SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________

FORM 10-K
(Mark one)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended March 31, 1997

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to ________

Commission File No. 0-15360

BIOJECT MEDICAL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

Oregon 93-1099680
(State of other jurisdiction of (I.R.S. identification no.)
employer incorporation or organization)

7620 SW Bridgeport Road
Portland, Oregon 97224
(Address of principal executive offices) (Zip code)

(503) 639-7221
(Registrant's telephone number, including areas code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
None None

Securities registered pursuant to Section 12(g) of the Act:

Title of Class
Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]

State the aggregate market value of voting stock held by non-affiliates
of the registrant, as of May 31, 1997: $17,660,800

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of May 31, 1997: Common Stock, no par value,
19,540,413 shares.

Documents Incorporated by Reference:

Portions of the registrant's definitive Proxy Statement for the 1997
Annual Shareholders' Meeting are incorporated by reference into
Part III

Table of Contents

PART I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

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

PART II

Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters

Item 6. Selected Consolidated Financial Data

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Item 8. Consolidated Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

PART III

Item 10. Directors and Executive Officers of the Registrant

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and
Management

Item 13. Certain Relationships and Related Transactions

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K

PART I

ITEM 1. BUSINESS

FORWARD-LOOKING STATEMENTS

Certain statements in this Report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. 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 risks, uncertainties and factors include, among others, those described
under "Business -- Risk Factors."

GENERAL

Bioject Medical Technologies Inc. ("Bioject" or the "Company")
develops, manufactures and markets a jet injection system for needle-free
drug delivery. Using this technology for injections virtually eliminates the
associated risk of contaminated needlestick injuries and resulting blood-
borne pathogen transmission, a major concern throughout the healthcare
industry. The Company manufactures and markets a professional jet injection
system, the Biojector (registered trademark) 2000, which allows healthcare
professionals to inject medications through the skin, both intramuscularly
in the deltoid muscle and subcutaneously, without a needle. The Biojector
2000 system consists of two components: a hand-held, reusable jet-injector
(the "Biojector 2000"); and a sterile, single-use disposable syringe
("Biojector syringe"). The system is capable of delivering variable dose
needle-free injections up to 1 ml. Additionally, the Company has developed
a self-injection system for delivery of various medications up to 1 ml. for
use by non-professionals, and the Company is also developing systems for
Hoffmann-La Roche to use with certain of their products pursuant to an
agreement signed January 10, 1995. See "Research and Product Development."

Currently, medications are administered using various methods, each of
which has advantages and limitations. The leading drug delivery techniques
include oral ingestion, intravenous infusion, subcutaneous and intramuscular
injection, inhalation and transdermal diffusion "patch." Many drugs are
effective only when administered by injection. Studies indicate that there
are more than four billion needle-syringes sold annually in the U.S. The
Company believes that approximately 80% of these syringes are used for
subcutaneous or intramuscular injections up to 1 ml.

Injections using traditional needle-syringes suffer from many
shortcomings including (i) the risk of needlestick injuries, (ii) the risk
of penetrating a patient's vein and (iii) patients' aversion to needles and
discomfort. The most important of these, the contaminated needlestick
injury, occurs when a needle that has been exposed to a patient's blood
accidentally penetrates a healthcare worker's skin. Contaminated needles
can transmit deadly blood-borne pathogens including such viruses as HIV
and hepatitis B. Published data indicate that the total number of reported
needlestick injuries in the U.S. exceeds 800,000 annually.

In recent years, with the growing awareness of blood-borne pathogen
transmission, safety has become a critical concern for hospitals and
healthcare professionals as well as patients. As a result, pressures on the
healthcare industry to eliminate the risk of contaminated needlestick
injuries have increased. For example, the U.S. Occupational Safety and
Health Administration ("OSHA") issued regulations, effective in 1992, which
require healthcare institutions to treat all blood and other body fluids
as infectious. These regulations require the implementation of "engineering
and work practice controls" to "isolate or remove the blood-borne pathogens
hazard from the workplace." Among the required controls are special
handling and disposal of contaminated "sharps" in biohazardous "sharps"
containers and follow-up testing for victims of needlestick injuries. These
regulations have significantly increased the cost of using needle-syringes.

