commerce without prior authorization from the FDA. Such authorization is based
on a review by the FDA of the product's safety and effectiveness for its
intended uses. Medical devices may be authorized by the FDA for marketing in the
United States either pursuant to a 510(k) Notification or a PMA. The process of
obtaining clearances or approvals from the FDA and other applicable regulatory
authorities can be expensive, uncertain and time consuming, frequently requiring
several years from the commencement of clinical trials or submission of data to
the receipt of regulatory approval.

A 510(k) Notification, among other things, requires an applicant to show
that its products are "substantially equivalent" in terms of safety and
effectiveness to existing products that are currently permitted to be marketed.
An applicant is permitted to begin marketing a product as to which it has
submitted a 510(k) Notification at such time as the FDA issues a written finding
of substantial equivalence. Requests for additional information may delay the
market introduction of certain of an applicant's products and, in practice,
initial clearance of products often takes substantially longer than the FDA
pre-market notification review period of 90 days. The Company has completed
clinical trials of the TracCell 2000 and in November 1996 filed a 510(k)
Notification with the FDA with respect to the TracCell 2000.

A PMA consists of the submission to the FDA of information sufficient to
establish independently that a device is safe and effective for its intended
use. A PMA must be supported by extensive data, including preclinical and
clinical trial data, as well as extensive literature to prove the safety and
effectiveness of the device. By statute, the FDA is required to respond to a PMA
within 180 days from the date of its submission; however, the approval process
usually takes substantially longer, often as long as several years. During the
review period, the FDA may conduct extensive reviews of the Company's
facilities, deliver multiple requests for additional information and
clarifications and convene advisory panels to assist in its determination.

Under current interpretation of FDA regulations, marketing of the AcCell
Series 2000 in the United States does not require FDA clearance or approval.
Marketing of the TracCell 2000 in the United States, however, does require
pre-marketing clearance or approval by the FDA. The Company has completed
clinical trials of the TracCell 2000 and in November 1996 filed a 510(k)
Notification with the FDA with respect to the TracCell 2000. There can be no
assurance that FDA will clear the TracCell 2000 for marketing in the United
States on a timely basis, if ever.

<PAGE> 40
Under current interpretation of FDA regulations, marketing of the
Company's MIC/ID microbiology products in the United States requires FDA
clearance through the 510(k) Notification process. With respect to the Company's
MIC/ID testing products, 510(k) Notifications must be filed and cleared with
respect to each antibiotic used. The Company may submit applications to add
individual antibiotics to those previously cleared as the market warrants.
However, there can be no assurance that clearances will continue to be obtained
or that obtained clearances will not be withdrawn.

At the current time, alamarBlue is marketed for use in the industrial and
research markets and therefore does not require FDA clearance or approval. The
FDA could change its interpretation of the regulations and require a 510(k)
Notification or PMA submission which, if pursued, may not be cleared or approved
or, if approved, may contain certain significant limitations on the intended
uses for which the product is marketed.

Marketing in the United States of the Company's products under development
may require additional FDA clearances or approvals. For example, the Company's
proposed automated pre-screening, specimen mapping workstation, the TracCell
2500, if developed, may not be sold in the United States unless and until the
Company has obtained FDA clearance or approval, either through a 510(k)
Notification or a PMA. In addition, marketing of the Company's proposed KB
Reader and other proposed microbiology products, if developed, is likely to
require FDA clearance through 510(k) Notifications. The Company is currently
conducting research and development with respect to such products and has not
yet begun clinical trials. There can be no assurance that any such products will
be developed or, if developed, that such products will be cleared or approved
for marketing by the FDA or other applicable regulatory authorities or, if such
clearance or approval is received, that such clearance or approval will not be
withdrawn. See "- Cytopathology - Cytopathology Products" and "- Microbiology
Microbiology Products."

Sales of medical devices outside of the United States are subject to
foreign regulatory requirements that vary from country to country. The time
required to obtain approval by a foreign country may be longer or shorter than
that required for FDA clearance or approval, and the requirements may differ.
Export sales of certain devices that have not received FDA marketing clearance
or approval generally are subject to both FDA export permit requirements and, in
some cases, general U.S. export regulations. In order to obtain a FDA export
permit, the Company may be required to provide the FDA with documentation from
the medical device regulatory authority of the country in which the purchaser is
located. No assurance can be given that foreign regulatory approvals will be
granted on a timely basis, if ever, or that the Company will not be required to
incur significant costs in obtaining or maintaining its foreign regulatory
approvals.

The Company intends to seek ISO 9001 qualification, an international
manufacturing quality standard, and is seeking the "CE" mark for the AcCell
Series 2000 and proposed products. The CE mark is recognized by countries that
are members of the European Union and the European Free Trade Association and,
effective in 1998, will be required to be affixed to all medical devices sold in
the European Union. The AcCell Series 2000 is expected to be certified as
complying with CE mark requirements upon completion of the CE mark qualification
process which is underway; however, no assurance can be given that the Company
will obtain the CE mark for the AcCell Series 2000 or any proposed products or
satisfy ISO 9001 standards, or that any product that the Company may develop or
commercialize will obtain the CE mark or will obtain any other required
regulatory clearance or approval on a timely basis, if ever.

The Company is subject to certain FDA registration, record-keeping and
reporting requirements, and certain of the Company's manufacturing facilities
are obligated to follow FDA GMP regulations and are subject to periodic FDA

<PAGE> 41

inspection. Any failure to comply with GMP regulations or any other FDA or other
government regulations could have a material adverse effect on the Company's
business, financial condition and results of operations.

In July 1996, the Company received from the FDA a warning letter regarding
certain procedures used in connection with the manufacture of its microbiology
products at the Sensititre facility in the United Kingdom. In such letter, the
FDA stated that the Company manufactured sterile products at such facility and
was not in compliance with GMP regulations relating to the manufacture of
sterile products. On August 7, 1996, the Company submitted a written response to
the FDA asserting that the products manufactured at the Sensititre facility are
not sterile. The FDA has acknowledged in writing that the products are not
represented as sterile and accepted the Company's GMP responses as adequate. The
FDA has indicated that it will verify the Company's implementation during its
next inspection and that import of the Company's devices will be permitted to
continue.

Federal, state and foreign regulations regarding the manufacture and sale
of healthcare products and diagnostic devices are subject to future change. The
Company cannot predict what material impact, if any, such changes might have on
its business. Future changes in regulations or enforcement policies could impose
more stringent requirements on the Company, compliance with which could
adversely affect the Company's business. Such changes may relax certain
requirements, which could prove beneficial to the Company's competitors and thus
adversely affect the Company's business. In addition, regulations of the FDA,
including GMP regulations, and state and foreign laws and regulations, depend
heavily on administrative interpretations, and there can be no assurance that
future interpretations made by the FDA, or other regulatory authorities, with
possible retroactive effect, will not adversely affect the Company. See "Risk
Factors Technological Change and Competition."

In addition to the regulations directly pertaining to the Company and its
products, many of the Company's existing and potential customers are subject to
extensive regulation and governmental oversight. Regulatory changes in the
healthcare industry that adversely affect the business of the Company's
customers could have a material adverse effect on the Company's business,
financial condition and results of operations.

