ACCUMED INTERNATIONAL INC, S-3, 1998-06-09

ACCUMED INTERNATIONAL INC
S-3, 1998-06-09
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

Previous: KINDER MORGAN ENERGY PARTNERS L P, S-8, 1998-06-09

Next: OMEGA HEALTHCARE INVESTORS INC, 8-K, 1998-06-09

<PAGE> 1
As filed with the Securities and Exchange Commission on June 9, 1998
Registration No. 333-_____

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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 or 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)

PAUL F. LAVALLEE
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
Telecopy (312) 642-2985

Approximate date of commencement of proposed sale to the public: from
time to time after the effective date of this Registration Statement.

<PAGE> 2

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 or 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. [ ]

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

PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AGGREGATE AGGREGATE
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE(1) PRICE FEE
---------- ---------- ----------- ----- ---
<S> <C> <C> <C> <C>
Common Stock 1,683,714 shares $ 3.75 $ 6,313,928 $ 1,914
Common Stock
Underlying Warrants
and Convertible Preferred 2,355,107 shares $ 3.75 $ 8,831,651 $ 2,676

===================================================================
TOTAL 4,038,821 shares $ 3.75 $15,145,579 $ 4,590

- -------------------------------------------------------------------------------------------------------
</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 $3.75 per share, the average of the high
and low sales prices reported for the Common Stock on June 5, 1998.

<PAGE> 3

PROSPECTUS

4,038,821 SHARES
ACCUMED INTERNATIONAL, INC.
COMMON STOCK

This Prospectus relates to 4,038,821 shares (the "Shares") of Common
Stock, par value $0.01 per share (the "Common Stock"), of AccuMed International,
Inc., a Delaware corporation (the "Company" or "AccuMed") of which (i) an
aggregate of 641,410 shares (the "Conversion Shares") are underlying Series A
Convertible Preferred Stock (the "Convertible Preferred"), (ii) 1,713,697 shares
(the "Warrant Shares") are underlying Common Stock Purchase Warrants (the
"Warrants"), and 1,683,714 shares are currently outstanding (the "Outstanding
Shares", and, together with the Conversion Shares and the Warrant Shares, are
collectively referred to as the "Shares"). The Company will not receive any of
the proceeds from any sales of the Shares, but will receive aggregate gross
proceeds of approximately $8,310,000 if all of the Warrants 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 agreements between the Company and
holders of the Outstanding Shares, Warrants and the Convertible Preferred.
(Holders of the Shares are collectively referred to as the "Selling
Securityholders.") See "Selling Securityholders."

The Common Stock is quoted on the National Association of Securities
Dealers Automated Quotation System ("Nasdaq") SmallCap Market under the trading
symbol "ACMCD." The Selling Securityholders may, from time to time, sell the
Shares at market prices prevailing on Nasdaq at the time of the sale or at
negotiated prices (this "Offering") under the terms described under the caption
"Plan of Distribution." See "Risk Factors," "Selling Securityholders" and "Plan
of Distribution."

The last reported sale price for the Common Stock on June 5, 1998, as
reported on the Nasdaq, was $3.63 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" BEGINNING AT PAGE 11.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
AND EXCHANGE 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 $24,000.

This date of this Prospectus is ________________, 1998.

<PAGE> 4

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the following: the
Company's history of losses and uncertainty of profitability; the uncertainty of
market acceptance of the Company's products; the Company's limited sales,
marketing and distribution experience and dependence on distributors; the
Company's highly competitive industry and rapid technological change within such
industry; the Company's ability to obtain rights to technology and obtain and
enforce patents and other proprietary rights; the Company's ability to
commercialize and manufacture products; the results of clinical studies; the
results of the Company's research and development activities; the business
abilities and judgment of the Company's personnel; the availability of qualified
personnel; changes in, or failure to comply with, governmental regulations; the
ability to obtain adequate financing in the future; general and business
conditions; and other factors referenced in this Prospectus. See "Risk Factors."

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), 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 Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission, including the Company, at
http://www.sec.gov. 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

Additional information regarding the Company and the securities offered
hereby is contained in Registration Statement on Form S-3 (Registration No.
333-_____) 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 of
which may be obtained at prescribed rates from, the office of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549.

The Company furnishes stockholders 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

<PAGE> 5

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 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-K for the year ended December 31,
1997.

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.

(3) 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
North Franklin Street, Suite 401, Chicago, Illinois 60610, Attn: Leonard R.
Prange, Chief Financial Officer and Chief Operating Officer, telephone (312)
642-9200.

The following are trade names and trademarks of the Company:
alamarBlue(TM), the "AccuMed" logo and name, AcCell(TM), TracCell(TM),
MacroVision(TM), Sensititre(TM), SensiTouch(TM), ARIS(TM), AutoReader(TM),
AutoInnoculator(TM) Relational Cytopathology Reference Guide(TM),
FluoreTone(TM), MacCell(TM), SpeciFind(TM), Accuzone(TM), AcCell Savant(TM) and
"and you thought you'd seen it all" (TM).

The Company's address is 900 North 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 be reference 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

BACKGROUND

AccuMed International, Inc. 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(TM) 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.

On October 15, 1996, the Company acquired a two-thirds interest in
Oncometrics Imaging Corp., a company continuing under the laws of the Yukon
Territory, Canada ("Oncometrics"). Oncometrics was formed in 1995 as a
wholly-owned subsidiary of Xillix Technologies Corp. 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.

On October 15, 1996, the Company also acquired all the outstanding
shares of common stock (the "RADCO Stock") not already owned by the Company of
RADCO Ventures, Inc., a Delaware corporation ("RADCO"), at which time RADCO
became a wholly-owned subsidiary of the Company. RADCO was formed in March 1996,
for the purpose of developing a diagnostic microbiology test panel and automated
reading instrument known as FluoreTone(TM). RADCO was merged with and into the
Company effective November 15, 1996, at which time RADCO ceased to exist as a
separate corporate entity.

On March 3, 1997, the Company acquired the ESP(TM) Culture System II
product line (the "ESP Product Line") for a total purchase price of $6,000,000
in cash. This acquisition consisted of accounts receivable, inventories,
production equipment and a portfolio of rental instruments used tod detect
microorganisms in blood cultures. The purchase price was ultimately funded by an
$8,500,000 private placement of convertible debt and warrants to purchase
850,000 shares of Common Stock.

On March 5, 1998, the Company announced that the Board of Directors has
authorized management to seek buyers for the Company's microbiology business.
The Company has received proposals from parties interested in acquiring the
microbiology business. However, currently there is no agreement to sell the
microbiology business. Consumation of any such sale would be subject to
certain conditions, including stockholder approval.

<PAGE> 7

On May 19, 1998, stockholders approved an amendment to the Company's
Certificate of Incorporation to effect a one-for-six reverse stock split on the
Common Stock. Such reverse stock split be came effective at the opening of
trading on May 21, 1998.

On May 27, 1998, the Company announced a letter of intent with Xillix
Technologies Corp. ("Xillix") pursuant to which the Company has agreed to
purchase from Xillix the one-third equity interest in Oncometrics not currently
owned by the Company. Terms of the transaction have not been publicly disclosed
as of the date of this Prospectus. Consummation of the transaction remains
subject to customary requirements such as completion of definitive
documentation.

THE BUSINESS

The Company 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) Cytopathology System, an automated slide
handling, data management system and microscopy workstation, at the end of the
first quarter of 1996. The TracCell(TM) 2000 Slide Mapping System (the "TracCell
2000) is a slide mapping system that automatically creates a computerized map
that excludes empty space and certain non-clinically relevant portions of the
specimen to permit a more efficient analysis of the slide. A human screener then
reviews the mapped specimen through an AcCell microscopy workstation. In August
1997, the United States Food and Drug Administration (the "FDA") granted the
Company clearance to market the TracCell 2000 in the United States pursuant to a
pre-market notification under Section 510(k) under the United States Food, Drug
and Cosmetic Act.

In May 1997, the Company entered into an agreement with Leica Microscopy
and Systems GmbH, a leader in precision microscopy and imaging technology
("Leica"), pursuant to which Leica has exclusive third party distribution rights
to the AcCell 2000 and 2001 Systems outside the Western Hemisphere. Leica also
has a right of first refusal and negotiation to be the exclusive distributor
outside the Western Hemisphere of future cytopathology products developed by the
Company. The Company presently markets the AcCell systems and TracCell in the
United States through its direct sales force. From May 1996 until September
1997, the Company had granted Olympus America exclusive third party distribution
rights to the AcCell 2000 and 2001 Systems in the Western Hemisphere. In
September 1997, the Company and Olympus entered into an amendment to terminate
the original agreement and permit Olympus to require the Company to repurchase
up to six AcCell systems per month from Olympus' inventory beginning in October
1997 at the original purchase price.

On April 30, 1998, the Company entered into a five-year Finders
Agreement with Sunquest Information Systems, Inc. which sells proprietary
laboratory information system software ("Sunquest"). Pursuant to the Finders
Agreement, Sunquest has the right to market, in collaboration with the Company,
licenses for the Company's AcCell, TracCell, SpeciFind and Data Management
System (DMS)/network software products to Sunquest software endusers in the
United States and Canada.

The Company also develops, manufactures and markets in vitro diagnostic
clinical microbiology products for the human clinical laboratory, veterinary and
pharmaceutical markets. In March 1997, the Company acquired certain assets
relating to the ESP Culture System II product line (the "ESP Product Line") from
Difco Microbiology Systems, Inc., a Michigan corporation ("Difco"), consisting
of disposables, software and instruments for the growth and detection of
microorganisms in blood cultures, sterile body fluids and mycobacteria samples.
The Company offers the microbiology laboratory a variety of FDA-cleared
products, under the SensititreTM name, for the minimum inhibitory concentration
and identification ("MIC/ID") testing of bacteria suspected of causing
infections and for measuring the

<PAGE> 8

susceptibility of such bacteria to different types and concentrations of
antibiotics. The Company's microbiology products include disposable test kits
and a range of automated instruments. In September 1996, the Company entered
into an agreement with Fisher Scientific Company ("Fisher"), a leading
distributor of clinical laboratory products, pursuant to which Fisher has been
granted exclusive rights to distribute the Company's Sensititre human clinical
microbiology products in the United States. The Company also markets
alamarBlue(TM), a proprietary, non-toxic indicator reagent that measures cell
growth for in vitro testing. The Company has develop a prototype instrument
named AccuZoneTM, an automated instrument designed to read the results of a
Kirby-Bauer method susceptibility test. The Company is conducting limited
development work on Fluoretone, 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. See "--Recent Developments--Possible
Sale of Microbiology Business."