The costs resulting from needlestick injuries vary widely.
Uncontaminated needlesticks involve relatively little cost, while
investigating and following up contaminated needlestick injuries are much
more expensive. Investigation typically includes identifying the source of
contamination, testing the source for blood-borne pathogens and repeatedly
testing the needlestick victim over an extended period. Some healthcare
providers are requiring additional measures, including presuming that all
needlestick injuries involve contaminated needles unless proven otherwise
and, under certain circumstances, administering prophylactic treatment such
as zidovudine (AZT) or other drugs. The costs associated with treating
needlestick injuries that result in infection by life-threatening pathogens,
such as HIV or hepatitis B, are dramatically higher. In an effort to protect
healthcare workers from needlestick injuries, many healthcare facilities have
adopted more expensive, alternative technologies. One such
technology is an intravenous ("IV") port that permits the injection of
medication directly into the IV line without requiring the use of a sharp
needle for each administration. Another is the "safety syringe," generally
a disposable needle-syringe with a plastic sheath mechanism intended to
cover the needle after use. Despite many efforts to reduce the risk of
needlestick injuries, such injuries remain a major health concern.

The Company's long-term goal is to establish its jet injection
technology as the preferred drug delivery method for all medications
administered by intramuscular or subcutaneous injection. The Company
currently markets the Biojector 2000 system to public health and flu
immunization clinics, and physician offices, has developed a self-injection
device for the delivery of various medications to be delivered by
non-professionals in the home and is developing application specific devices
to be marketed by Hoffmann-La Roche. The Company is also seeking
relationships with pharmaceutical and biotechnology companies to market its
existing Biojector 2000 and self injector products for specific applications
and to develop other application specific devices and companion syringes.

THE COMPANY

The Company's operations are conducted by Bioject Inc., an Oregon
corporation, which is a wholly owned subsidiary of Bioject Medical
Technologies Inc., an Oregon corporation (the "Company").

Although Bioject Inc. commenced operations in 1985, the Company was
formed in December 1992 for the sole purpose of acquiring all the capital
stock of Bioject Medical Systems Ltd., a Company organized under the laws
of British Columbia, Canada, in a stock-for-stock exchange in order
to establish a U.S. domestic corporation as the publicly traded parent
company for Bioject Inc. and Bioject Medical Systems Ltd. Bioject Medical
Systems Ltd. was terminated in fiscal 1997. All references to the Company
herein are to Bioject Medical Technologies Inc. and its
subsidiary, unless the context requires otherwise. The Company's
executive offices and operations are located at 7620 SW Bridgeport Road,
Portland, Oregon 97224, and its telephone number is (503) 639-7221.

"Biojector" and "Bioject" are trademarks of the Company.

DESCRIPTION OF THE COMPANY'S PRODUCTS

The Company's current product, the Biojector 2000 system, is a
refinement of jet injection technology that enables healthcare professionals
to reliably deliver measured variable doses of medication through the skin,
either intramuscularly or subcutaneously, without a needle. Giving an
injection with a Biojector 2000 system is easy and straightforward. The
healthcare worker checks the CO2 pressure on the easy-to-read gauge at the
rear of the injector, draws up medication into the plastic syringe
discarding the fill needle in a sharps container, inserts the syringe
into the power injector, presses the syringe tip against the appropriate
disinfected surface on the patient's skin, and then presses an
actuator thereby injecting the medication. Medication is expelled rapidly
through a precision molded, small diameter orifice in a thin stream at a
velocity sufficient to penetrate the skin and force the medication into the
tissue at the desired level. The Biojector 2000 system consists of two
components: a hand-held, reusable jet injector; and a sterile, single-use
disposable plastic syringe capable of delivering variable doses of
medication up to 1 ml.

The first component, the Biojector 2000, is a portable hand-held unit
(about the size of a flashlight) which is designed to be easy to use by
healthcare professionals, as well as attractive and non-threatening to
patients. As described in the June 7, 1993 issue of BUSINESSWEEK, the
Biojector 2000 won the 1993 Gold Industrial Design Excellence Award given by
Industrial Designers Society of America for its aesthetically pleasing and
ergonomic design. In July 1994, the Biojector 2000 also received the
Alliance of Children's Hospitals Seal of Approval. The Biojector 2000
injector uses disposable CO2 cartridges as a power source. The CO2
cartridges, which are purchased by the Company from an outside supplier,
give an average of ten injections before requiring replacement. The CO2 gas
provides consistent, reliable pressure in order to push the syringe plunger
and thereby propel the medication. The CO2 does not come into contact with
the patient or medication.