EMPLOYEES

As of December 11, 1996, the Company had a total of 102 employees, of
whom two are part-time employees, in the following departments: 27 in general
and administrative, 18 in sales and marketing, 37 in manufacturing and 20 in
research and development. The Company considers its relations with its employees
to be good.

FACILITIES

The Company currently leases (i) a 5,088 square foot facility at 900 North
Franklin Street, Chicago, Illinois, pursuant to a lease expiring September 30,
2004, and (ii) an additional 3,110 square foot facility located at 920 North
Franklin Street, Chicago, Illinois, pursuant to a lease expiring September 30,
2004, each subject to renewal by the Company. The Company's executive offices
were relocated to the 900 North Franklin Street facility in July 1996.

<PAGE> 42
Collectively, the Company's Chicago, Illinois facilities also house its research
and development facilities, an engineering laboratory and cytopathology product
assembly facilities.

The Company also leases a 10,980 square foot facility in Westlake, Ohio,
pursuant to a five year lease expiring April 1, 2000 which is renewable by the
Company. Sensititre leases an 18,000 square foot microbiology manufacturing
facility in East Grinstead, West Sussex, England, pursuant to a lease expiring
in 2009.

The Company believes that its facilities are adequate for its proposed
needs through 1996 and that additional suitable space is likely to be available,
if required.

LEGAL PROCEEDINGS

The Company is not currently a party to any material litigation and is not
aware of any pending or threatened litigation against the Company that could
have a material adverse effect upon the Company's business, operating results or
financial condition.

<PAGE> 43

SELLING SECURITYHOLDERS

The following table sets forth information as of December 12, 1996 (the
"Reference Date") with respect to the beneficial ownership of shares of Common
Stock by each of the Selling Securityholders. At the Reference Date there were
21,984,170 shares of Common Stock outstanding.

<TABLE>
<CAPTION>
SHARES TO SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED BE SOLD IN OWNED
PRIOR TO OFFERING(1) OFFERING AFTER OFFERING(1)
NAME AND ADDRESS ------------------------- -------- --------------------
OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Orbis Pension Trustees Ltd. 1,000,000 4.5 1,000,000 -0- 4.2

Peter Gombrich(2)(3) 3,556,950 16.1 716,586 2,635,914 11.0

E&M RP Trust(3) 560,000 2.5 560,000 -0- -0-

Michael Falk(3)(4) 2,796,931 1.8 934,444 1,862,487 7.11

Commonwealth
Associates(3)(5) 1,889,300 8.0 537,222 1,352,078 5.3

Clarion Capital Corp.(3) 320,000 1.5 320,000 -0- -0-

Philip L. Thomas(3)(7) 461,313 461,313 -0- -0-

The P.L. Thomas Group,
Inc.(3)(7) 461,313 2.1 461,313 -0- -0-

Vitali Maritime Corp.
c/o Sofianis Papanastion 294,000 1.3 294,000 -0- -0-

George B. and Anna M.
Pocisk 277,337 1.6 261,000 16,337 *

Norman J. Pressman(3)(8) 75,000 * 75,000 -0- -0-

Cantrade Privatbank AG 240,000 1.1 240,000 -0- -0-

Gallagher Investment
Corp.(3) 240,000 1.1 240,000 -0- -0-

Societe de Bourse Ferri
Ref France Finance IV 230,000 1.0 230,000 -0- -0-

American Equities
Overseas, Inc.(3)(9) 206,275 1.0 162,500 43,775 *

Fred Kassner(3) 160,000 * 160,000 -0- -0-

Banque Pour L'Industrie
Francaise 160,000 * 160,000 -0- -0-

Leonard R. Prange(3)(10) 25,000 -0- 150,000 -0- -0-

Mark L. Santor(11) 110,000 * 35,000 75,000 *
</TABLE>

<PAGE> 44

<TABLE>
<CAPTION>
SHARES TO SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED BE SOLD IN OWNED
PRIOR TO OFFERING(1) OFFERING AFTER OFFERING(1)
NAME AND ADDRESS ------------------------- -------- --------------------
OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Republic New York
Securities Corp. f/b/o
Samisa Investment Corp.
c/o American Equities
Overseas 141,000 * 141,000 -0- -0-

Emerge Capital 115,000 * 115,000 -0- -0-

Vincent LaBarbara(3)(6) 110,696 * 100,000 10,696 *

Robert Priddy(3)(12) 900,000 3.8 900,000 -0- -0-

Gwenda Gombrich, as
Custodian for Megan
Klein(3)(13) 3,556,950 16.1 716,586 2,840,364 11.8

Gwenda Gombrich, as
Custodian for Lucas
Klein(3)(13) 3,556,950 16.1 716,586 2,840,364 11.8

Ann F. Gallagher(3) 80,000 * 80,000 -0- -0-

Christopher C. Gallagher(3) 80,000 * 80,000 -0- -0-

Daniel R. Lee(3) 80,000 * 80,000 -0- -0-

Jo-Bar Enterprises
LLC c/o Joel A. Stone(3) 80,000 * 80,000 -0- -0-

J.A. Cardwell(3) 80,000 * 80,000 -0- -0-

Richard Friedman(3) 80,000 * 80,000 -0- -0-

Axel Investment Corporation 75,000 * 75,000 -0- -0-

Michael Burke(3)(14) 85,797 * 145,797 -0- -0-

G&G Diagnostics LP I(3) 75,000 * 75,000 -0- -0-

Leonard M. Schiller(3)(15) 172,159 * 65,000 132,159 *

Hultquist Capital LLC(3)(16) 56,000 * 56,000 -0- -0-

Hans Bodmer 50,000 * 50,000 -0- -0-

Newburger & Berman
f/b/o Montaigne Fund 50,000 * 50,000 -0- -0-

Republic New York Securities
Corp. f/b/o Green Acres
Enterprises Inc. 50,000 * 50,000 -0- -0-

Courcoux Bouvet 50,000 * 50,000 -0- -0-

John Abeles(3)(17) 326,657 1.5 81,020 245,637 1.0
</TABLE>

<PAGE> 45

Northlea Partners Ltd.(3)(18) 285,637 1.3 40,000 245,637 1.0

Hamilton T. Bailey(3) 40,000 * 40,000 -0- -0-

Alan Hammerman(3) 40,000 * 40,000 -0- -0-

James A. Cardwell, Jr.(3) 40,000 * 40,000 -0- -0-

Charles Potter(3) 40,000 * 40,000 -0- -0-

Sheila Y. Schiller(3) 40,000 * 40,000 -0- -0-

Suzanne Schiller(3) 40,000 * 40,000 -0- -0-

William R. and Barbara
J. Schoen(3) 40,000 * 40,000 -0- -0-

John Luck(3) 40,000 * 40,000 -0- -0-

Frederick J. Oswald(3) 40,000 * 40,000 -0- -0-

Richard A. Voell(3) 40,000 * 40,000 -0- -0-

Wertheimer Partnership(3) 40,000 * 40,000 -0- -0-

Leslie Hannafey(3)(6) 37,929 * 37,929 -0- -0-

Jack Halperin(3)(19) 80,388 * 35,800 44,588 *

Steven Warner(3)(6) 37,929 * 37,929 -0- -0-

Joseph D. Ferrone, M.D.(3) 32,000 * 32,000 -0- -0-

Republic New York Securities
Corp.
f/b/o J. Watling
c/o American Equities
Overseas 30,200 * 30,200 -0- -0-