For additional information regarding the Company's products, competition
and intellectual property, see "Risk Factors--Uncertainty of Market Acceptance
and Initial Investment in Cytopathology Products;" "--Technological Change and
Competition; "--Delayed or Unsuccessful Product Development"; "--Government
Regulation;" and "--Protection of Intellectual Property."

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

<S> <C>
Securities offered............ 4,038,821 shares of Common Stock offered by the Selling
Securityholders.
Common Stock outstanding
after the Offering (1)...... 7,700,316 shares (which assumes the exercise of Warrants and
conversion of Convertible Preferred to acquire an aggregate of 2,355,107
Warrant Shares and Conversion 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. Aggregate proceeds to the
Company of approximately $8,310,000 pursuant to exercises of Warrants
by the Selling Securityholders, if all the Warrants are exercised, 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 SmallCap
Market Symbol................ ACMCD
</TABLE>

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

(1) Based upon shares outstanding at June 1, 1998 (of which 7,250 shares are
subject to forfeiture if certain milestones under a microbiology product
development agreement are not achieved. Excludes: (i) an aggregate of
541,653 shares reserved for issuance upon exercise of warrants (other
than the Warrants relating to the Warrant Shares) outstanding at June 1,
1998; (ii) an aggregate of 589,275 shares reserved for issuance upon the
exercise of stock options outstanding at June 1, 1998; and (iii) an
aggregate of 26,000 shares reserved for issuance upon exercise of
options available for future grant under the Company's stock option
plans. On May 23, 1997, the Company's stockholders approved an amendment
to the Company's Certificate of Incorporation increasing the authorized
Common Stock from 30,000,000 shares to 50,000,000 shares. On May 19,
1998, the Company's stockholders approved an amendment to the Company's
Certificate of Incorporation effecting a one-for-six reverse stock split
on the Common Stock which became effective at the opening of trading on
May 21, 1998.

<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.

SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL CAPITAL. The
Company has expended substantial funds for research and product development,
scale-up of manufacturing capacity, marketing and distribution ramp-up, and
other working capital and general corporate purposes. Management believes that
the Company's existing capital resources and anticipated internally generated
revenues will provide sufficient capital to meet the Company's current and
projected requirements over the next 12 months.

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, and other factors. Additional financing may be required
to fund the Company's operations beyond the next 12-month period. 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 result in
the failure of the Company to repay its obligations under certain indebtedness
as they become due and 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. See
"--Substantial Indebtedness."

LIMITED RELEVANT OPERATING HISTORY; SIGNIFICANT OPERATING LOSSES;
ACCUMULATED DEFICIT; CHARGES ARISING FROM AMORTIZATION OF GOODWILL AND
IN-PROCESS RESEARCH AND DEVELOPMENT, ISSUANCE OF CONVERTIBLE NOTES; 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

<PAGE> 11

products and recently (in 1996 and 1997) began to commercialize certain
cytopathology products. In March 1997, the Company acquired the ESP Product Line
from Difco. The Company has been advised that Difco, and its affiliates Difco
Laboratories Incorporated, a Michigan corporation ("Difco Labs Michigan") and
Difco Laboratories Incorporated, a Wisconsin corporation ("Difco Labs
Wisconsin"), have been engaged in the production of the ESP Product Line since
1992. Accordingly, there is a limited relevant operating history with respect to
the ESP Product Line upon which an evaluation of its prospects can be made.
Difco was not able to conduct the ESP Business in a profitable manner and the
Company has conducted the ESP Business in a profitable manner for only a limited
time. 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 year ended December 31, 1997, and
for the three-month period ended March 31, 1998, the Company's net losses were
approximately $16.9 million and $2.8 million, respectively. As of March 31,
1998, the Company had an accumulated deficit of approximately $54.1 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."

During the first quarter of 1997, certain contingencies were 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. As a result,
approximately $3.6 million, the fair market value of such securities at the date
on which such contingencies were satisfied were recorded as goodwill associated
with the Merger and charged off in its entirety to operations during the three
months ended March 31, 1997 as an impaired asset.

The Company's acquisition of a two-thirds equity interest in Oncometrics
was accounted for under the purchase method of accounting, resulting in
approximately $1.6 million of acquired in-process research and development and
approximately $1.1 million of purchased technology. The $1.1 million of
purchased technology will be amortized over its useful life of ten years and the
$1.6 million of acquired in-process research and development was written off as
a charge to earnings in the last quarter of 1996.

The Company's acquisition of all of the outstanding shares of Common
Stock not previously owned by the Company of RADCO for an aggregate cost to the
Company of $1.4 million also included approximately $800,000 of acquired
in-process research and development. Amounts recorded as acquired in-process
research and development for the RADCO acquisition were written off as a charge
to earnings in the last quarter of 1996.

Issuance of Convertible Notes in the aggregate principal amount of $8.5
million during the first quarter of 1997 at a conversion rate of $0.50 less than
the market price at the time of issuance resulted in recognition of a discount
of $1.9 million recorded against such notes at the date of issuance. Such notes
were first convertible during the second quarter of 1997, which resulted in such
$1.9 million being written off as a non-cash charge against earnings during such
quarter.

<PAGE> 12

SUBSTANTIAL INDEBTEDNESS. On March 14, 1997, the Company issued
three-year, 12% Convertible Promissory Notes due 2000 in the aggregate principal
amount of $8.5 million (the "Convertible Notes"). On February 23, 1998, the
Company consummated the exchange (the "Note Exchange") of $5,275,000 in
principal amount of the Convertible Notes together with the right to receive an
aggregate of $329,030 in accrued and unpaid interest thereon for (i) 1,245,340
shares of Series A Convertible Preferred Stock convertible into 4,981,360 shares
of Common Stock, and (ii) 1,245,340 five-year warrants (the "Exchange Warrants")
each exercisable to purchase one share of Common Stock at an exercise price of
$1.125 per share. The balance of $3,225,000 of Convertible Notes remain
outstanding and unaffected by the Note Exchange. The Convertible Notes, which
are unsecured, accrue interest at a rate of 12% per annum due semi-annually in
arrears on February 15 and August 15 while they remain outstanding. If the
Company defaults on its obligation to pay interest when due, the interest rate
would increase to 16% during such default and the noteholders would be entitled
to accelerate the Convertible Notes and demand payment of the entire principal
amount then outstanding in addition to accrued and unpaid interest. Acceleration
of the Convertible Notes would have a material adverse effect on the Company's
financial position.

The Company borrowed an aggregate of $4.5 million pursuant to an
equipment loan in September 1997 and in October 1997 entered into a working
capital revolving credit facility allowing for maximum borrowing of $4.0 million
(the "Transamerica Debt"), in each case from Transamerica Business Credit
Corporation ("Transamerica"). The Transamerica Debt is secured by a first
priority lien against virtually all of the Company's assets. The Transamerica
Debt requires substantial payments of interest and principal. Failure of the
Company to pay such obligations as they become due would entitle Transamerica to
accelerate all principal and interest under the Transamerica Debt. The Company
does not have sufficient funds to repay such accelerated principal and interest,
which would entitle Transamerica to foreclose on all assets of the Company,
except for certain stock in foreign subsidiaries and certain royalty payments.
Foreclosure on such assets would require the Company to cease its operations.
The terms of the Transamerica Debt contain various restrictive covenants that
limit the manner in which the Company may conduct its affairs, including its
ability to obtain additional funds through incurrence of debt or sale of assets.
See "--Significant Capital Requirements; Need for Additional Capital."

CONVERTIBLE NOTES AND CONVERTIBLE PREFERRED RANK SENIOR TO COMMON STOCK.
The Convertible Notes are senior indebtedness of the Company and are pari passu
with the Company's indebtedness to Transamerica Business Credit Corporation
("Transamerica") and all other indebtedness of the Company, including the
Company's trade debt. However, the Company's indebtedness to Transamerica is
secured by a lien on substantially all of the Company's assets. Therefore, if
the Company were to liquidate, proceeds from the sale of assets would be applied
first to satisfy the Company's obligations to Transamerica ($5,039,235 at June
1, 1998, and potentially a prepayment premium). The remaining proceeds, if any,
would then be applied to satisfy the Convertible Notes and all other outstanding
indebtedness of the Company, including trade debt (on a pro rata basis if the
proceeds remaining after satisfaction of the Transamerica Debt were insufficient
to satisfy fully such obligations). Any proceeds remaining after full
satisfaction of all indebtedness of the Company would be applied to satisfy the
liquidation preference of the Series A Convertible Preferred (the "Convertible
Preferred") and other preferred stock of the Company, if any is then
outstanding, which has parity as to liquidation preference with the Convertible
Preferred (on a pro rata basis if such remaining proceeds were insufficient to
satisfy fully such liquidation preferences). There can be no assurances that any
proceeds would remain for distribution to holders of Common Stock following
satisfaction of such indebtedness and liquidation preferences.

<PAGE> 13

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 System 2000 and 2001
and the TracCell 2000 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 System
2000 and the TracCell 2000 will be offset by a reduction in costs associated
with increased efficiency and decreased malpractice liability risks 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 System 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 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 both directly through its internal sales
force and through a limited number of distributors. In 1996, the Company entered
into its initial distribution arrangement and commenced direct sales efforts
with respect to cytopathology products. Pursuant to a five-year distribution
agreement (commencing May 1997), Leica has been granted exclusive third-party
distribution rights outside the Western Hemisphere for the AcCell Systems and
has a right of first negotiation with respect to TracCell 2000 and other future
cytopathology products. In September 1997, the Company and Olympus terminated
the distribution agreement entered into in May 1996 which had granted Olympus
exclusive distribution rights for the AcCell Systems in the Western Hemisphere.
While the agreement was in effect, Olympus sold very few AcCell Systems to
end-users. Furthermore, the Company has agreed to repurchase up to six AcCell
Systems per month, beginning in October 1997, from Olympus' inventory.