The second component, the Biojector single-use disposable syringe, is
provided in a sterile, peel-open package and consists of a plastic, needle-
free, variable dose syringe containing a plunger, accompanied by a needle
used only for filling. The body of the syringe is transparent and has
graduated markings to aid filling by healthcare workers in the same way as
traditional needle-syringes are filled. However, unlike the traditional
needle-syringe, the Biojector fill needle is designed to be immediately
discarded in a "sharps" container as soon as the syringe is filled, so that
a needle need never come near a patient when an injection is being given.
More importantly, since no needle penetrates the patient's skin, the risk of
contaminated needlestick injury is virtually eliminated. Under OSHA
regulations, used Biojector syringes need not be disposed of in a special
biohazardous "sharps" container.

There are five different Biojector syringes, each of which is intended
for a different injection depth or body type. The syringes are molded using
the Company's patented manufacturing process. The healthcare worker selects
the syringe appropriate for the intended type of injection. One syringe
size is for subcutaneous injections, while the others are designed for
intramuscular injections, depending on the patient's body
characteristics.

The current suggested retail list price for the Biojector 2000
professional jet injector is $995, and the suggested retail list price for
syringes is $1.00 a piece. CO2 cartridges are sold for a suggested retail
price of $0.50 per cartridge and average ten injections per cartridge.
Discounts are offered for volume purchases.

The Company has other products in development which are intended to
address other markets or to enhance the Biojector 2000 system. See
"Research and Product Development."

INDUSTRY BACKGROUND

In 1836, LaForgue developed the concept of placing medicine under the
skin by means of a needle lance trochar. In 1853, Wood developed the
hollow-needle hypodermic which was later improved by Hunter, Pravaz and
many others. The basic needle-syringe in use across the healthcare market
today is a direct derivation from the original Wood design and involves a
hollow steel needle of various diameters and lengths attached to a plastic
syringe body and plunger. The entire unit requires special handling and
disposal.

The next fundamental improvement in injection technique for parenteral
administration was made approximately 100 years following Wood's
development of the hollow-needle hypodermic. This improvement was the
development of a pneumatically powered hypodermic device which was capable
of injecting medication through the skin without a needle. These early
needle-free injection devices were large and bulky devices which lent
themselves to mass inoculations but were inappropriate for single-shot
administrations of medication in the physician's office, hospital or in the
home setting.

During the last 20 years, there have been many attempts to develop
portable one-shot needle-free hypodermic devices. Some of the problems
which arose in these attempts to develop such devices include: (a)
inadequate injection power; (b) little or no control of pressure and depth
of penetration; (c) complexity of design with related difficulties in cost
and performance; (d) difficulties in use, including filling and cleaning;
and (e) the necessity for sterilization between patients.

In recent years, several spring-driven needle-free injectors have been
developed and marketed primarily for the injection of insulin. Each of
these devices requires regular cleaning as well as filling from a separate
medication bottle or vial. Current prices for such injectors range from
approximately $400 to $600 per injector. The Company believes that due to
the cost combined with the difficulties of use, market acceptance of these
devices has been limited.

Also in recent years, various versions of a "safety syringe" have been
designed and marketed. These syringes generally involve as their basic
design a standard or modified needle-syringe with a plastic guard or
sheathing surrounding the needle. Such covering is usually retracted or
removed in order to give the injection. Although the intent of the safety
syringes is to reduce or eliminate needlestick injuries, the syringes
require manipulation after injection and, therefore, still pose the risk
of needlestick injury. They are also bulky and add to contaminated waste
disposal problems.