Republic New York
Securities Corp. f/b/o
Kelebe Investment Corp.
c/o American Equities
Overseas 30,200 * 30,200 -0- -0-

Kenneth D. Miller(3)(20) 168,004 * 25,000 143,004 *

Paul Lavallee(3)(21) 25,000 * 25,000 -0- -0-

Nagrasim S.p.a. 25,000 * 25,000 -0- -0-

Clariden Bank 25,000 * 25,000 -0- -0-
</TABLE>

<PAGE> 46

David Morley 20,000 * 20,000 -0- -0-

Republic New York
Securities Corp.
f/b/o Mizebourne
Investment Corp. 20,000 * 20,000 -0- -0-

Harold S. Blue(3)(23) 20,000 * 20,000 -0- -0-

Broadmark Capital
Corporation(3)(6)(24) 15,600 * 15,600 -0- -0-

Republic New York 15,200 * 15,200 -0- -0-

Donald Earhart(3)(25) 40,762 * 12,895 27,867 *

Keith Rosenbloom(3)(6) 12,542 * 12,542 -0- -0-

Paul Goldenheim(3) 10,000 * 10,000 -0- -0-

Cathy Ross(3)(6) 20,000 * 10,000 10,000 *

Michael Volpe(3)(6) 10,000 * 10,000 -0- -0-

Stephen LaBarbara(3)(6) 10,000 * 10,000 -0- -0-

Murray Segal(3)(6) 10,298 * 10,000 298 *

Pluvalca 10,000 * 10,000 -0- -0-

Joel Kanter(3)(26) 9,215 * 9,215 -0- -0-

Henry Wilson (3)(27) 8,550 * 8,550 -0- -0-

Joseph Schocken(3)(28) 7,895 * 7,895 -0- -0-

Edward Vanacore(3)(6) 7,000 * 7,000 -0- -0-

Alan Ebler(3)(29) 6,000 * 6,000 -0- -0-

Sharon Gignac(3)(29) 6,000 * 6,000 -0- -0-

Peggy Howard(3)(29) 6,000 * 6,000 -0- -0-

Peter Korreng(3)(29) 6,000 * 6,000 -0- -0-

David Panvelle(3)(29) 6,000 * 6,000 -0- -0-

Darlla Pritchard(3)(29) 6,000 * 6,000 -0- -0-

Al Mirman(6) 5,000 * 5,000 -0- -0-

Richard Galterio(6) 5,000 * 5,000 -0- -0-
</TABLE>

<PAGE> 47

Russell Bailenson(3)(6) 1,000 * 1,000 -0- -0-
</TABLE>

- -----------------------
* Represents less than 1%.

(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock listed as beneficially owned by them. A person is deemed to
be the beneficial holder of securities that can be acquired by such person
within 60 days from the Reference Date upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by
including shares underlying options or warrants which are exercisable by
such person currently or within 60 days following the Reference Date, and
excluding shares underlying options and warrants held by any other person.
The percentage of shares owned after the Offering is calculated assuming
that 23,930,344 shares of Common Stock will be outstanding, which
includes the 21,984,170 shares outstanding on the Reference Date and an
additional 1,946,174 Underlying Shares underlying the Warrants and
Stock Options which would have to be exercised in order to sell the
Underlying Shares.

(2) Shares listed as held by Mr. Gombrich include 513,818 shares held by
Gwenda Gombrich, Mr. Gombrich's wife, directly or as custodian for minor
children, as to which Mr. Gombrich disclaims beneficial ownership.
Shares beneficially owned prior to Offering and shares to be sold in
Offering include 66,666 shares underlying stock options that are
exercisable currently or within 60 days following the Reference Date, and
133,334 shares underlying stock options that will become exercisable on
specified dates following the Reference Date. Includes 537,381 shares
subject to forfeiture if the Company fails to meet certain earnings per
share or stock price performance thresholds during 1997 (the "Performance
Shares"). The Shares listed as to be sold in this Offering include 166,586
shares to be sold by Gwenda Gombrich directly or as custodian for minor
children, as to which Mr. Gombrich disclaims beneficial ownership.
Mr. Gombrich is an officer and director of the Company. See "Certain
Relationships and Transactions."

(3) Transfer of shares listed as held by such Selling Securityholder are
subject to restrictions pursuant to a Lock-up Letter between the holder
and Tucker Anthony Incorporated and Vector Securities as representatives
of the several underwriters in the Public Offering of the Company's Common
Stock consummated on October 8, 1996. Such Lock-up Letter is filed as an
exhibit to the Registration Statement of which this Prospectus forms a
part.

(4) Mr. Falk directly owns 222,222 shares of Common Stock and warrants to
purchase up to 585,409 shares of Common Stock. The number listed as owned
by Mr. Falk includes an additional 222,222 shares, and 1,667,078 shares
underlying warrants that are exercisable currently or within 60 days
following the Reference Date, held by Commonwealth Associates (excluding
securities held in Commonwealth Associates' trading account). Mr. Falk is
a control person of the corporate general partner of Commonwealth
Associates and may be deemed to be beneficial owner of securities held by
Commonwealth Associates. The number of shares also includes an additional
100,000 shares underlying warrants that are exercisable currently or
within 60 days following the Reference Date held by Anne Falk, Mr. Falk's
spouse. Mr. Falk disclaims beneficial ownership of the securities held by
Commonwealth Associates except to the extent of his percentage ownership
interests in Commonwealth Associates. Shares and warrants held directly by
Mr. Falk were transferred to him by Commonwealth Associates. Commonwealth
Associates disclaims beneficial ownership of such shares and warrants and
the underlying warrant shares. Such shares and warrants were issued to
Commonwealth Associates as compensation for certain services rendered to
the Company. The shares listed under the caption "Shares to be Sold in
Offering" include 537,222 shares to be sold by Commonwealth Associates in
this Offering. See "Certain Relationships and Related Transactions."

<PAGE> 48

(5) The number of shares owned prior to the Offering includes 1,667,078 shares
underlying warrants and the number of shares owned after the Offering
includes 1,352,078 shares underlying warrants, each such warrant is
exercisable currently or within 60 days of the Reference Date. Excludes
securities held in Commonwealth Associates' trading account. Certain of
the Warrants to purchase shares are held in the name of Commonwealth
Associates for the account of its equity owners, certain of its employees
and certain officers and/or directors of its corporate general partner.
Commonwealth Associates has acted as underwriter and placement agent in
sales of the Company's securities for which it has received commissions in
the form of cash and securities. See "Certain Relationships and
Transactions."

(6) Shares listed as being offered in this Offering by the Selling
Securityholder are Underlying Shares underlying currently exercisable
Warrants transferred to the Selling Securityholder by Commonwealth
Associates or issued directly to the Selling Securityholder as a designee
of Commonwealth Associates. The Selling Securityholder is currently or was
formerly associated with Commonwealth Associates. Commonwealth Associates
disclaims beneficial ownership of such Shares, Warrants and the Underlying
Shares. Such Shares and Warrants were issued to Commonwealth Associates or
its designees as compensation for services rendered by Commonwealth
Associates to the Company in connection with the Merger. See "Certain
Relationships and Transactions."