With respect to human, clinical microbiology products marketed under the
Sensititre trade name, the Company has entered into an exclusive, four-year
distribution agreement (commencing September

<PAGE> 14

1996) for the United States with Fisher Scientific. In December 1996, the
Company entered into a Manufacturing and License Agreement with Salcom S.r.l.
("Salcom") pursuant to which Salcom has been granted certain exclusive rights in
and to technology and related trade secrets, know-how and patent rights relating
to alamarBlue(TM) (the "Licensed Technology") to manufacture and distribute the
Company's alamarBlue(TM) microbiology products in parts of Europe and Japan.
Salcom is obligated to pay royalties to the Company on net sales of any product
which encompasses or incorporates the Licensed Technology until September 30,
1999, subject to certain conditions and restrictions.

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 its current
distribution arrangements 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, Leica and Fisher
Scientific are the exclusive distributors of the respective products in the
respective territories covered by the Company's agreements with such
distributors, 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.

LIMITED NUMBER OF CYTOPATHOLOGY 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 System and the
TracCell 2000 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 System
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.

UNCERTAINTY OF PROFITABLE CYTOPATHOLOGY MANUFACTURING; RELIANCE ON
THIRD-PARTY MICROBIOLOGY MANUFACTURING. The Company has developed the AcCell
System 2000 manufacturing system and marketing and sales of the AcCell System
2000 began in 1996. 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 System
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.

<PAGE> 15

PROTECTION OF INTELLECTUAL PROPERTY; POSSIBLE INFRINGEMENT OF THIRD-PARTY
PATENT. 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. Two of the Company's patent applications have been granted as
of the date of this Prospectus, and several other applications remain pending or
are in development.

The Company has been issued a Great Britain patent and has filed or been
assigned 14 U.S. patent applications 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. The Company has been assigned
one U.S. patent related to the ESP Product Line and one U.S. and two European
patent applications related to such issued patent, as well as one additional
U.S. patent application relating to the ESP Product Line. 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(TM) 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 European patent relating to a portion of the alamarBlue
microbiology technology. However, subsequently BioMerieux (one of the Company's
competitors) filed an Opposition to the grant of such European patent. The
Company filed its response to such Opposition in November 1997. There can be no
assurance that such Opposition will be overcome and that such European patent
will issue.

The Company is continuing to prepare additional patent applications.
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 another relevant patent applicant 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.
Protections relating to portions of such technology 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 also can be no assurance
that any patents, patent applications and patent licenses will adequately cover
the Company's technologies.

The Company owns two U.S. trademark registrations for the trademark
"Sensititre," and owns "ESP," "EZ DRAW," and "EZ VIEW," and has filed U.S.
trademark applications for the trademarks "AcCell," "MacCell," "FluoreTone,"
"INSIGHT," "SpeciFind," "Relational Cytopathology Review Guide," "MacroVision,"
"Pathos," "AcCell Savant," "And you thought you'd seen it all" and "TracCell."
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

<PAGE> 16

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, on February 20, 1998, Akzo Nobel ("Akzo") notified the Company
that Akzo believes that the Company is infringing on an Akzo patent by
manufacturing and selling ESP instruments. The Company believes that it is not
infringing the Akzo patent. However, there can be no assurances the Company
would prevail if Akzo were to file patent infringement litigation against the
Company. 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.

TECHNOLOGICAL CHANGE AND COMPETITION. The Company's AcCell System and
TracCell 2000, which received FDA clearance for marketing in the United States
in August 1997, 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 Company's business, financial condition and
results of operations could be materially adversely affected.

<PAGE> 17

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"). The ESP Product
Line faces competition from companies that have developed or may be developing
competing product lines. 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 at least two other
companies (including Becton, Dickinson and Company), that currently produce and
market products similar to the ESP Product Line.

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.

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. 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."

17
<PAGE> 18

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 marketing clearance 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.

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 marketing clearances, 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
2000 in the United States does not require FDA marketing clearance. Marketing of
the TracCell 2000 in the United States, however, does require pre-marketing
clearance by the FDA, which clearance was granted to the Company in August 1997.

Under current interpretation of FDA regulations, marketing of the
Company's MIC/ID microbiology products in the United States requires FDA
marketing 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.

<PAGE> 19

At the current time, alamarBlue is marketed for use in the industrial
and research markets and therefore does not require FDA marketing clearance. 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, and 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. 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 marketing clearance, 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 for marketing
by the FDA or other applicable regulatory authorities or, if such clearance is
received, that such marketing clearance will not be withdrawn.

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 clearance by a foreign country may be longer or shorter than
that required for FDA clearance, and the requirements may differ. Export sales
of certain devices that have not received FDA marketing clearance generally are
subject to both FDA certificate for product for export regulations 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 clearances 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
clearances.

The Company intends to seek ISO 9001 qualification, an international
manufacturing quality standard. The CE mark is recognized by countries that are
members of the European Union and the European Free Trade Association and is
required to be affixed to all medical devices sold in the European Union. The
AcCell 2000 is certified as complying with CE mark requirements. However, no
assurance can be given that the Company will obtain the CE mark for 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 Quality System Regulation and are subject to
periodic FDA inspection. Any failure to comply with Quality System Regulation 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 Quality System 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 Quality
System Regulation responses as adequate.

19
<PAGE> 20

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 Quality System Regulation, 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.

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 clearances in the United States or internationally on a
timely basis, if ever. Delays in the receipt of, or failure to receive, such
clearances, the loss of previously received listings 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 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.

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. 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.

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

<PAGE> 21

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 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.

TEMPORARY EXEMPTION ON NASDAQ SMALLCAP LISTING; POSSIBLE DELISTING OF
COMMON STOCK FROM NASDAQ; RISKS RELATING TO LOW-PRICE STOCKS. From October 1996
until February 19, 1998, the Common Stock traded on The Nasdaq National Market
under the symbol "ACMI." Due to the Company's failure to meet the continued
listing requirements of the Nasdaq National Market, Nasdaq moved trading of the
Common Stock to The Nasdaq SmallCap Market under the symbol "AMCIC" on February
19, 1998, pursuant to a temporary exemption from the initial listing
requirements.

On November 14, 1997, Nasdaq notified the Company that Nasdaq was
reviewing the eligibility of the Common Stock for continued inclusion on the
Nasdaq National Market because at September 30, 1997 the Company's net tangible
assets and equity were below the $4.0 million threshold. In accordance with
Nasdaq's request, on December 5, 1997, the Company provided Nasdaq with the
Company's proposals for achieving compliance. On December 18, 1997, Nasdaq
notified the Company that the Company's request for continued listing on the
Nasdaq National Market had been denied. The decision was reviewed before an oral
hearing panel of Nasdaq on January 29, 1998.

The Nasdaq hearing panel ordered that the trading of the Common Stock be
moved to the Nasdaq SmallCap Market on February 19, 1998, pursuant to a
temporary exemption from the initial listing requirements. On February 17, 1998,
Nasdaq notified the Company that in order to continue listing of the Common
Stock on the Nasdaq SmallCap Market the Company must (i) file an application for
listing the Common Stock on the Nasdaq SmallCap Market by February 28, 1998, and
(ii) file with the Commission on or prior to March 20, 1998, a pro forma balance
sheet dated February 28, 1998 showing net tangible assets of a minimum of
$7,000,000 and compliance with all criteria for continued listing on the Nasdaq
SmallCap Market. The Company filed the required listing application within the
prescribed period. On March 20, 1998, the Company filed with the Commission a
Current Report on Form 8-K evidencing compliance with the $7,000,000 minimum net
tangible assets requirement and all criteria for continued listing, except that,
from February 19, 1998 through March 23, 1998 and then again on April 2, 1998,
the bid price for the

<PAGE> 22

Common Stock dropped below the $1.00 minimum bid price for continued listing.

On March 17, 1998, Nasdaq granted the Company's request for an extension
of the deadline for achieving compliance with the minimum $1.00 price per share
of Common Stock to allow time to complete a reverse stock split as a possible
means to increase the bid price of the Common Stock. An amendment to the
Company's Certificate of Incorporation to effect a one-for-six reverse stock
split on the Common Stock was approved by stockholders on May 19, 1998 and
became effective at the opening of trading on May 21, 1998 (at which time the
new temporary symbol for the Common Stock became "ACMCD"). Nasdaq has required
that the bid price remain over $1.00 per share during the ten consecutive
trading days (through June 5, 1998) following the effectiveness of the reverse
stock split. From May 21, 1998 through June 1, 1998, the minimum bid price per
share of Common Stock has been above $1.00 per share. However, there can be no
assurance that, even if the Reverse Stock Split is effected, the Common Stock
will continue to remain eligible for listing on the Nasdaq SmallCap Market.

In order to maintain listing on The Nasdaq SmallCap Market following the
date of this Prospectus, the Company will have to maintain certain minimum
financial and corporate governance requirements for continued inclusion on
Nasdaq. Continued inclusion on The Nasdaq SmallCap Market generally requires
either (x) (i) net tangible assets of $2,000,000, (ii) a public float of 500,000
shares with a market value of $1,000,000, (iii) a $1.00 minimum bid price, (iv)
300 round lot stockholders and (v) two market makers. There can be no assurances
that the Company will be able to maintain compliance for continued listing.

If the Common Stock is not listed on Nasdaq, trading, if any, in the
Common Stock would thereafter be conducted in the non-Nasdaq over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's securities could be impaired, not
only in the number of shares of Common Stock that would be bought and sold, but
also through delays in the timing of transactions, reduction in security analyst
coverage of the Company and lower prices for the Common Stock than might
otherwise be attained. Consequently, investors could find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of the
Company's Common Stock. In addition, delisting could result, in certain
circumstances, in the Common Stock becoming characterized as a low-priced or
"penny" stock. In such event, the market liquidity for the Company's securities
could be severely affected as the Common Stock would be subject to compliance
with The Securities Enforcement and Penny Stock Reform Act of 1990. The
regulations governing low-priced, so-called "penny" stocks could limit the
ability of broker-dealers to sell the Company's Common Stock and, in turn, the
ability of stockholders to sell their Common Stock.

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
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

<PAGE> 23

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.

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
System 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 System 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,
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

<PAGE> 24

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.

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.
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

<PAGE> 25

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.