MARKETING AND COMPETITION

The Company is currently focusing on gaining acceptance of the
Biojector system in the U.S. public health clinic and flu immunization
markets. The Company is also working on arrangements to market the Biojector
2000 system to the U.S. physician office market and the home healthcare
market. The Company plans eventually to expand into international markets.
Different marketing and distribution approaches are required in each of
these markets. As new products are developed, the Company intends to
establish additional channels of distribution. For example, the Company
is developing an injection system for specific applications which is
anticipated to be marketed by Hoffmann-La Roche. Pre-filled Biojector
syringes, if developed, would be filled and marketed by the pharmaceutical
or biotechnology companies involved.

The Company currently employs five sales representatives to be a dedicated
sales force to sell the Company's Biojector 2000 system directly to the
public health clinic and flu immunization markets in key metropolitan areas.
These sales representatives are led by a vice president of sales and
marketing and are supported by a product manager, customer service staff,
three full time nurse trainers and 10-20 per diem nurse trainers. Bioject's
direct sales efforts have resulted in the signing of public health
agreements for the state of North Carolina, the New York City Middle Schools,
and the health departments in the states of New Mexico and Oklahoma.
The Company expects to sign additional agreements with other public health
agencies. The Company has a national agreement with the Visiting Nurses
Associations for use of the Biojector 2000 system for flu immunization. In
addition, through the VNA member organizations, it was recently announced
that the Company will participate in a new flu immunization program to be
sponsored by Wal-Mart this fall. It is the Company's intention to leverage
its success in these immunization programs to attract pharmaceutical company
strategic partners to assist it in gaining access to the physician office
and other specialized markets where the benefits of needle-free drug
delivery will enhance the distribution of their injectible medications.

In August 1994, Bioject signed an agreement with Homecare Management,
Inc. (HMI), granting HMI exclusive rights to purchase Bioject's Needle-Free
Injection Management System, the Biojector 2000, for use in the home
healthcare market. Sales to HMI commenced in August 1994. In return for
HMI's commitment to purchase a minimum of 8,000 Biojector units over the
ensuing two years, the Company granted volume pricing discounts to HMI.
Throughout the term of the contract the selling price of Biojectors to HMI
exceeded their standard cost. During fiscal 1995 and 1996, the Company sold
approximately 2,100 and 4,300 Biojectors to HMI for total sales revenue
including syringes of $1.1 million and $2.2 million, respectively. HMI
had not placed the great majority of these Biojectors with patients pending
completion of negotiations with pharmaceutical companies for certain pricing
concessions for medication to be administered with the Biojectors. In
January 1996, HMI requested that further shipments under the contract be
suspended. In February 1996, the Company learned from HMI's press releases
that HMI expected to default under its loan, to take significant write-offs
for accounts receivable and inventories, planned operational consolidations,
and would restate certain prior period financial statements. In fiscal 1997,
the Company agreed to repurchase certain of the Biojector inventories
(including up to 6,000 devices) which HMI had on hand for a
total of $660,000 including $322,000 of forgiveness of accounts receivable
and payment of $338,000 in two installments, one-half of which was paid in
July 1996 and with the balance remaining outstanding. The Company was under
no obligation to repurchase these inventories, and the repurchase was at a
substantial discount to the original selling price to HMI.

The sale of new technologies to hospitals and large clinics can be a
lengthy process. Introduction of new technologies to a hospital or large
clinic typically involves screening by many individuals and committees
within the institution, including new product evaluation committees,
infection control officers, medical staff and business office personnel.
Therefore, in order to shorten the sales cycle, the Company has adopted a
strategy that focuses instead on the public health and flu immunization
markets where there are fewer and more concentrated decision makers.

The medical equipment market is highly competitive, and competition is likely
to intensify. Many of the Company's existing and potential competitors have
been in business longer than the Company and have substantially greater
technical, financial, marketing, sales and customer support resources. The
Company believes the primary competition for the Biojector 2000 system and
other jet injectors it may develop is the traditional disposable needle-
syringe and the "safety syringe." Leading suppliers of needle-syringes
include: Becton-Dickinson & Co., Sherwood Medical Co., a subsidiary of
American Home Products Corp., and Terumo Corp. of Japan. Manufacturers of
traditional needle-syringes compete primarily on
price, which generally ranges from approximately $0.10 to $0.20 per unit.
Manufacturers of "safety syringes" compete on features, quality and price.
"Safety syringes" generally are priced in a range of $0.25 to $0.45 per
unit.