(7) Philip L. Thomas is the President and sole shareholder of The P.L. Thomas
Group, Inc. The Shares listed to be sold in this Offering by The P.L.
Thomas Group, Inc. include 301,313 warrant Shares underlying currently
exercisable warrants and 160,000 Shares to be sold by Philip L. Thomas.
The number of Shares listed as owned by Mr. Thomas include the 301,313
warrant Shares underlying warrants registered in the name of The P.L.
Thomas Group, Inc. of which Mr. Thomas may be deemed the beneficial owner.
The shares listed as owned by The P.L. Thomas Group, Inc. include the
160,000 Shares registered in the name of Philip L. Thomas of which The
P.L. Thomas Group, Inc. may be deemed the beneficial owner. The Shares
listed as to be sold in this Offering by Mr. Thomas include 301,313 shares
to be sold by The P.L. Thomas Group, Inc.

(8) Of the shares listed as offered by Mr. Pressman, 50,000 shares are
underlying stock options that are exercisable currently or within 60 days
following the Reference Date. Mr. Pressman is an officer of the
Company. See "Certain Relationships and Transactions."

(9) The Shares offered in this Offering by American Equities Overseas, Inc.
are underlying currently exercisable Warrants transferred to it by
Commonwealth Associates. Such Warrants were issued as compensation for the
services of Commonwealth Associates in connection with the Merger.
American Equities Overseas, Inc. has served as a placement agent in the
sale of the Company's Securities for which it has received commission in
the forms of cash and securities. See "Certain Relationships and
Transactions."

<PAGE> 49

(10) Of the shares listed as being offered by Mr. Prange, 25,000 Shares are
underlying stock options that are exercisable currently or within 60 days
following the Reference Date and 125,000 are underlying options that are
not currently exercisable. Mr. Prange is an officer of the Company. See
"Certain Relationships and Transactions."

(11) Shares listed as held by Mr. Santor include 75,000 shares underlying stock
options that are exercisable currently or within 60 days following the
Reference Date. Mr. Santor is a former officer of the Company. See
"Certain Relationships and Transactions."

(12) Shares listed as held by Mr. Priddy include 100,000 shares underlying a
currently exercisable Warrant.

(13) Gwenda Gombrich is married to Peter P. Gombrich, the Company's Chief
Executive Officer and Chairman of the Board. Includes 3,043,132 shares
held of record by Mr. Gombrich as to which Ms. Gombrich disclaims
beneficial ownership. The Shares listed to be sold in this Offering
include 550,000 shares to be sold by Mr. Gombrich as to which Ms. Gombrich
disclaims beneficial ownership.

(14) Includes 28,333 shares underlying stock options that are exercisable
currently or within 60 days following the Reference Date, and the shares
listed to be sold in the Offering include 50,000 shares underlying stock
Options that will become exercisable on specified dates following the
Reference Date. Includes 9,841 Performance Shares. Mr. Burke is an
officer of the Company. See "Certain Relationships and Transactions."

(15) Includes 25,000 shares underlying stock options and 75,000 shares
underlying warrants that are exercisable currently or within 60 days
following the Reference Date. Mr. Schiller has been a director of the
Company since April 21, 1995. See "Certain Relationships and
Transactions."

(16) Hultquist Capital LLC and its predecessor Bridgemere Capital Corporation
served as advisors to the Company in connection with the Merger. See
"Certain Relationships and Transactions."

(17) Includes 34,895 shares underlying stock options that are exercisable
currently or within 60 days following the Reference Date. Includes
247,588 Shares of Common Stock held of record and 38,049 shares underlying
warrants exercisable currently or within 60 days following the Reference
Date held of record by Northlea Partners Limited, as to which Dr. Abeles
disclaims beneficial ownership except with respect to his 1% general
partnership ownership. The shares listed to be sold in this Offering
include 40,000 shares to be sold by Northlea Partners Limited. Dr. Abeles
is a director of the Company. The shares beneficially owned after the
Offering include 207,588 shares and 38,049 shares underlying warrants
exercisable currently or within 60 days of the Reference Date. See
"Certain Relationships and Transactions."

(18) Includes 38,049 shares underlying warrants exercisable currently or
within 60 days following the Reference Date. The shares beneficially
owned after the Offering include 207,588 shares and 38,049 shares
underlying warrants exercisable currently or within 60 days of the
Reference Date. Dr. John Abeles is an affiliate of Northlea Partners
Ltd. Dr. Abeles has been a director of the Company since 1988.
See "Certain Relationships and Transactions."

(19) Shares beneficially owned and shares to be sold in this offering include
35,800 shares underlying stock options that are exercisable currently or
within 60 days following the Reference Date. Mr. Halperin is a director of
the Company. See "Certain Relationships and Transactions."

<PAGE> 50

(20) Mr. Miller is a former officer and director of the Company. See "Certain
Relationships and Transactions."

(21) Includes 25,000 shares underlying stock options that are exercisable
currently or within 60 days following the Reference Date. Mr. Lavalee is
a director of the Company. See "Certain Relationships and Transactions."

(22) Includes 25,000 shares underlying stock options that are exercisable
currently or within 60 days following the Reference Date. Mr. Plandowski
is a director of the Company. See "Certain Relationships and
Transactions."

(23) Consists of shares underlying stock options that are exercisable currently
of within 60 days following the Reference Date. Mr. Blue is a director of
the Company. See "Certain Relationships and Transactions."

(24) Joseph L. Schocken is the President of Broadmark Capital Corporation. Mr.
Schocken was a director of the Company from November 1992 until April
1995. See "Certain Relationships and Transactions."

(25) Mr. Earhart is a former director of the Company. See "Certain
Relationships and Transactions."

(26) Mr. Kanter is a former director of the Company. See "Certain Relationships
and Transactions."

(27) Mr. Wilson is a former director of the Company. See "Certain Relationships
and Transactions."

(28) Mr. Schocken is a former director of the Company. See "Certain
Relationships and Transactions."

(29) Consists of shares underlying stock options that are exercisable currently
or within 60 days following the Reference date. The holder is a former
employee of the Company.

The Company has agreed to indemnify certain of the Selling Securityholders
and the Selling Securityholders have agreed to indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act.

Except as noted in the footnotes above and under the caption "Certain
Relationships and Transactions" below, none of the Selling Securityholders has
held any office or maintained any material relationship with the Company during
the past three years.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

Set forth below is certain information regarding certain relationships and
transactions between the Selling Securityholders and the Company.