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. The Company currently has outstanding 1,245,340
shares of Series A Convertible Preferred Stock and has contractual commitments,
upon the occurrence of certain events, to offer to exchange shares of Series A
Convertible Preferred Stock and Series C Convertible Preferred Stock in exchange
for securities of the Company issued in private placements in February and March
1998. Although the Company does not currently intend to issue any other 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 acquirer 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 June 1, 1998, the Company has outstanding 5,345,209 shares of
Common Stock, warrants to purchase 2,255,390 shares of Common Stock (including
the 1,713,697 Warrants Shares to which this Prospectus relates) and options to
purchase 589,275 shares of Common Stock. Of the outstanding shares, 7,250 shares
are subject to forfeiture if certain milestones under a microbiology product
development agreement are not achieved. As of June 1, 1998, approximately
3,660,000 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. The Company has
registered the issuance of approximately 20,700 shares of Common Stock issuable
upon the exercise of options outstanding pursuant to certain of the Company's
stock option plans. Such shares are available for immediate sale in the

<PAGE> 26
public market upon exercise of options. In addition to the resale of the
4,038,821 Shares to be registered hereby, the resale of approximately 533,500
shares of Common Stock underlying immediately exercisable warrants has been
registered pursuant to currently effective registration statements. The Company
also intends to register the resale of approximately 269,400 shares issuable
upon exercise of options granted under the 1997 Stock Option Plan approved by
stockholders in May 1998.

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 to acquire all the Warrant Shares, the Company will receive aggregate
gross proceeds of approximately $8,310,000, at the current exercise prices which
will be used as unallocated working capital. The Company has agreed to pay
certain expenses in connection with this Offering, currently estimated to be
approximately $24,000.

ACCUMED INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
ESP
AccuMed Product Line Adjustments Pro Forma
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sales 19,109,661 2,639,122 $ 21,748,783
Less cost of sales (11,850,692) (1,971,039) (13,821,731)
------------ ------------ -------- ------------
Gross profit (loss) 7,258,969 668,083 -- 7,927,052
------------ ------------ -------- ------------

Operating expenses:
General and Administrative 7,891,320 721,162 8,612,482
Research and Development 5,315,411 259,930 5,575,341
Goodwill writeoff 3,582,068 -- 3,582,068
Sales and marketing 4,289,447 -- 4,289,447
------------ ------------ -------- ------------
Total operating expenses 21,078,246 981,092 -- 22,059,338
------------ ------------ -------- ------------

Operating Loss (13,819,277) (313,009) -- (14,132,286)
------------ ------------ -------- ------------

Other income (expense):
Interest income 23,383 -- 23,383
Interest expense (3,584,160) -- (120,000) (1) (3,704,160)
Other income (expense) 24,351 -- 24,351
Minority interest 437,127 -- 437,127
------------ ------------ -------- ------------
Total other income (expense) (3,099,299) -- (120,000) (3,219,299)
------------ ------------ -------- ------------

Loss before income taxes (16,918,576) (313,009) (120,000) (17,351,585)

Income tax (expense) benefit -- -- -- --
------------ ------------ -------- ------------
Net Loss $(16,918,576) $ (313,009) (120,000) $(17,351,585)
============ ============ ======== ============
Net Loss per share $ (0.77) $ (0.79)
============ ============
Weighed average common shares
outstanding 22,052,929 22,052,929
============ ============
</TABLE>

See accompanying notes to the Pro Forma Condensed Consolidated Financial
Statements.

AccuMed International, Inc.
Notes to Pro-Forma Consolidated Statement of Operations
For the Year Ended December 31, 1997

NOTE A - DESCRIPTION OF ACQUISITION

On March 3, 1997, the Company acquired certain assets and assumed
certain liabilities (the "ESP Product Line") of Difco Microbiology Systems, Inc.
Pursuant to the terms of the acquisition agreement, the Company paid $6.0
million in cash in exchange for these net assets. The acquisition was funded by
a $6.0 million bridge loan which was repaid on March 14, 1997 by proceeds
received from the issuance of three year convertible notes bearing 12% interest.

The acquisition was accounted for using the purchase method of
accounting, with the purchase price allocated to the net assets acquired based
on their estimated fair values. This treatment resulted in no excess purchase
price over fair value of tangible assets acquired. The results of operations of
the acquired net assets are included in the consolidated financial statements
from the date of acquisition.

The accompanying pro forma condensed consolidated statement of
operations illustrates the effect of the acquisition ("pro forma") on the
Company's results of operations for the period indicated. The statement
presented for the year ended December 31, 1997 is based on the historical
statements of operations of the Company and the listed acquisition for that
period assuming the acquisition took place on January 1, 1997.

NOTE B - PRO FORMA ADJUSTMENTS

The following adjustment is reflected in the Pro Forma Condensed
Consolidated Statement of Operations under the columns headed "Adjustments".

(1) Interest Accrued on Loan to Finance Acquisition

The funds used to acquire the ESP Product Line came from a bridge
loan which was repaid on March 14, 1997 and replaced with three year
convertible notes bearing interest at 12%. Interest expense of
$120,000, based on the $6,000,000 purchase price at 12%, has been
added to the Pro Forma Consolidated Statement of Operations, as the
Acquisition was assumed to have taken place on January 1, 1997.

<PAGE> 27

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is quoted on the Nasdaq SmallCap Market under
the trading symbol "ACMCD." On June 5, 1998, the last reported sale price of the
Common Stock on the Nasdaq SmallCap Market was $3.63 per share. Effective May
21, 1998, the Company effected a one-for-six reverse stock split on the Common
Stock. The tables below sets forth, for the periods indicated, the range of high
and low sales prices for the Common Stock on the Nasdaq SmallCap Market both at
pre-reverse stock split prices and post-reverse stock split prices. At June 5,
1998, there were approximately 5,500 beneficial owners of Common Stock.
<TABLE>
<CAPTION>

PRE-REVERSE STOCK SPLIT ACTUAL AND EQUIVALENT PRICES
High Low
---- ---
<S> <C> <C>
1996 FISCAL YEAR
First Quarter $ 6.25 $ 1.06
Second Quarter 9.38 4.88
Third Quarter 7.00 4.16
Fourth Quarter 5.06 2.25

1997 FISCAL YEAR
First Quarter $ 4.06 $ 2.47
Second Quarter 4.13 3.00
Third Quarter 3.63 2.25
Fourth Quarter 2.97 1.16

1998 FISCAL YEAR
First Quarter $ 2.13 $ 0.69
Second Quarter (through June 5, 1998) 1.31 0.36

POST-REVERSE STOCK SPLIT ACTUAL AND EQUIVALENT PRICES
High Low
---- ---
1996 FISCAL YEAR
First Quarter $ 37.50 $ 6.36
Second Quarter 56.28 29.28
Third Quarter 42.00 24.96
Fourth Quarter 30.36 13.50

1997 FISCAL YEAR
First Quarter $ 24.36 $ 14.82
Second Quarter 24.78 18.00
Third Quarter 21.78 13.50
Fourth Quarter 17.82 6.96

1998 FISCAL YEAR
First Quarter $ 12.75 $ 4.13
Second Quarter (through June 5, 1998) 7.88 2.16
</TABLE>

<PAGE> 28

SELLING SECURITYHOLDERS

The following table sets forth information as of June 5, 1998 (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
approximately 5,345,209 shares of Common Stock outstanding (subject to further
adjustment to reflect issuance of one additional whole share of Common Stock in
lieu of a fractional share otherwise issuable in the one-for-six reverse stock
split effective May 21, 1998).

<TABLE>
<CAPTION>
Shares to
Shares Beneficially Owned be Sold in Shares Beneficially Owned
Prior to Offering (1) Offering After Offering (1)
------------------------- -------------- -------------------------
NAME Number Percent Number Percent
- ---- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Shannon P. Acks (2) 24,588 * 24,588 -- *

Basil Asciutto (3) 8,073 * 6,668 1,405 *

Bellington Industries, Inc. (4) 1,333,334 22.18% 1,333,334 -- *

Better Homes Plastic Corp. (5) 22,224 * 22,224 -- *

John W. Boyd MD (6) 4,446 * 4,446 -- *

Belinda Breese Bull (7) 8,890 * 8,890 -- *

Caisse Centrale des Banques
Populaires (8) 19,688 * 19,688 -- *

Leslie G. Callahan III (9) 19,670 * 19,670 -- *
Chatri Jhunjhnuwala &

Lourdes Jhunjhnuwala (10) 16,668 * 16,688 -- *

Clariden Bank (11) 29,532 * 29,532 -- *

Denis P. Coleman (12) 8,890 * 8,890 -- *

Commonwealth Associates 242,641 4.48% 88,891 153,750 2.00%
(13)(21)

Conzett Europa Invest. (14) 147,520 2.69% 147,520 -- *

DW Trustees (BVI) Ltd. (15) 9,835 * 9,835 -- *

Egger & Co. Cust. for
Courcoux Bonnet (16) 49,219 * 49,219 -- *

Eldridge Associates, Inc.
Defined Benefit Pension
Plan (17) 4,446 * 4,446 -- *

Elite Sales Profit Sharing
Plan (18) 8,668 * 8,668 -- *
</TABLE>

<PAGE> 29

<TABLE>

<S> <C> <C> <C> <C> <C>
Emerge Capital (19) 29,532 * 29,532 -- *

Faisal Finance S.A. (20) 66,668 1.24% 66,668 -- *

Michael S. Falk (13)(21) 311,850 5.81% 44,446 267,404 3.47%

Fifth Third Bank of Western
Ohio, Trustee (22) 48,922 * 29,505 19,417 *

Flynn Corporation (23) 66,668 1.24% 66,668 -- *

France Finance IV (24) 47,709 * 39,375 8,334 *

Gallagher Corporation (25) 88,890 1.65% 88,890 -- *

Paul D. Goldenheim (26) 5,540 * 4,923 617 *

Zachary Gomes (27) 21,337 * 19,670 1,667 *

William Joe & Ann Street
Jackson, JTWROS (28) 19,670 * 19,670 -- *

Jed R. Manocherian 1995

Property Trust (29) 2,462 * 2,462 -- *

J.F. Shea Co., Inc. as
Nominee 1997-7 (30) 416,160 7.63% 222,224 305,937 3.97%

Peggy Jordan (31) 128,560 2.37% 128,560 -- *

Jupiter World (32) 22,224 * 22,224 -- *

Garth A. Koniver MD (33) 4,446 * 4,446 -- *

LAD Equity Partners, LP (34) 19,688 * 19,688 -- *

Douglas Levine (35) 7,383 * 7,383 -- *

Greg Manocherian (36) 4,918 * 4,918 -- *

Gary. N. Mansfield (37) 4,446 * 4,446 -- *

McDonnell Boehnen Hulbert &
Berghoff 16,536 * 16,536 -- *

Patrick H. & Lee M

Miller, Jr., JTWROS (38) 98,347 1.83% 98,347 -- *

Mizebourne Investments
Corp. (39) 9,844 * 9,844 -- *

Northlea Parners, Ltd. (40) 75,834 1.42% 22,224 53,610 *

Anna M. Pocisk (41) 13,334 * 13,334 -- *

Robert Priddy (42) 894,053 15.25% 739,483 154,570 2.01%
</TABLE>

<PAGE> 30

<TABLE>

<S> <C> <C> <C> <C> <C>
Richard Campeanella IRA,
B.S.C.S.as Cust for (43) 2,224 * 2,224 -- *