The Company expects to compete with traditional needle-syringes and
"safety syringes" based on healthcare worker safety, ease of use, reduced
cost of disposal, patient comfort, and compliance with OSHA regulations, but
not on purchase price. However, the Company believes that when all indirect
costs (including disposal of syringes and testing, treatment and workers'
compensation expense related to needlestick injuries) are considered, the
Biojector 2000 system will compete effectively. See "Forward Looking
Statements" and "Risk Factors."

The Company is not aware of any competing products with features and
benefits comparable to the Biojector 2000 system. The Company is aware of
other portable needle-free injectors on the market today but these are
generally focused on subcutaneous self-injection applications of 0.5 ml. or
less whereas the Company's products are suitable for both intramuscular and
subcutaneous of up to 1 ml. in the professional and home injection markets.
Manufacturers of needle-syringes, as well as other companies, may develop
new products that compete directly or indirectly with the Company's products.
There can be no assurance that the Company will be able to
compete successfully in this market. See "Risk Factors - Competition," "-
Dependence on Single Technology." A variety of new technologies (for
example, transdermal patches) are being developed as alternatives to
injection for drug delivery. While the Company does not believe such
technologies have significantly affected the use of injection for drug
delivery to date, there can be no assurance that they will not do so in
the future.

PATENTS AND PROPRIETARY RIGHTS

The Company believes that technology incorporated in its injection
device, single-dose disposable plastic syringes and products under
development gives it significant advantages over the manufacturers of other
jet injection systems and over prospective competitors seeking to develop
similar systems. The Company attempts to protect its technology through a
combination of trade secrets, confidentiality agreements and procedures and
patent prosecution.

The Company has three U.S. patents which were issued with respect to jet
injection technology incorporated in earlier versions of its jet injection
systems and which expire from July 2007 to November 2008. Seven additional
U.S. patents have been issued which protect developments incorporated in the
Biojector 2000 system. These patents incorporate a number of claims
including claims regarding the jet injection system's design, method of
operation, certain aspects of the syringe design and the method of
manufacturing the syringe orifice. The Company has also been granted
patents relating to an electronic self-injection device and a drug mixing
vial, newer technologies not yet incorporated in any product. The Company
has made additional patent filings regarding pre-filled syringe technologies
and adapters for drug vial access. The Company also generally files patent
applications in Canada, Europe and Japan at the times and under the
circumstances it deems filing to be appropriate under the procedures in
place in each jurisdiction. There can be no assurance that any patents
applied for will be granted or that patents held by the Company will be
valid or sufficiently broad to protect the Company's technology or provide a
significant competitive advantage. See "Risk Factors."

The Company also relies on trade secrets and proprietary know-how that
it seeks to protect through confidentiality agreements with its employees,
consultants, suppliers and others. There can be no assurance that these
agreements will not be breached, that the Company would have adequate
remedies for any breach, or that the Company's trade secrets will not
otherwise become known to or be developed independently by competitors. In
addition, the laws of foreign countries may not protect the Company's
proprietary rights to its technology, including patent rights, to the same
extent as the laws of the U.S.

Although the Company believes that it has independently developed its
technology and attempts to assure that its products do not infringe the
proprietary rights of others, if infringement were alleged and proved, there
can be no assurance that the Company could obtain necessary licenses on
terms and conditions that would not have an adverse affect on the Company.
The Company is not aware of any asserted claim that the Biojector 2000 or
any product under development violates the proprietary rights of any person.

If a dispute arises concerning the Company's technology, litigation
that could result in substantial cost to and diversion of effort by the
Company might be necessary to enforce the Company's patents, to protect the
Company's trade secrets or know-how or to determine the scope of the
proprietary rights of others. Adverse findings in any proceeding could
subject the Company to significant liabilities to third parties, require the
Company to seek licenses from third parties or otherwise adversely affect
the Company's ability to manufacture and sell its products.