<PAGE> 51
The following officers, directors and former officers and directors of the
Company are among the Selling Securityholders. Peter P. Gombrich has been the
Chief Executive Officer, President and Chairman of the Board of the Company
since consummation of the Merger on December 29, 1995, and from April 21, 1995
until consummation of the Merger, was the Acting Chief Executive Officer and a
director of the Company. Norman J. Pressman, Ph.D has been Senior Vice President
of AccuMed and President of the Cytopathology Division of the Company since July
1996. Leonard R. Prange has been Chief Financial Officer and Corporate Vice
President of the Company since September 1996. Leonard M. Schiller has been a
director of the Company since April 21, 1995. John H. Abeles, M.D. is an
affiliate of Northlea Partners, a Selling Securityholder. Dr. Abeles has been a
director of the Company since October 1988. Jack H. Halperin has been a director
of the Company since June 1991 and served as Chairman of the Board of Directors
from April 1995 until December 29, 1995. Mr. Halperin is legal counsel to
American Equities Overseas, Inc., a Selling Securityholder. Paul F. Lavallee and
Joseph W. Plandowski have been directors of the Company since December 29, 1995.
Harold S. Blue has been a director of the Company since July 1996. Michael D.
Burke has been a Senior Vice President and President of the Microbiology
Division of the Company since consummation of the Merger on December 29, 1995.
Joseph L. Schocken is President of Broadmark Capital Corporation, a Selling
Securityholder. Mr. Schocken was a director of the Company from November 1992
until April 1995. Kenneth D. Miller was President of the Cytopathology Division
of the Company from August 1995 until May 1996. Mr. Miller served as Chief
Executive Officer and a director of the Company from October 1989 until April
21, 1995 at which time he was appointed Senior Vice President of the Company.
Mark L. Santor was Chief Financial Officer of the Company from June 1991 until
August 30, 1996, Vice President, Finance and Operations from November 1992 until
June 1, 1996, and Secretary from November 1994 until August 30, 1996. He served
as Assistant Secretary from May 1994 until November 1994.

Commonwealth Associates is a Selling Securityholder and principal
stockholder. Pursuant to a letter agreement dated as of February 14, 1995 among
the Company, AccuMed, Inc. and Commonwealth Associates, Commonwealth Associates
was paid a fee for acting as a "finder" in connection with the Merger. The fee
was paid in the form of $50,000 in cash, 444,444 shares of Common Stock, and a
five-year warrant to purchase up to 750,000 shares of Common Stock at an
exercise price of $1.25 per share. During 1995, Commonwealth Associates acted as
placement agent for the Company in certain private placements of Common Stock
for which Commonwealth Associates received an aggregate of (i) $353,000 in cash
commissions, (ii) a non-accountable expense allowance of $106,000, (iii)
approximately $10,600 in reimbursement for the fees and expenses of counsel, and
(iv) a warrant to purchase an aggregate of 564,840 shares of the Common Stock at
an exercise price of $0.625 per share. During 1995, the Company paid
Commonwealth Associates an aggregate of $59,000 in cash pursuant to a Consulting
Agreement in effect from January 1, 1995 through December 31, 1995. As
reimbursement for certain expenses incurred by Commonwealth Associates in
connection with a terminated private placement of securities for which
Commonwealth Associates was to act as placement agent, the Company (i) issued to
Commonwealth Associates on December 31, 1994 a five-year warrant to purchase an
aggregate of 420,000 shares of Common Stock at an exercise price of $0.25 per
share and (ii) issued to designees of Commonwealth Associates on December 29,
1995 five-year warrants to purchase an aggregate of 104,000 shares of Common
Stock at an exercise price of $2.125 per share, which warrants expire on October
31, 1997.

The Company has agreed, with respect to the exercise of the Redeemable
Warrants issued in connection with the Company's initial public offering, to pay
to Commonwealth Associates a fee of 5% of the exercise price of each Redeemable
Warrant exercised; provided, however, that Commonwealth Associates will not be
entitled to receive such compensation for Redeemable Warrant exercise
transactions in which: (i) the market price of the Common Stock at the time of
the exercise is lower than the exercise price of the Redeemable Warrants;

<PAGE> 52
(ii) the Redeemable Warrants are held in any discretionary account; (iii)
disclosure of compensation arrangements is not made in documents provided to
holders of Redeemable Warrants at the time of exercise; (iv) the exercise of the
Redeemable Warrants is unsolicited; and (v) the transaction was in violation of
Rule 10b-6 promulgated under the Exchange Act. As of October 1, 1996, Redeemable
Warrants had been exercised to purchase 200 shares of Common Stock.

The Company issued to American Equities Overseas, Inc. ("AEO"), a Selling
Securityholder, an immediately exercisable, five-year warrant to purchase up to
100,000 shares of Common Stock at an exercise price of $0.25 per share. Such
warrant was issued to AEO by the Company in September 1995 as reimbursement for
expenses incurred by AEO in connection with a terminated private placement in
1994 and advisory services in connection with certain of the Company's European
stockholders. In March 1996, the Company issued to AEO immediately exercisable
five-year warrants to purchase an aggregate of 42,500 shares of Common Stock at
an exercise price of $3.87 per share and 20,000 shares at an exercise price of
$3.42 per share, as partial compensation for its services in placing warrants to
purchase Common Stock and securities of RADCO in connection with the
capitalization of RADCO. AEO acted as placement agent in connection with the
sale of Common Stock to certain European investors in May 1996, for which it
received aggregate cash commissions of $56,250. Pursuant to an agreement dated
July 18, 1996 among the Company, RADCO and AEO, the Company paid to AEO a fee of
$15,000 in cash upon consummation of the RADCO Acquisition. As a part of the
RADCO Acquisition, the Company purchased from AEO 50,000 shares of RADCO Stock
in consideration of payment of approximately $14,000 in cash.

Hultquist Capital LLC, a Selling Securityholder, is the successor to
Bridgmere Capital. The 56,000 Shares of Common Stock offered for sale by
Hultquist Capital LLC were issued to it pursuant an agreement between the
Company and Bridgemere Capital under which Bridgemere Capital and Hultquist
Capital LLC acted as special advisors to the Board of Directors of the Company
in connection with the Merger. Pursuant to such agreement, Bridgemere Capital
and Hultquist Capital LLC were entitled to be paid cash compensation in the
aggregate amount of $105,000 of which [$58,000] has been paid and [$47,000] is
payable.

PLAN OF DISTRIBUTION

The Common Stock and Warrants offered hereby may be sold by the Selling
Securityholders from time to time as market conditions permit in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
The shares offered hereby may be sold by one or more of the following methods,
without limitation: (a) a block trade in which a broker or dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Securityholders may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from Selling Securityholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
under the Securities Act might be sold under Rule 144 rather than pursuant to
this Prospectus.

LEGAL MATTERS

The legality of the securities offered by this Prospectus will be passed
upon for the Company by Graham & James LLP, Sacramento, California.

<PAGE> 53
EXPERTS

The balance sheet of AccuMed, Inc. as of December 31, 1994, and the
statements of operations, stockholder's deficit, and cash flows for the period
from February 7, 1994 (inception) through December 31, 1994, the balance sheets
of Alamar Biosciences, Inc. as of September 30, 1995 and 1994, and the
statements of operations, stockholder's equity, and cash flows for each of the
three years in the period ended September 30, 1995, and the balance sheet of
Sensititre/Alamar, the Microbiology Division of AccuMed, Inc., as of December
31, 1994 and the statements of net sales, cost of sales, and selling expenses
for the eight months ended December 31, 1994 and for each of the two years in
the period ended April 30, 1994, as incorporated by reference in the
Registration Statement of which this Prospectus forms a part, have been
incorporated herein in reliance on the reports, which included explanatory
paragraphs related to AccuMed, Inc.'s and Alamar Biosciences, Inc.'s ability to
continue as going concerns, of Coopers & Lybrand, L.L.P., independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

The balance sheets of AccuMed International Limited as of December 31,
1994, April 30, 1994 and 1993, and the statements of operations and cash flows
for the eight months ended December 31, 1994, and for each of the two years in
the period ended April 30, 1994, as incorporated by reference in the
Registration Statement of which this Prospectus forms a part, have been
incorporated herein in reliance on the report of Coopers & Lybrand, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

The consolidated financial statements of AccuMed International, Inc. and
subsidiaries as of December 31, 1995, and for the three months ended December
31, 1995, incorporated by reference herein and elsewhere in the Registration
Statement of which this Prospectus forms a part from the Company's Transition
Report of Form 10-KSB for the transition period ended December 31, 1995, have
been included therein and incorporated by reference herein and elsewhere in the
Registration Statement of which this Prospectus forms a part in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
included therein and incorporated herein by reference, and upon the authority of
said firm as experts in accounting and auditing.