Robert A. O'Sullivan
Family Trust (44) 11,644 * 9,844 1,800 *

Keith M. Rosenbloom (45) 8,009 * 4,446 3,563 *

Sakura Finetek USA Inc. (46) 222,224 4.07% 222,224 -- *

Edward T. Scheider (47) 23,670 * 19,670 4,000 *

William R. Schoen (48) 11,511 * 9,844 1,667 *

Lawrence Seftel (49) 11,112 * 11,112 -- *

Michael A. Singer (50) 22,224 * 22,224 -- *

Theodore & Elizabeth S.
Stern, JTWROS (51) 78,678 1.47% 78,678 -- *

Joel A. Stone (52) 22,224 * 22,224 -- *

Sutton Parner L.P. (53) 80,000 1.49% 80,000 -- *

Vitali Maritime Corp. (54) 19,688 * 19,688 -- *

Dennis Wilson (55) 8,000 * 8,000 -- *
</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 and other securities convertible into Common Stock. Each
beneficial owner's percentage ownership is determined by including
shares underlying securities which are exercisable or convertible into
Common Stock by such person currently or within 60 days following the
Reference Date, and excluding shares underlying securities held by any
other person. The percentage of shares owned after the Offering is
calculated assuming that 7,700,316 shares of Common Stock will be
outstanding, which includes the 5,345,209 shares outstanding on the
Reference Date and an additional 2,355,107 Shares underlying the
Warrants and Convertible Preferred which would have to be exercised or
converted in order to sell the Shares.

(2) Shares listed as held by Ms. Acks include 4,918 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 19,670 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(3) Shares listed as held by Mr. Asciutto include 4,739 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(4) Shares listed as held by Bellingham Industries, Inc. include 666,667
shares underlying Warrants that are exercisable currently or within 60
days following the Reference Date.

<PAGE> 31

(5) Shares listed as held by Better Homes Plastic Corp. include 11,112
shares underlying Warrants that are exercisable currently or within 60
days following the Reference Date.

(6) Shares listed as held by Dr. Boyd include 2,223 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(7) Shares listed as held by Ms. Bull include 4,445 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(8) Shares listed as held by Caisse Centrale des Banques Populaires include
3,938 shares underlying Warrants that are exercisable currently or
within 60 days following the Reference Date and 15,750 shares underlying
Convertible Preferred that are convertible currently or within 60 days
of the Reference Date.

(9) Shares listed as held by Mr. Callahan include 3,934 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 15,736 shares underlying Convertible Prefferred that
are convertible currently or within 60 days of the Reference Date.

(10) Shares listed as held by Mr. and Ms. Jhunjhnuwala include 8,334 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(11) Shares listed as held by Clariden Bank include 5,907 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 23,625 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(12) Shares listed as held by Mr. Coleman include 4,445 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(13) Shares listed as held by Commonwealth Associates include 121,713 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(14) Shares listed as held by Conzett Europa Invest. include 29,504 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 118,016 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(15) Shares listed as held by DW Trustees (BVI) Ltd. include 1,967 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 7,868 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(16) Shares listed as held by Egger & Co. Cust. For Courcoux Bonnet include
9,844 shares underlying Warrants that are exercisable currently or
within 60 days following the Reference Date and 39,375 shares underlying
Convertible Preferred that are convertible currently or within 60 days
of the Reference Date.

(17) Shares listed as held by Eldridge Associates, Inc. Defined Benefit
Pension Plan include 2,223 shares underlying Warrants that are
exercisable currently or within 60 days following the Reference Date.

(18) Shares listed as held by Elite Sales Profit Sharing Plan include 4,334
shares underlying Warrants that are exercisable currently or within 60
days following the Reference Date.

(19) Shares listed as held by Emerge Capital include 5,907 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 23,625 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

<PAGE> 32

(20) Shares listed as held by Faisal Finance S.A. include 33,334 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(21) Mr. Falk directly owns 73,593 shares of Common Stock and warrants to
purchase up to 119,211 shares of Common Stock exercisable currently or
within 60 days following the Reference Date. The number shown includes
an additional 120,926 shares, and 300,180 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. Mr. Falk disclaims beneficial ownership of the securities
held by Commonwealth Associates except to the extent of his percentage
ownership interests in Commonwealth Associates. Certain shares and
warrants held directly by Mr. Falk were transferred to him by
Commonwealth Associates.

(22) Shares listed as held by Fifth Third Bank of Western Ohio, Trustee
include 5,901 shares underlying Warrants that are exercisable currently
or within 60 days following the Reference Date and 23,604 shares
underlying Convertible Preferred that are convertible currently or
within 60 days of the Reference Date.

(23) Shares listed as held by Flynn Corporation include 33,334 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(24) Shares listed as held by France Finance IV include 16,209 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 31,500 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(25) Shares listed as held by Gallagher Corporation include 44,445 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(26) Shares listed as held by Mr. Goldheim include 985 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 3,938 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(27) Shares listed as held by Mr. Gomes include 3,934 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 15,736 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(28) Shares listed as held by Mr. And Ms. Jackson include 3,934 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 15,736 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(29) Shares listed as held by Jed R.Manocherian 1995 Property Trust include
493 shares underlying Warrants that are exercisable currently or within
60 days following the Reference Date and 1,969 shares underlying
Convertible Preferred that are convertible currently or within 60 days
of the Reference Date.

(30) Shares listed as held by J.F. Shea Co. include 85,334 shares underlying
convertible notes held by Edmund Shea, a control person of J.F. Shea Co.
which are convertible currently or within 60 days following the
Reference Date and 149,714 shares underlying warrants held by J.F. Shea
Co. which are exercisable currently or within 60 days following the
Reference Date.

(31) Shares listed as held by Ms. Jordan include 58,379 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 15,736 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(32) Shares listed as held by Jupiter World include 11,112 shares underlying
Warrants that are exercisable currently or within 60
days following the Reference Date.

<PAGE> 33

(33) Shares listed as held by Dr. Koniver include 2,223 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(34) Shares listed as held by LAD Equity Partners, LP include 3,938 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 15,750 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(35) Shares listed as held by Mr. Levine include 1,477 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 5,906 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(36) Shares listed as held by Mr. Manocherian include 984 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 3,934 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(37) Shares listed as held by Mr. Mansfield include 2,223 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(38) Shares listed as held by Mr. And Ms. Miller include 19,670 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 78,677 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(39) Shares listed as held by Mizebourne Investments Corp. include 1,969
shares underlying Warrants that are exercisable currently or within 60
days following the Reference Date and 7,875 shares underlying
Convertible Preferred that are convertible currently or within 60 days
of the Reference Date.

(40) Shares listed as held by Northlea Partners, Ltd. include 25,936 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(41) Shares listed as held by Ms. Pocisk include 6,667 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(42) Shares listed as held by Mr. Priddy include 299,132 shares underlying
warrants, 236,031 shares underlying Convertible Preferred, and 3,334
shares underlying options held by Mr. Priddy that are exercisable or
convertible currently or within 60 days following the Reference Date.

(43) Shares listed as held by Richard Campanella IRA, B.S.C.S. as Cust.
include 1,112 shares underlying Warrants that are exercisable currently
or within 60 days following the Reference Date.

(44) Shares listed as held by Robert A. O'Sullivan Family Trust include 3,769
shares underlying Warrants that are exercisable currently or within 60
days following the Reference Date and 7,875 shares underlying
Convertible Preferred that are convertible currently or within 60 days
of the Reference Date.

(45) Shares listed as held by Mr. Rosenbloom include 5,786 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(46) Shares listed as held by Sakura Finetek USA Inc. include 111,112 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(47) Shares listed as held by Mr. Scheider include 3,934 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 15,736 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

<PAGE> 34

(48) Shares listed as held by Mr. Schoen include 1,969 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date and 7,875 shares underlying Convertible Preferred that
are convertible currently or within 60 days of the Reference Date.

(49) Shares listed as held by Mr. Seftel include 5,556 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(50) Shares listed as held by Mr. Singer include 11,112 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(51) Shares listed as held by Mr. and Ms. Stern include 15,736 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 62,942 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(52) Shares listed as held by Mr. Stone include 11,112 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

(53) Shares listed as held by Sutton Partners L.P. include 40,000 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date.

(54) Shares listed as held by Vitali Maritime Corp. include 3,938 shares
underlying Warrants that are exercisable currently or within 60 days
following the Reference Date and 15,750 shares underlying Convertible
Preferred that are convertible currently or within 60 days of the
Reference Date.

(55) Shares listed as held by Mr. Wilson include 4,000 shares underlying
Warrants that are exercisable currently or within 60 days following the
Reference Date.

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.

<PAGE> 35

CERTAIN RELATIONSHIPS AND TRANSACTIONS

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

COMMONWEALTH ASSOCIATES

Commonwealth Associates ("Commonwealth") is a principal stockholder of
the Company. 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 of
AccuMed, Inc. into the Company. 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.

On March 14, 1997, the Company consummated the private placement of an
aggregate of $8,500,000 in initial principal amount of 12% Convertible
Promissory Notes (the "Convertible Notes") and Warrants to purchase an aggregate
of 850,000 shares of Common Stock at $3.125 per share. Commonwealth acted as
placement agent in the private placement for which it received from the Company
(i) cash commissions of $595,000, (ii) five-year warrants to purchase 200,000
shares of Common Stock (issuable to Commonwealth and/or its designees at an
exercise price of $3.125 per share, and (iii) an accountable expense
reimbursement of $56,500 in cash.