GOVERNMENTAL REGULATION

The Company's products and manufacturing operations are subject to
extensive government regulations, both in the U.S. and abroad. In the U.S.,
the Food and Drug Administration ("FDA") administers the Federal Food, Drug
and Cosmetic Act (the "FFDCA") and has adopted regulations, including those
governing the introduction of new medical devices, the observation of
certain standards and practices with respect to the manufacturing and
labeling of medical devices, the maintenance of certain records and the
reporting of device-related deaths, serious injuries, and certain
malfunctions to the FDA. Manufacturing facilities and certain Company
records are also subject to FDA inspections. The FDA has broad discretion in
enforcing the FFDCA and the regulations thereunder, and noncompliance can
result in a variety of regulatory steps ranging from warning letters,
product detentions, device alerts or field corrections to mandatory recalls,
seizures, injunctive actions and civil or criminal penalties.

The FFDCA provides that, unless exempted by regulation, medical devices
may not be commercially distributed in the U.S. unless they have been
cleared or approved by the FDA. The FFDCA provides two basic review
procedures for pre-market clearance or approval of medical devices. Certain
products qualify for a submission authorized by Section 510(k) of the FFDCA,
wherein the manufacturer provides the FDA with a premarket notification
("510(k) notification") of the manufacturer's intention to commence
marketing the product. The manufacturer must, among other things, establish
in the 510(k) notification that the product to be marketed is substantially
equivalent to another legally marketed product, (i.e., that it has the same
intended use and that it as safe and effective as a legally marketed device
and does not raise questions of safety and effectiveness that are different
from those associated with the legally marketed device). Marketing may
commence when the FDA issues a letter finding substantial equivalence to
such a legally marketed device. The FDA may require, in connection with the
510(k) submission, that it be provided with animal and/or human test
results. If a medical device does not qualify for the 510(k) procedure, the
manufacturer must file a premarket approval ("PMA") application. A PMA must
show that the device is safe and effective and is generally a much more
complex submission than a 510(k) notification typically requiring more
extensive prefilling testing and a longer FDA review process.

A 510(k) notification is required when a device is being introduced
into the market for the first time. A 510(k) notification is also required
when the manufacturer makes a change or modification to an already marketed
device that could significantly affect safety or effectiveness, or where
there is a major change or modification in the intended use of the device.
When any change or modification is made in a device or its intended use, the
manufacturer is expected to make the initial determination as to whether the
change or modification is of a kind that would necessitate the filing of a
new 510(k) notification. The FDA's regulations provide only limited
guidance in making this determination.

In April 1987, the Company received 510(k) marketing clearance from the
FDA allowing the Company to market a hand-held CO2-powered jet injection
system. Although the Biojector 2000 system incorporates changes from the
system with respect to which the Company's 1987 510(k) marketing clearance
was received and expands its intended use, the Company made the
determination that these were not major changes or modifications in intended
use or changes in the device that could significantly affect the safety
or effectiveness of the device and that, accordingly, the 1987 510(k)
clearance permitted the Company to market the Biojector 2000 system in the
U.S. In June 1994, the Company received clearance from the FDA under
510(k) to market a version of its Biojector 2000 system in a configuration
targeted at high volume injection applications. In October 1996, the Company
received 510(k) clearance for a non-needle disposable vial access device.
In March 1997, the Company received additional 510(k) clearance for certain
enhancements to its Biojector 2000 system. The Company expects that the
self-injection and other systems under development would require new 510(k)
submissions. See "Research and Product Development" and "Forward Looking
Statements". However, there can be no assurance that the FDA will concur
with the Company's determination that the product can be cleared via a
510(k) submission.

The Company continues to seek arrangements with pharmaceutical companies to
develop pre-filled Biojector syringe applications to permit the pharmaceutical
companies to market their products packaged in Biojector prefilled
containers. See "Research and Product Development." Before pre-filled
Biojector syringes may be distributed for use in the U.S., certain FDA-
mandated stability tests may be required of those pharmaceutical companies.
Pre-filled syringes involve drugs packaged as a component of a medical
device. It is current FDA policy that such pre-filled syringes,
which are considered to be combination products, are evaluated by the FDA as
drugs rather than medical devices. Marketing of pre-filled syringes by
pharmaceutical companies will require prior approval via a New or amended
Drug Application ("NDA") or an Abbreviated New Drug Application ("ANDA").
An NDA is a complex submission required to establish that a drug will be
safe and effective for its intended uses. An ANDA is a less detailed
process which does not require, among other things, that the applicant
provide complete reports of preclinical and clinical studies of safety and
efficacy as are required for NDAs. Assuming that the drugs used in the pre-
filled syringes have previously been approved by the FDA for injection, the
FDA will likely require that ANDAs, rather than NDAs, be submitted. The
Company believes that if a drug to be used in the Company's pre-filled
syringe were already the subject of an approved NDA or ANDA for
intramuscular or subcutaneous injection, the main issue affecting approval
for use in the pre-filled syringe would be the adequacy of the syringe to
store the drug, to assure its stability until used and to safely deliver
the proper dose. See "Forward Looking Statements" and "Risk Factors -
Government Regulation."