<PAGE> 54
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING
SECURITYHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

---------------------

9,767,774 SHARES

ACCUMED INTERNATIONAL, INC.

COMMON STOCK

PROSPECTUS

DECEMBER ___, 1996

<PAGE> 55
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the issuance and distribution of the securities being registered hereunder.
All of the amounts shown are estimates (except for the SEC registration fee).

<TABLE>
<S> <C>
SEC registration fee .................................................$ 22,515
Printing and engraving expenses....................................... 2,000
Accounting fees and expenses.......................................... 5,000
Legal fees and expenses............................................... 35,000
Blue Sky fees and expenses............................................ 3,000
Miscellaneous......................................................... 2,485

TOTAL.................................................................$ 70,000
</TABLE>

None of these expenses will be paid by the Selling Securityholders
pursuant to the terms of the agreements under which the shares of Common Stock
to be sold hereby were issued.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company has provisions in its Certificate of Incorporation which
eliminate the liability of the Company's directors to the Company and its
shareholders for monetary damages to the fullest extent permissible under
Delaware law and provisions which authorize the Company to indemnify its
directors and agents by bylaws, agreements or otherwise, to the fullest extent
permitted by law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.

The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by Delaware law.

The Company's officers and directors are covered by a director's and
officer's liability insurance policy maintained by the Company. Under the
insurance policy, the Company is entitled to be reimbursed for indemnity
payments that it is required or permitted to make to its directors and officers.

II-1

<PAGE> 56
ITEM 16. EXHIBITS

The following exhibits are filed herewith:

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.1 Certificate of Incorporation of the Registrant (incorporated by
reference to the Registrant's Transition Report of Form 10-KSB for
the transition period ended December 31, 1995 (the "Transition
Report)).

4.2 Specimen Certificate for Common Stock (incorporated by reference to
the Transition Report).

4.3 Bylaws of the Registrant (incorporated by reference to Transition
Report).

4.4 Form of Common Stock Purchase Warrant dated as of December 29, 1995
by the Registrant in favor of Commonwealth Associates, Inc.
(previously filed with this Registration Statement on May 30, 1996).

4.5 Form of Warrant Agreement between the Registrant and Commonwealth
Associates dated as of December 29, 1995 pertaining to Warrants to
purchase up to 750,000 shares of Common Stock of the Company
(previously filed with this Registration Statement on May 30, 1996).

4.6 Warrant Certificate dated as of December 29, 1995 registered in the
name of The P.L. Thomas Group, Inc. representing the right to
purchase up to 237,840 shares of Common Stock of the Company
(previously filed with this Registration Statement on May 30, 1996).

4.7 Warrant Certificate dated as of December 29, 1995 registered in the
name of The P.L. Thomas Group, Inc. representing the right to
purchase up to 63,473 shares of Common Stock of the Company
(previously filed with this Registration Statement on May 30, 1996).

4.8 Warrant Agreement dated as of January 25, 1996 between the Company
and Robert Priddy (previously filed with this Registration Statement
on May 30, 1996).

4.9 Warrant Certificate dated as of January 25, 1996 registered in the
name of Robert Priddy representing the right to purchase 100,000
shares of Common Stock of the Company (previously filed with this
Registration Statement on May 30, 1996).

4.10 Form of Warrant Agreement between the Registrant and Commonwealth
Associates dated as of December 29, 1995 pertaining to Warrants to
purchase up to 104,000 shares of Common Stock of the Company,
including form of Warrant Certificate issued to designees of
Commonwealth Associates dated as of December 29, 1995 representing
the right to purchase up to an aggregate of 104,000 shares of Common
Stock of the Company (previously filed with this Registration
Statement on May 30, 1996).

4.11 Form of Warrant Agreement dated March 14, 1996 between the Company
and certain of the Selling Securityholders, including form of
Warrant Certificate evidencing right to purchase Common Stock at
$3.42 per share (previously filed with this Registration Statement
on May 30, 1996).

II-2

<PAGE> 57
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.12 Form of Warrant Agreement dated March 14, 1996 between the Company
and certain of the Selling Securityholders, including form of
Warrant Certificate evidencing right to purchase Common Stock at
$3.87 per share (previously filed with this Registration Statement
on May 30, 1996).

4.13 Form of Lock-up Letter dated July 16, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and each of the following Selling Securityholders:
Michael Falk, Clarion Capital Corp., The P.L. Thomas Group, Inc.,
Gallagher Investment Corp., American Equities Overseas, Inc., Fred
Kassner, Philip L. Thomas, Vincent LaBarbara, Robert Priddy, Ann F.
Gallagher, Christopher C. Gallagher, Daniel R. Lee, Jo-Bar
Enterprises LLC, J.A. Cardwell, Richard Friedman, Michael Burke, G&G
Diagnostics LP I, Leonard M. Schiller, John Abeles, Andrew B. Hart,
Northlea Partners Ltd., Hamilton T. Bailey, Alan Hammerman, James A.
Cardwell, Jr., Charles Potter, Sheila Y. Schiller, Suzanne Schiller,
William R. and Barbara J. Schoen, John Luck, Frederick J. Oswald,
Richard A. Voell, and Wertheimer Partnership.

4.14 Lock-up Letter dated August 21, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and Commonwealth Associates.

4.15 Lock-up Letter dated July 16, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and Hultquist Capital LLC.

4.16 Lock-up Letter dated July 16, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and Peter P. Gombrich, and Gwenda Gombrich as Custodian
for Lucas Klein and Megan Klein.

5.1 Opinion of Graham & James LLP, counsel to the Registrant, regarding
the legality of the securities offered hereby (previously filed with
this Registration Statement on May 30, 1996).

23.1 Consent of Graham & James LLP (contained in Exhibit 5.1 previously
filed with this Registration Statement on May 30, 1996).

23.2 Consent of Coopers & Lybrand LLP.

23.3 Consent of Coopers & Lybrand (UK).

23.4 Consent of KPMG Peat Marwick LLP.

24.1 Powers of Attorney (contained in the signature page to the
Registration Statement, page II-5 previously filed on May 30, 1996).

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
additional or changed material information with respect to the plan of
distribution.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new

II-3

<PAGE> 58
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-4
<PAGE> 59
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Pre-effective Amendment No. 2 to the Registration Statement
on Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois on December 17, 1996.

ACCUMED INTERNATIONAL, INC.

By: /s/ PETER P. GOMBRICH
Peter P. Gombrich,
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Pre-effective Amendment No. 2 to the Registration Statement on Form S-3 has been
signed by the following persons in the capacities and on the dates indicated.