On February 23, 1998, the Company consummated the exchange (the "Note
Exchange") of $5,275,000 in principal amount of the Convertible Notes together
with the right to receive an aggregate of $329,030 in accrued and unpaid
interest thereon for (i) 1,245,340 shares of Series A Convertible Preferred
Stock, and (ii) five-year warrants to purchase an aggregate of 1,245,340 shares
of Common Stock at an exercise price of $1.125 per share. Commonwealth served as
placement agent in the Note Exchange for which it received from the Company, (i)
50,000 shares of Common Stock in lieu of a cash retainer, (ii) $175,000 in cash,
and (iii) seven-year warrants to purchase an aggregate of 350,000 shares of
Common Stock (issuable to Commonwealth and/or its designees), at an exercise
price of $1.125 per share. In addition, the warrants to purchase 200,000 shares
of Common Stock issued to Commonwealth and its designees as compensation for the
original placement of the Convertible Notes, with an exercise price of $3.125
have been replaced with warrants having identical terms except that the exercise
price was reduced to $1.125 per share.

On March 19 and 23, 1998, the Company consummated a private placement
(the "March 1998 Placement") of 8,686,667 shares of Common Stock and seven-year
warrants to purchase an aggregate of 8,686,667 shares of Common Stock at an
exercise price of $0.75 per share. Commonwealth acted as placement agent in the
March 1998 Placement for which it received from the Company, (i) 133,333 shares
of Common Stock in lieu of a cash retainer, (ii) $251,750 in cash, (iii) and
seven-year warrants to purchase 670,534 shares of Common Stock at an exercise
price of $0.75 per share, and (iv) an accountable expense reimbursement $97,500
in cash. In addition, the warrants to purchase an aggregate of 350,000 shares of
Common Stock issued to Commonwealth and its designees as compensation for its
services in connection with the Note Exchange, at an exercise price of $1.125,
have been replaced with warrants having identical terms except that the exercise
price was reduced to $0.75 per share.

HAROLD S. BLUE

Mr. Blue has been a director of the Company since April 1, 1998 and also
served as a director from July 1996 through May

<PAGE> 36

1997. He served as a finder in the March 1998 Placement for which he received
$124,875 in cash and seven-year warrants to purchase an aggregate of 333,333
shares of Common Stock at an exercise price of $0.75 per share.

ROBERT L. PRIDDY

Mr. Priddy is a principal stockholder of the Company, and is the
beneficial owner of 9.9% of the common stock of Commonwealth. Mr. Priddy has
been a director of the Company since May 1997. Mr. Priddy loaned the Company
$3,000,000 pursuant to a loan (the "Bridge Loan") in the aggregate principal
amount of $6,000,000 made pursuant to a Loan Agreement dated as of February 19,
1997 among the Company and Mr. Priddy and Edmund H. Shea, Jr. (collectively, the
"Lender"), evidenced by a Convertible Promissory Note dated as of February 19,
1997 made by the Company in favor of the Lender. Interest on the indebtedness
under the Bridge Loan accrued at a rate of 12% per annum payable at maturity.
All amounts owed to the Lender by the Company pursuant to the Bridge Loan,
including an aggregate of $130,000 representing the loan origination fee,
interest and the prepayment premium were paid in full as of March 14, 1997 with
a portion of the proceeds of a private placement.

On August 18, 1997, Mr. Priddy loaned the Company $500,000 in cash (the
"1997 Priddy Loan") pursuant to a Promissory Note (the "Promissory Note") and
Security Agreement each of even date therewith. The 1997 Priddy Loan, which was
secured by a junior lien on royalty payments to which the Company may be
entitled under a License Agreement with Becton Dickenson & Company, bore
interest at a rate of 12% per annum. Principal and interest under the Promissory
Note were due and payable on the earlier of (x) October 15, 1997, and (y) the
closing of a senior debt financing with a financial institution (other than
Heller Financial, Inc.). However, if the principal and interest were repaid
prior to October 15, 1997, the Company was required to pay a prepayment premium
equal to the difference between $10,000 and the amount of accrued and unpaid
interest under the Promissory Note. On September 30, 1997, the Company repaid in
full the principal, interest and prepayment premium due under the 1997 Priddy
Loan.

On February 3, 1998, Mr. Priddy loaned the Company $1,000,000 in cash
(the "1998 Priddy Loan") pursuant to a Promissory Note (the "1998 Promissory
Note") and Security Agreement each of even date therewith. The 1998 Priddy Loan,
was secured by a junior lien on royalty payments to which the Company may be
entitled under a License Agreement with Becton Dickenson & Company, and bore
interest at a rate of 12% per annum. Principal and interest under the 1998
Promissory Note were due and payable on the earlier of (x) April 2, 1998 and (y)
upon closing of a securities offering in which the Company received gross
proceeds of at least $3,000,000. However, if the principal and interest were
repaid prior to April 2, 1998, the Company was required to pay a prepayment
premium equal to the difference between $20,000 and the amount of accrued and
unpaid interest under the 1998 Promissory Note. The Company repaid the principal
amount in full on March 19, 1998, and paid the interest and prepayment premium
on April 2, 1998.

EDMUND SHEA JR./ J.F. SHEA CO.

Edmund H. Shea, Jr. is a principal of J.F. Shea Co., a Selling
Securityholder. Mr. Shea loaned the Company $3,000,000 pursuant the Bridge Loan
in the aggregate principal amount of $6,000,000 made pursuant to a Loan
Agreement dated as of February 19, 1997 among the Company and Mr. Priddy and Mr.
Shea (collectively, the "Lender"), evidenced by a Convertible Promissory Note
dated as of February 19, 1997 made by the Company in favor of the Lender.
Interest on the indebtedness under the Bridge Loan accrued at a rate of 12% per
annum payable at maturity. All amounts owed to the Lender by the Company
pursuant to the Bridge Loan, including an aggregate of $130,000 representing the
loan origination fee, interest and the prepayment premium were paid in full as
of March 14, 1997 with a portion of the proceeds of a private placement.

PLAN OF DISTRIBUTION

The Selling Securityholders may sell the Shares of Common Stock (i) in
an underwritten offering or offerings, (ii) through brokers and dealers, (iii)
"at the market" to or through a market maker or in an existing trading market,
on an exchange or otherwise, for such Shares, (iv) in other ways not involving
market makers or established trading markets, including direct sales to
purchasers and (v) to the extent not prohibited by applicable securities law, in
ways other than pursuant to the distribution plan presented in this

<PAGE> 37

Prospectus.

The distribution of Shares of Common Stock may be effected from time to
time in one or more underwritten transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a "best efforts" or a "firm commitment" basis.

In connection with any such underwritten offering, underwriters or
agents may receive compensation from the Selling Securityholders for whom they
may act as agents in the form of discounts, concessions or compensation in the
form of discount, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agents.

At any time a particular offer of Shares of Common Stock is made, if
required, a Prospectus Supplement will be distributed that will set forth the
names of the Selling Securityholder(s) offering such Shares of Common Stock, the
aggregate amount of such Shares of Common Stock being offered and the terms of
the offering, including the names or names of any underwriters, dealers or
agents, any discounts, commissions and other items constituting compensation
from the Selling Securityholders and any discounts, commissions or concessions
allowed or reallowed or paid to dealers. Such Prospectus Supplement and, if
necessary, a post-effective amendments to the tea Registration Statement of
which this Prospectus forms as part, will be filed with the Commission to
reflect the disclosure of additional information with respect to the
distribution of such Shares of Common Stock.

The Selling Securityholders and any underwriters, dealers or agents that
participate in the distribution of Shares of Common Stock may be deemed to be
underwriters,and any profit on the sale of Shares of Common Stock by the Selling
Securityholders and any discount, commissions or concessions received by any
such underwriters, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act.

Under an agreement that may be entered into by the Company,
underwriters, dealers, and agents who participate in the distribution of Shares
of Common stock may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such underwriters, dealers or agents
may be required to make in respect thereof.

The sale of Shares of Common Stock by Selling Securityholders may also
be effect from time to time by Selling Securityholders directly to purchasers or
to or through certain broker-dealers. In connection with any such sale, any such
broker-dealer, acting as agent or s principal, may be made pursuant to any of
the methods described below. Such sales may be made on the Nasdaq or other
exchanges on which the Common Stock is then traded, in the over-the-counter
market, in negotiated transactions or otherwise at prices and at terms then
prevailing or at prices related to the then-current market prices or at prices
otherwise negotiated.

The Shares of Common Stock may also be sold in one or more of the
following transactions: (i) a block transactions (which may involve crosses) in
which a broker-dealer may sell all or a portion of such shares as agent but may
position and resell all or a portion of the block as principal to facilitate the
transaction; (ii) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to this Prospectus which forms a
part of the Registration Statement; (iii) a special offering, an exchange
distribution or a secondary distribution in accordance with applicable stock
exchange rules; and (iv) ordinary brokerage transactions and transactions in
which any such broker-dealer solicits purchasers. In effecting sales,
broker-dealers engaged by the Selling Securityholders may arrange for to the
broker-dealers to participate. Broker-dealers will receive commissions or other
compensation from the Selling Securityholders in amounts to be negotiated
immediately prior to the sale that will not exceed the customary in the type of
transactions involved. Broker-dealers may also receive compensation from
purchasers of the Shares which is not expected to exceed that customary in the
types of transactions involved.

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.

<PAGE> 38

LEGAL MATTERS

The legality of the securities offered by this Prospectus will be passed
upon for the Company by its General Counsel, Joyce L. Wallach, Esq.

EXPERTS

The balance sheet of Alamar Biosciences, Inc. as of September 30, 1995
and the statements of operations, stockholder's equity, and cash flows for the
year ended September 30, 1995, as incorporated by reference in the Registration
Statement of which this Prospectus forms a part has been incorporated herein in
reliance on the report, which included an explanatory paragraph related to
Alamar Biosciences, Inc.'s ability to continue as a going concern, of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of said firm as
experts in accounting and auditing.

The consolidated financial statements and schedules of AccuMed
International, Inc. and subsidiaries as of December 31, 1997 and 1996, and for
the years ended December 31, 1997 and 1996 and the three months ended December
31, 1995, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick, L.L.P., independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

<PAGE> 39

================================================================================

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 a
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, 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 information contained herein is correct as
of any time subsequent to the date hereof.

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

TABLE OF CONTENTS

Page
----

<S> <C>
Special Note Regarding Forward Looking Statements..................