The FDA also regulates the Company's quality control and manufacturing
procedures by requiring the Company and its contract manufacturers to
demonstrate compliance with current Good Manufacturing Practice ("GMP")
Regulations. These regulations require, among other things, that (i) the
manufacturing process must be regulated and controlled by the use of written
procedures and (ii) the ability to produce devices which meet the
manufacturer's specifications must be validated by extensive and detailed
testing of every aspect of the process. They also require investigation of
any deficiencies in the manufacturing process or in the products produced
and detailed record-keeping. Further, the FDA's interpretation and
enforcement of these requirements has been increasingly strict in recent
years and seems likely to be even more stringent in the future. Failure to
adhere to GMP requirements would cause the products produced to be
considered in violation of the Act and subject to enforcement action. The
FDA monitors compliance with these requirements by requiring manufacturers
to register with the FDA, and subjecting them to periodic FDA inspections of
manufacturing facilities. If the inspector observes conditions that might
be violated, the manufacturer must correct those conditions or explain them
satisfactorily, or face potential regulatory action that might include
physical removal of the product from the marketplace.

The FDA's Medical Device Reporting Regulation requires that the Company
provide information to the FDA on the occurrence of any death or serious
injuries alleged to have been associated with the use of the Company's
products, as well as any product malfunction that would likely cause or
contribute to a death or serious injury if the malfunction were to recur.
In addition, FDA regulations prohibit a device from being marketed for
unapproved or uncleared indications. If the FDA believes that the company
is not in compliance with these regulations, it can institute proceedings to
detain or seize products, issue a recall, seek injunctive relief or assess
civil and criminal penalties against such company.

The use and manufacture of the Company's products are subject to OSHA
and other federal, state and local laws and regulations relating to such
matters as safe working conditions for healthcare workers and Company
employees, manufacturing practices, environmental protection and disposal of
hazardous or potentially hazardous substances and the policies of hospitals
and clinics relating to compliance therewith. There can be no assurance
that the Company will not be required to incur significant costs to comply
with such laws, regulations or policies in the future, or that such laws,
regulations or policies will not increase the costs or restrictions related
to the use of the Company's products or otherwise have a materially adverse
effect upon the Company's ability to do business. See "Risk Factors."

Laws and regulations regarding the manufacture, sale and use of medical
devices are subject to change and depend heavily on administrative
interpretations. There can be no assurance that future changes in
regulations or interpretations made by the FDA, OSHA or other regulatory
bodies, will not adversely affect the Company.

Sales of medical devices outside of the United States are subject to foreign
regulatory requirements. The requirements for obtaining premarket clearance
or approval by a foreign country may differ from those required for FDA
clearance or approval. Devices having an effective 510(k) clearance or PMA
may be exported without further FDA authorization. FDA authorization is
generally required in order to export other medical devices.

RESEARCH AND PRODUCT DEVELOPMENT

Research and development efforts are focused on enhancing the Company's
current product offerings and developing both new jet injection technology
and new products. The Company continues to use clinical, magnetic resonance
imaging and tissue studies to determine the reliability and performance of
new and existing products. As of March 31, 1997, the Company's research and
product development staff consisted of 5 employees. During fiscal 1995,
1996 and 1997, the Company spent $1.4 million, $1.5 million, and $1.3
million, respectively, on research and development.