Signature Title Date

/s/ PETER P. GOMBRICH Chairman of the Board, December 17, 1996
- ------------------------ Chief Executive Officer, and
(Peter P. Gombrich) President (Principal Executive
Officer)

/s/ LEONARD R. PRANGE Corporate Vice President and December 17, 1996
- ------------------------ Chief Financial Officer
(Leonard R. Prange) (Principal Financial and
Accounting Officer)

/s/ JOHN H. ABELES* Director December 17, 1996
- ------------------------
(John H. Abeles)

- ------------------------ Director ___________, 1996
(Harold S. Blue)

/s/ JACK HALPERIN* Director December 17, 1996
- ------------------------
(Jack Halperin)

/s/ PAUL F. LAVALLEE* Director December 17, 1996
- ------------------------
(Paul F. Lavallee)

/s/ JOSEPH PLANDOWSKI* Director December 17, 1996
- ------------------------
(Joseph Plandowski)

/s/ LEONARD SCHILLER* Director December 16, 1996
- ------------------------
(Leonard Schiller)

*By: /s/ PETER P. GOMBRICH
- -----------------------------------
Peter P. Gombrich, Attorney-in-Fact

II-5

<PAGE> 60

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.2 Specimen Certificate for Common Stock (incorporated by reference to
the Transition Report).

4.3 Bylaws of the Registrant (incorporated by reference to Transition
Report).

4.8 Warrant Agreement dated as of January 25, 1996 between the Company
and Robert Priddy (previously filed with this Registration Statement
on May 30, 1996).

II-6

<PAGE> 61

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.14 Lock-up Letter dated August 21, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and Selling Securityholder Commonwealth Associates.

4.15 Lock-up Letter dated July 16, 1996 between Tucker Anthony
Incorporated and Vector Securities as representatives of the several
underwriters and Hultquist Capital LLC.

5.1 Opinion of Graham & James LLP, counsel to the Registrant, regarding
the legality of the securities offered hereby (previously filed with
this Registration Statement on May 30, 1996).

23.1 Consent of Graham & James LLP (contained in Exhibit 5.1 previously
filed with this Registration Statement on May 30, 1996).

23.2 Consent of Coopers & Lybrand LLP.

23.3 Consent of Coopers & Lybrand (UK).

23.4 Consent of KPMG Peat Marwick LLP.

24.1 Powers of Attorney (contained in the signature page to the
Registration Statement, page II-5 previously filed on May 30, 1996).

II-7

<PAGE> 1
EXHIBIT 4.13

ACCUMED INTERNATIONAL, INC.

LOCK-UP LETTER

July 16, 1996

VECTOR SECURITIES INTERNATIONAL, INC.
TUCKER ANTHONY INCORPORATED
c/o VECTOR SECURITIES INTERNATIONAL, INC.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015

Dear Sirs:

The undersigned understands that you and certain other firms propose to enter
into an Underwriting Agreement (the "Underwriting Agreement") providing for the
purchase by you and other such firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
Accumed International, Inc. (the "Company") from the Company and certain
stockholders and that the Underwriters propose to reoffer the Shares to the
public (the "Offering").

In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby irrevocably
agrees that, without the prior written consent of Vector Securities
International, Inc. and Tucker Anthony Incorporated (the "Representatives") the
undersigned will not, directly or indirectly, sell, offer to sell, solicit an
offer to buy, contract to sell (including, without limitation, any short sale),
grant any option to purchase or right to acquire, acquire any option to dispose
of, or otherwise transfer or dispose of, any shares of Common Stock, or any
securities convertible into or exercisable or exchangeable for Common Stock or
such similar securities (other than in the Offering), for a period of two
hundred and seventy (270) days after the date of the final Prospectus relating
to the Offering. Notwithstanding the foregoing, the undersigned, without the
consent of the Representatives, may sell (i) up to one-third of the Common Stock
(including Common Stock issuable upon exercise of outstanding options or
warrants owned by the undersigned) owned by the undersigned on the date hereof
exclusive of Shares to be offered in the Offering (the "Non-offered Shares")
following 90 days after the date of the final Prospectus relating to the
Offering and (ii) up to and an additional one-third of the Non-offered Shares on
the date hereof after 180 days following the date of the final Prospectus
relating to the Offering.
<PAGE> 2
The undersigned hereby represents that he, she or it has not taken, and
agrees that he, she or it shall not take any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of Common Stock or to facilitate the sale of Shares in the public
offering contemplated by the Underwriting Agreement in violation of law.

The undersigned agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, heirs and personal representatives of the
undersigned.

In furtherance of the foregoing, the Company and American Stock & Trust Co.,
its Transfer Agent, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
letter agreement.

It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment
for the delivery of the Shares, you will release us from our obligations under
this letter agreement.

Number of Shares of Common Very truly yours
Stock owned by the undersigned:

Shares
- ------- --------------------
Signature
Number of Shares of Common
Stock underlying options and warrants
owned by the undersigned:

Shares
- --------- ----------------------
Printed Name and Title

The Company requests that this Lock-Up Agreement be completed and
delivered by facsimile as soon as possible to the Company's counsel, Graham &
James LLP, 400 Capitol Mall, Suite 2400, Sacramento, CA 95814, Attn:
Christopher W. Ewing, Esq., facsimile (916) 441-6700, telephone (916) 558-6700.

<PAGE> 1
EXHIBIT 4.14

ACCUMED INTERNATIONAL, INC.

LOCK-UP LETTER

August 21, 1996

VECTOR SECURITIES INTERNATIONAL, INC.
TUCKER ANTHONY INCORPORATED
c/o VECTOR SECURITIES INTERNATIONAL, INC.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015

Dear Sirs:

The undersigned understands that you and certain other firms propose to enter
into an Underwriting Agreement (the "Underwriting Agreement") providing for the
purchase by you and other such firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock"), of
AccuMed International, Inc. (the "Company") from the Company and certain
stockholders and that the Underwriters propose to reoffer the Shares to the
public (the "Offering").

In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby irrevocably
agrees that, without the prior written consent of Vector Securities
International, Inc. and Tucker Anthony Incorporated (the "Representatives") the
undersigned will not, directly or indirectly, sell, offer to sell, solicit an
offer to buy, contract to sell (including, without limitation, any short sale),
grant any option to purchase or right to acquire, acquire any option to dispose
of, or otherwise transfer or dispose of, any shares of Common Stock, or any
securities convertible into or exercisable or exchangeable for Common Stock or
such similar securities (other than in the Offering), for a period of two
hundred and seventy (270) days after the date of the final Prospectus relating
to the Offering. Notwithstanding the foregoing, the undersigned, without the
consent of the Representatives, may sell (i) at any time, up to 77,807 shares
of Common Stock issuable upon exercise of the publicly traded warrants (the
"Warrant Shares") owned by the undersigned on the date hereof; (ii) at any time
after 60 days from the date of the final prospectus relating to the Offering,
up to 900,000 Warrant Shares owned by the undersigned on the date hereof; (iii)
at any time after 90 days after the date of the final prospectus relating to
the Offering, up to one-third of the Common Stock (including Warrant Shares and
shares of Common Stock issuable upon exercise of Options owned by the
Undersigned)

<PAGE> 2

owned by the undersigned on the date hereof exclusive of Shares to
be offered in the Offering (the "Non-offered Shares"); (iv) at any time after
180 days following the date of the final prospectus relating to the Offering,
up to and an additional one-third of the Non-offered Shares owned by the
Undersigned on the date hereof; and (v) at any time any of the publicly traded
warrants owned by the undersigned on the date hereof, provided that with
respect to sales of such warrants proposed to be made within the time period
referred to within (ii) above, prior to such sale the transferee shall agree in
writing to be bound by the terms of this Agreement. The undersigned agrees
that a legend in the Form of Exhibit A shall be placed on all Warrant
Certificates, which legend shall be removed if transferred after the
expiration of the applicable lock-up period, if any.