Available Information..............................................

Additional Information.............................................

Incorporation of Certain Documents by Reference....................

Prospectus Summary.................................................

The Company........................................................

Risk Factors.......................................................

Use of Proceeds....................................................

Selling Securityholders............................................

Certain Relationships and Transactions.............................

Plan of Distribution...............................................

Legal Matters......................................................

Experts............................................................
</TABLE>

================================================================================

4,038,821 Shares

ACCUMED INTERNATIONAL,

INC.

Common Stock

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

PROSPECTUS

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

================================================================================

<PAGE> 40

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..................................................... $4,590
Printing and engraving expenses.......................................... $6,000
Accounting fees and expenses............................................. $9,000
Legal fees and expenses.................................................. $1,000
Blue Sky fees and expenses............................................... $2,000
Miscellaneous............................................................ $1,410

====================================================
TOTAL....................................................................$24,000
</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.

ITEM 16. EXHIBITS

The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

<S> <C>
4.1 Certificate of Incorporation of the Registrant. (1)

4.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant increasing authorized Common Stock. (4)
</TABLE>

II-1

<PAGE> 41

<TABLE>

<S> <C>
4.3 Certificate of Designation, Rights and Preferences of Series A
Convertible Preferred Stock. (5)

4.4 Certificate of Correction to Certificate of Designation, Rights and
Preferences of Series A Convertible Preferred Stock. (5)

4.5 Certificate of Amendment to Certificate of Incorporation of the
Registrant effecting reverse stock split.

4.6 Specimen Certificate for Common Stock. (1)

4.7 Bylaws of the Registrant. (1)

4.8 Amendment No. 1 to Bylaws of the Registrant. (6)

4.9 Warrant Agreement dated as of February 23, 1998 between the Company
and Commonwealth Associates, including form of Warrant Certificate
attached as Exhibit A thereto, representing an aggregate of 1,245,340
(pre split) Common Stock purchase Warrants issued to investors in a
Note Exchange Offer. (5)

4.10 Warrant Agreement dated March 19, 1998 between the Registrant and
Commonwealth Associates representing an aggregate of 350,000 (pre
split) Common Stock purchase Warrants issued to Commonwealth
Associates and/or its designees in exchange for warrants issued
thereto in connection with a Note Exchange Offer. (6)

4.11 Form of Subscription Agreement and Registration Rights Agreement
dated as of February 23, 1998 between the Registrant and each of the
investors in a Note Exchange Offer. (5)

4.12 Warrant Agreement dated as of March 19, 1998, as amended by Amendment
No. 1 dated as of March 23, 1998, between the Registrant and
Commonwealth Associates pertaining to an aggregate of 8,686,667 (pre
split) Common Stock purchase Warrants issued to investors in a
private placement. (6)

4.13 Form of Warrant Certificate representing an aggregate of 8,686,667
(pre split) Common Stock purchase Warrants issued to investors in a
private placement in March 1998. (6)

4.14 Form of Warrant to Purchase Common Stock dated March 19, 1998 or
March 23, 1998, including form of Warrant Certificate attached as
Exhibit A thereto, representing an aggregate of 1,337,333 (pre split)
Common Stock purchase Warrants issued to Commonwealth Associates,
Bellingham Capital Industries, and Harold S. Blue and/or their
respective designees in connection with a private placement. (6)

4.15 Form of Subscription Agreement and Registration Rights Agreement
dated March 19, 1998 or March 23, 1998 between the Registrant and
each of the investors in a private placement. (6)

5.1 Opinion of Joyce L. Wallach, Esq., General Counsel to the Registrant,
regarding the legality

</TABLE>

II-2

<PAGE> 42

of the securities offered hereby.

23.1 Consent of Joyce L. Wallach, Esq., General Counsel to the Registrant,
(contained in Exhibit 5.1).

23.2 Consent of Coopers & Lybrand LLP.

23.3 Consent of KPMG Peat Marwick LLP.

24.1 Powers of Attorney (contained in the signature page).

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

(1) Incorporated by reference to the Registrant's Transition Report of
Form 10-KSB for the transition period ended December 31, 1995.

(2) Incorporated by reference to the Registrant's Post-effective
Amendment No. 2 to the Registration Statement on Form S-3 (Regis. No.
333-04715).

(3) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1996.

(4) Incorporated by reference to the Registration Statement on Form S-3
(Regis. No. 333-28125) filed with the Commission on May 30, 1997.

(5) Incorporated by reference to the Current Report on Form 8-K dated
March 20, 1998.

(6) Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1997.

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 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.

II-3

<PAGE> 43

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 foregoing1 may 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> 44

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this 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 June 9, 1998

ACCUMED INTERNATIONAL, INC.

By: /s/ PAUL F. LAVALLEE
-----------------------------------------
Paul F. Lavallee, Chairman, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Pre-effective Amendment No. 1 to the Registration Statement on Form S-3 has been
signed by the following persons in the capacities andto on the dates indicated.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, jointly and severally, Paul F. Lavallee
and Leonard R. Prange, and each of the, attorneys-in-fact for the undersigned,
each with the power of substitution, for the undersigned in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with all exhibits
thereto, and other documents inc connection therewith, with the Securities and
Exchange Commission, hereby certifying and confirming all that each of said
attorneys-in-fact or his substitute or substitutes may lawfully do or causes to
be done by virtue hereof.

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Paul F. Lavallee Chairman of the Board, President June 9, 1998
- -------------------------- and Chief Executive Officer
(Paul F. Lavallee) (Principal Executive Officer)

/s/ Leonard R. Prange Chief Financial Officer June 9, 1998
- -------------------------- and Chief Operating Officer
(Leonard R. Prange) (Principal Financial and
Accounting Officer)
</TABLE>

II-5

<PAGE> 45

<TABLE>

<S> <C> <C>
/s/ Mark Banister Director June 9, 1998
- ----------------------------
(Mark Banister)

/s/ Harold S. Blue Director June 9, 1998
- ----------------------------
(Harold S. Blue)

/s/ J. Donald Gaines Director
- ----------------------------
(J. Donald Gaines)

/s/ Jack H. Halperin Director June 9, 1998
- ----------------------------
(Jack H. Halperin)

/s/ Robert L. Priddy Director June 9, 1998
- ----------------------------
(Robert L. Priddy)

/s/ Leonard M. Schiller Director June 9, 1998
- ----------------------------
(Leonard M. Schiller)
</TABLE>

II-6

<PAGE> 46

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION

4.1 Certificate of Incorporation of the Registrant. (1)

4.2 Certificate of Amendment to Certificate of Incorporation of the
Registrant increasing authorized Common Stock. (4)

4.3 Certificate of Designation, Rights and Preferences of Series A
Convertible Preferred Stock. (5)

4.4 Certificate of Correction to Certificate of Designation, Rights
and Preferences of Series A Convertible Preferred Stock. (5)

4.5 Certificate of Amendment to Certificate of Incorporation of the
Registrant effecting reverse stock split.

4.6 Specimen Certificate for Common Stock. (1)

4.7 Bylaws of the Registrant. (1)

4.8 Amendment No. 1 to Bylaws of the Registrant. (6)

4.9 Warrant Agreement dated as of February 23, 1998 between the
Company and Commonwealth Associates, including form of Warrant
Certificate attached as Exhibit A thereto, representing an
aggregate of 1,245,340 (pre split) Common Stock purchase Warrants
issued to investors in a Note Exchange Offer. (5)

4.11 Form of Subscription Agreement and Registration Rights Agreement
dated as of February 23, 1998 between the Registrant and each of
the investors in a Note Exchange Offer. (5)

4.12 Warrant Agreement dated as of March 19, 1998, as amended by
Amendment No. 1 dated as of March 23, 1998, between the
Registrant and Commonwealth Associates pertaining to an aggregate
of 8,686,667 (pre split) Common Stock purchase Warrants issued to
investors in a private placement. (6)

4.13 Form of Warrant Certificate representing an aggregate of
8,686,667 (pre split) Common Stock purchase Warrants issued to
investors in a private placement in March 1998. (6)

II-7

<PAGE> 47

Bellingham Capital Industries, and Harold S. Blue and/or their
respective designees in connection with a private placement. (6)

4.15 Form of Subscription Agreement and Registration Rights Agreement
dated March 19, 1998 or March 23, 1998 between the Registrant and
each of the investors in a private placement. (6)

5.1 Opinion of Joyce L. Wallach, Esq., General Counsel to the
Registrant, regarding the legality of the securities offered
hereby.

23.1 Consent of Joyce L. Wallach, Esq., General Counsel to the
Registrant, (contained in Exhibit 5.1).

23.2 Consent of Coopers & Lybrand LLP.

23.3 Consent of KPMG Peat Marwick LLP.

24.1 Powers of Attorney (contained in the signature page).

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

(1) Incorporated by reference to the Registrant's Transition Report of Form
10-KSB for the transition period ended December 31, 1995.

(2) Incorporated by reference to the Registrant's Post-effective Amendment No.
2 to the Registration Statement on Form S-3 (Regis. No. 333-04715).

(3) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
for the year ended December 31, 1996.

(4) Incorporated by reference to the Registration Statement on Form S-3 (Regis.
No. 333-28125) filed with the Commission on May 30, 1997.

(5) Incorporated by reference to the Current Report on Form 8-K dated March 20,
1998.

(6) Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997.

II-8

<PAGE> 1
Exhibit 4.5

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

ACCUMED INTERNATIONAL, INC.

The undersigned, the President and Secretary of AccuMed International,
Inc., a Delaware corporation (the "Corporation"), do hereby certify as follows:

1. The Board of Directors of AccuMed International, Inc. duly adopted a
resolution, in accordance with Section 242 of the General Corporation Law of the
State of Delaware, to amend the Certificate of Incorporation of AccuMed
International, Inc. to effect a one-for-six reverse stock split on the Common
Stock and declaring the advisability thereof.

2. At the Combined Annual and Special Meeting of Stockholders held on
May 19, 1998, dully called and held in accordance with the provisions of Section
222 of the General Corporation Law of the State of Delaware, a majority of the
shares of the outstanding stock entitled to vote thereon, and a majority of the
outstanding stock of each class entitled to vote thereon as a class, were voted
in favor of such amendment in accordance with Section 242 of the General
Corporation Law of the State of Delaware.