The undersigned hereby represents that he, she or it has not taken, and
agrees that he, she or it shall not take any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of Common Stock or to facilitate the sale of Shares in the public
offering contemplated by the Underwriting Agreement in violation of law.

The undersigned agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, heirs and personal representatives of the
undersigned.

Number of Shares of Common Very truly yours
Stock owned by the undersigned:

222,222 Shares /s/ Basil Asciutto
- ------- --------------------
Signature
Number of Shares of Common
Stock underlying options and warrants
owned by the undersigned:

1,667,078 Shares Basil Asciutto, C.O.O.
- --------- ----------------------
Printed Name and Title

<PAGE> 1
EXHIBIT 4.15

ACCUMED INTERNATIONAL, INC.

LOCK-UP LETTER

July 16, 1996

VECTOR SECURITIES INTERNATIONAL, INC.
TUCKER ANTHONY INCORPORATED
c/o VECTOR SECURITIES INTERNATIONAL, INC.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015

Dear Sirs:

In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby irrevocably
agrees that, without the prior written consent of Vector Securities
International, Inc. and Tucker Anthony Incorporated (the "Representatives") the
undersigned will not, directly or indirectly, sell, offer to sell, solicit an
offer to buy, contract to sell (including, without limitation, any short sale),
grant any option to purchase or right to acquire, acquire any option to dispose
of, or otherwise transfer or dispose of, any of the 1,673 "post-offering"
shares of Common Stock, or any securities convertible into or exercisable or
exchangeable for Common Stock or such similar securities (other than in the
Offering), for a period of two hundred and seventy (270) days after the date of
the final Prospectus relating to the Offering. Notwithstanding the foregoing,
the undersigned, without the consent of the Representatives, may sell (i) up to
one-third of the Common Stock (including Common Stock issuable upon exercise of
outstanding options or warrants owned by the undersigned) owned by the
undersigned on the date hereof exclusive of Shares to be offered in the
Offering (the "Non-offered Shares") following 90 days after the date of the
final Prospectus relating to the Offering and (ii) up to and an additional
one-third of the Non-offered Shares on the date hereof after 180 days following
the date of the final Prospectus relating to the Offering.
<PAGE> 2

The undersigned agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, heirs and personal representatives of the
undersigned.

Number of Shares of Common Very truly yours
Stock owned by the undersigned:

1,673 Shares* /s/ Gary Hultquist, Hultquist
- ----- Capital, LLC
-----------------------------
Signature

Number of Shares of Common
Stock underlying options and warrants
owned by the undersigned:

1,673 Shares* Gary Hultquist, Managing
- ----- Director
-----------------------------
Printed Name and Title

*After Offering.

<PAGE> 1
EXHIBIT 4.16

ACCUMED INTERNATIONAL, INC.

LOCK-UP LETTER

July 16, 1996

VECTOR SECURITIES INTERNATIONAL, INC.
TUCKER ANTHONY INCORPORATED
c/o VECTOR SECURITIES INTERNATIONAL, INC.
1751 Lake Cook Road, Suite 350
Deerfield, Illinois 60015

Dear Sirs:

The undersigned agrees that the provisions of this Agreement shall be binding
also upon the successors, assigns, heirs and personal representatives of the
undersigned.

Number of Shares of Common Very truly yours
Stock owned by the undersigned:

3,490,284 Shares
- --------- /s/ Peter P. Gombrich
-----------------------------
Signature

Number of Shares of Common
Stock underlying options and warrants
owned by the undersigned:

66,666 Shares
- ------ Peter P. Gombrich
--------------------------------
Printed Name and Title

/s/ Gwenda Gombrich
--------------------------------
Signature

Gwenda Gombrich as Custodian for
Lucas Klein and Megan Klein
--------------------------------
Printed Name

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Pre-effective Amendment No.
2 to Form S-3 (SEC File No. 333-04715) of our report dated September 14, 1995,
on our audit of the balance sheet of Sensititre/Alamar, the Microbiology
Division of AccuMed, Inc., as of December 31, 1994, and the net sales, cost of
sales and selling expenses for the eight months ended December 31, 1994, and the
years ended April 30, 1994 and 1993, of our report, which includes an
explanatory paragraph related to substantial doubt about the ability of AccuMed,
Inc. to continue as a going concern, dated September 29, 1995, on our audit of
the balance sheet of AccuMed, Inc. as of December 31, 1994, and for the period
from February 7, 1994 (inception) through December 31, 1994, both appearing in
the registration statement on Form S-4 (SEC File No. 33-99680) of Alamar
Biosciences, Inc. filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 as incorporated by reference in the Current Report on
Form 8-K dated December 29, 1995, and of our report, which includes an
explanatory paragraph related to substantial doubt about the ability of Alamar
Biosciences, Inc. to continue as a going concern, dated November 19, 1995, on
our audits of the financial statements of Alamar Biosciences, Inc. as of
September 30, 1995 and 1994, and for the years ended September 30, 1995, 1994
and 1993, which report is included in the Annual Report on Form 10-KSB for the
year ended September 30, 1995. We also consent to the reference to our firm
under the caption "Experts."

/S/ COOPERS & LYBRAND LLP

Sacramento, CA
December 10, 1996

II-8

<PAGE> 1
Exhibit 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Pre-effective Amendment No.
2 to Form S-3 (SEC File No. 333-04715), of our report dated December 8, 1995, on
our audit of the balance sheets of AccuMed International Limited as of December
31, 1994, April 30, 1994 and 1993, and related statements of operations and
cashflows for the eight months ended December 31, 1994, and the years ended
April 30, 1994 and 1993, appearing in the registration statement on form S-4
(SEC File No. 33-99680) of Alamar Biosciences, Inc. filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933 as incorporated
by reference in the current Report on form 8-K dated December 29, 1995.

COOPERS & LYBRAND

Croydon
United Kingdom
December 12, 1996

II-9

<PAGE> 1
Exhibit 23.4

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
AccuMed International, Inc.

We consent to incorporation by reference in the pre-effective amendment No. 2 to
the registration statement (No. 333-04715) on Form S-3 of AccuMed International,
Inc. of our report dated April 5, 1996, relating to the consolidated balance
sheet of AccuMed International, Inc. and subsidiaries as of December 31, 1995,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the three months ended December 31, 1995, which report appears in
the December 31, 1995 transition report on Form 10-KSB of AccuMed International,
Inc.

/S/ KPMG PEAT MARWICK LLP

Chicago, Illinois
December 12, 1996

II-10