3. Article FOURTH of the Certificate of Incorporation of the Corporation
is hereby amended to read in its entirety as follows:

FOURTH. The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
55,000,000 shares, divided into two classes as follows:

5,000,000 shares of Preferred Stock of the par value of $0.01
per share ("Preferred Stock"); and

<PAGE> 2

50,000,000 shares of Common Stock of the par value of $0.01
per share ("Common Stock").

The designations, powers, preferences and rights, and the
qualifications, limitations or restrictions of the above classes of stock are as
follows:

DIVISION I

PREFERRED STOCK

1. The board of directors is expressly authorized at any time, and from
time to time, to issue shares of Preferred Stock in one or more series, and for
such consideration as the board of directors may determine, with such voting
powers, full or limited but not to exceed one vote per share, or without voting
powers, and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated in the resolution or resolutions
providing for the issue thereof, and as are not stated in this Certificate of
Incorporation, or any amendment thereto. All shares of any one series shall be
of equal rank and identical in all respects.

2. No dividend shall be paid or declared on any particular series of
Preferred Stock unless dividends shall be paid or declared pro rata on all
shares of Preferred Stock at the time outstanding of each other series which
ranks equally as to dividends with such particular series.

3. Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the board of directors creating any
series of Preferred Stock pursuant to this Division I, the holders of the
Preferred Stock shall have no voting power with respect to any matter
whatsoever. In no event shall the Preferred Stock be entitled to more than one
vote in respect of each share of stock. Subject to the protective conditions or
restrictions of any outstanding series of Preferred Stock, any amendment to this
Certificate of Incorporation which shall increase or decrease the authorized
capital stock of any class or classes may be adopted by the affirmative vote of
the holders of a majority of the outstanding shares of the voting stock of the
Corporation.

4. Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, shall, upon compliance with any applicable provisions
of the GCL, have

<PAGE> 3

the status of authorized and unissued shares of Preferred Stock and may be
reissued by the board of directors as part of the series of which they were
originally a part or may be reclassified into and reissued as part of a new
series or as a part of any other series, all subject to the protective
conditions or restrictions of any outstanding series of Preferred Stock.

DIVISION II

COMMON STOCK

1. DIVIDENDS. Subject to the preferential dividend rights, if any,
applicable to shares of the Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for
purchase, retirement or sinking funds for the Preferred Stock, the
holders of the Common Stock shall be entitled to receive to the extent
permitted by law, such dividends as may be declared from time to time
by the board of directors.

2. LIQUIDATION. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding up of the
Corporation, after distribution in full of the preferential amounts, if
any, to be distributed to the holders of shares of the Preferred Stock,
holders of the Common Stock shall be entitled to receive all the
remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of
shares of Common Stock held by them respectively.

3. VOTING RIGHTS. Except as may be otherwise required by law or this
Certificate of Incorporation, each holder of the Common Stock shall
have one vote in respect of each share of stock held by him or her of
record on the books of the Corporation on all matters voted upon by the
stockholders.

4. REVERSE STOCK SPLIT. Simultaneously with the effective date of this
amendment (the "Effective Date"), each share of the Company's Common
Stock, par value $0.01 per share, issued and outstanding immediately
prior to the Effective Date (the "Old Common Stock") shall
automatically and without any action on the part of the holder thereof
be reclassified as and changed, pursuant to a reverse stock split, into
one-sixth of a share of the Company's outstanding Common Stock, par
value $0.01 per share (the "New Common Stock"), subject to the
treatment of fractional share interests as described below. Each holder
of a certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Old Common Stock (the
"Old Certificates," whether one or more) shall be entitled to receive
upon surrender of such Old Certificates to the Company's Transfer Agent
for cancellation, a certificate or certificates (the "New
Certificates," whether one or more) representing the number of whole
shares of the New Common Stock into which and for which the shares of
the Old Common Stock formerly represented by such Old Certificates so
surrendered, are reclassified under the terms hereof. From and after
the Effective Date, Old Certificates shall represent only the right to
receive New Certificates pursuant to the provisions hereof. No
certificates or scrip representing fractional share interests in New
Common Stock will be issued, and no such fractional share interest will
entitle the holder thereof to vote, or to any rights of a shareholder
of the Company. Any fraction of a share of New Common Stock to which
the holder would otherwise be entitled will be adjusted upward to the
nearest whole share. If more than one Old Certificate shall be
surrendered at one time for the account of the same stockholder, the
number of full shares of New Common Stock for which New Certificates
shall be issued shall be computed on the basis of the aggregate number
of shares represented by the Old Certificate so surrendered. In the
event that the Company's Transfer Agent determines that a holder of Old
Certificates has not tendered all his certificates for exchange, the
Transfer Agent shall carry forward any fractional share until all
certificates of that holder have been presented for exchange such that
payment for fractional shares to any one person shall not exceed the
value of one share. If any New Certificate is to be issued in a name
other than that in which the Old Certificates surrendered for exchange
are issued, the Old Certificates so surrendered shall be properly
endorsed and otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite stock
transfer tax stamps to the Old Certificates surrendered, or provide
funds for their purchase, or establish to the satisfaction of the
Transfer Agent that such taxes are not payable. From and after the
Effective Date the amount of capital represented by the shares of the
New Common Stock into which and for which the shares of the Old Common
Stock are reclassified under the terms hereof shall be the same as the
amount of capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance with
applicable law.

DIVISION III

ELIMINATION OF PREEMPTIVE
RIGHTS

No holder of stock of any class of the Corporation shall be entitled as
a matter of right to purchase or subscribe for any part of any unissued stock of
any class, or of any additional stock of any class or capital stock of the
Corporation, or of any bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the

<PAGE> 4

Corporation, now or hereafter authorized, but any such stock or other securities
convertible into stock may be issued and disposed of pursuant to resolution by
the board of directors to such persons, firms, corporations or associations and
upon such terms and for such consideration (not less than the par value or
stated value thereof) as the board of directors in the exercise of its
discretion may determine and as may be permitted by law without action by the
stockholders.

IN WITNESS WHEREOF, we have signed this Certificate as of May 20, 1998.

ACCUMED INTERNATIONAL, INC.

By: /s/ PAUL F. LAVALLEE
----------------------------------
Paul F. Lavallee, Chairman,
President and Chief Executive
Officer

ATTEST:

/s/ JOYCE L. WALLACH
- -----------------------------
Joyce L. Wallach
General Counsel and Secretary

<PAGE> 1
EXHIBIT 5.1

AccuMed International, Inc.
900 North Franklin Street, Suite 401
Chicago, Illinois 60610

June 9, 1998

The Board of Directors
AccuMed International, Inc.
900 N. Franklin Street, Suite 401
Chicago, Illinois 60610

Gentlemen:

You have requested my opinion as General Counsel for AccuMed
International, Inc., a Delaware corporation (the "Company"), in connection with
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), and the Rules and Regulations promulgated thereunder, of an aggregate of
4,038,821 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), of which (i) 641,410 shares (the "Conversion Shares") are
underlying shares of Series A Convertible Preferred Stock (the "Convertible
Preferred"), (ii) 1,713,697 shares are underlying Warrants to purchase Common
Stock (the "Warrant Shares"), and (iii) 1,683,714 shares (the "Outstanding
Shares") are currently outstanding, pursuant to a Registration Statement on
Form S-3 (the "Registration Statement").

For purposes of this opinion, I have examined the Registration Statement
filed with the Securities and Exchange Commission on or about the date hereof,
including the prospectus which is a part thereof (the "Prospectus") and the
exhibits thereto. I have also been furnished with and have examined originals
or copies, certified or otherwise identified to my satisfaction, of all such
records of the Company, agreements and other instruments, certificates of
officers and representatives of the Company, certificates of public officials
and other documents as I have deemed it necessary to require as a basis for the
opinions hereafter expressed. As to questions of fact material to such opinions,
I have, where relevant facts were not independently established, relied upon
certifications by principal officers of the Company. I have made such further
legal and factual examination and investigation as I deem necessary for purposes
of rendering the following opinions.

In my examination I have assumed the genuineness of all signatures, the
legal capacity of natural persons, the correctness of facts set forth in
certificates, the authenticity of all

-1-
<PAGE> 2
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such copies. I have also assumed that such
documents have each been duly authorized, properly executed and delivered by
each of the parties thereto other than the Company.

I am a member of the bar of the State of California. My opinions below are
limited to the laws of the State of California, the General Corporation Law of
the State of Delaware and the federal securities laws of the United States.

Based on the foregoing, it is my opinion that all of (i) the Outstanding
Shares when sold and delivered in the manner described in the Prospectus, will
be legally and validly issued, fully paid and nonassessable, (ii) the Warrant
Shares, when issued and delivered against payment in full of the respective
Warrant exercise prices in accordance with the terms of the respective Warrants
and warrant agreements governing such Warrants, and when sold and delivered in
the manner described in the Prospectus, will be legally and validly issued,
fully paid and nonassessable, and (iii) the Conversion Shares, when issued and
delivered in accordance with the terms of the Convertible Preferred and when
sold and delivered in the manner described in the Prospectus, will be legally
and validly issued, fully paid and nonassessable.

I consent to the filing of this opinion as an exhibit to the Registration
Statement and consent to the use of my name under the caption "Legal Matters"
in the Prospectus.

Sincerely,

/s/ JOYCE L. WALLACH
General Counsel

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement of
AccuMed International, Inc. on Form S-3 (to be filed on or about June 8, 1998)
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 audit of the financial statements of
Alamar Biosciences, Inc. as of September 30, 1995, and for the year then ended,
which report is included in the Annual Report on Form 10-K of AccuMed
International, Inc. for the year ended December 31, 1997. We also consent to the
reference to our firm under the caption "Experts."

/s/ Coopers & Lybrand L.L.P.

Sacramento, CA
June 5, 1998

<PAGE> 1

Exhibit 23.3

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
AccuMed International, Inc.:

We consent to incorporation by reference in the registration statement on Form
S-3 of AccuMed International, Inc. of our report dated March 23, 1998, with
respect to the consolidated balance sheets of AccuMed International, Inc. and
subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1997 and 1996, and the three months ended December 31, 1995,
and all related schedules, which reports appear in the December 31, 1997 annual
report on Form 10-K of AccuMed International, Inc., and to the reference to our
firm under the heading "Experts" in the prospectus.

/s/ KPMG Peat Marwick, LLP

Chicago, Illinois
June 5, 1998