In March 1994, the Company entered into an agreement with Schering AG,
Germany, for the development of a self-injection device for delivery of
Betaseron to multiple sclerosis patients. During fiscal 1995 through 1997,
the Company developed prototypes to Schering specifications which were
accepted by Schering. During fiscal 1997, the Company entered into a supply
agreement with Schering AG and commenced activities related to full
production of the self injector. Schering loaned the Company a total of
$1.6 million to purchase molds and tooling for production of the product.
In January 1997, the Company received notice that its contract with Schering
AG would be cancelled. Under provisions of the contract, Schering AG had
the option of canceling the agreement if the FDA required extensive
clinical studies beyond an originally planned safety study. Schering AG
received a review letter from the FDA which would have required Schering
to conduct additional material clinical studies in order to use non-
traditional delivery mechanisms with its Betaseron (r) product. Under
terms of the contract, Schering was required to convert its
$1.6 million note due from Bioject into approximately 460,000 shares of
Bioject common stock at a conversion price of $3.50 per share. In addition,
$106,000 of accrued interest was converted into approximately 27,000 shares
of Bioject common stock at a conversion price of $3.50 per share. Schering
is obligated to pay Bioject for the cost of product ordered through the date
of cancellation of the contract. Under terms of the agreement, in April 1994,
Schering paid a one-time $500,000 licensing fee for access to the Company's
technology and paid $600,000 as its contribution toward Phase I of the
development. In October 1995 Schering paid $600,000 as its contribution
toward Phase II development and $60,000 of additional costs associated with
completion of Phase I. During fiscal 1997, Schering paid $300,000 for
Phase III development costs.

In January 1995, the Company signed a joint development agreement with
Hoffmann-La Roche to develop proprietary drug delivery systems for Roche
products. The agreement provides for Bioject to develop, manufacture and
sell Biojector needle-free drug delivery systems designed to Roche
specifications. In return, Bioject has granted Roche exclusive worldwide
rights to distribute these systems and their components for use with
certain Roche products. Hoffmann-La Roche Inc. is the United States
affiliate of the multinational group of companies headed by Roche Holding of
Basel, Switzerland, one of the world's leading research-intensive healthcare
companies. As of 1995 fiscal year end, the Company had commenced design of
a prototype device and had agreed with Roche on product specifications.
During fiscal 1996, the Company developed and delivered to Roche
preproduction prototypes for testing and developed the clinical
preproduction prototypes which were delivered to Roche in April 1996.
As of March 31, 1997, the Company and Hoffmann-LaRoche were finalizing
their submission to obtain regulatory approval to market the product.
Hoffmann-LaRoche was also gathering marketing information in order to sign a
supply agreement. In February 1995, Hoffmann-La Roche paid a one-time
licensing fee totalling $500,000, and the agreement provides that it will
pay specified product development fees on an agreed upon schedule of which
$900,000 was paid in fiscal 1996 and $250,000 was paid in fiscal 1997.

In addition to activities described above, the Company is seeking
arrangements with pharmaceutical and biotechnology companies for the use of
pre-filled syringes to eliminate the filling and measuring procedures
associated with traditional injection of medications. Before pre-filled
Biojector syringes may be distributed for use in the U.S., these companies
must commit to the packaging and distribution of their products in this
manner and to the time and financial resources necessary for FDA review and
approval. This process could be lengthy. See "Business -- Government
Regulation." There can be no assurance that such companies will commit
efforts to develop pre-filled packaging and pursue regulatory approval or
that regulatory approval of pre-filled Biojector syringes will be obtained.

The Company intends to continue research and development efforts
designed to further its understanding of the physics and physiology of jet
injection. These efforts will include further clinical studies to
demonstrate efficacy of jet injection and to evaluate new products and
enhancements to the Company's existing products. To advance these studies,
in April 1994 the Company formed a Department of Clinical Affairs research
group, which initiates and coordinates these studies.

MANUFACTURING

The Company assembles the Biojector 2000 and related syringes from
components purchased from outside suppliers. Prior to introduction of the
Biojector 2000 system in 1993, the Company had not engaged in manufacturing
on a commercial scale. However, in connection with that introduction, the
Company increased its manufacturing capabilities and built inventories to
support anticipated product sales.

During fiscal 1997, the Company's manufacturing activities focused on
retesting the devices repurchased from HMI to ensure their continuing
compliance with new product standards and selective upgrade of certain of
these units to current version configuration. Manufacturing also focused on
finalizing product engineering and bringing up the new self injector device
and syringe manufacturing lines in advance of product launch.

In order to succeed in expanding manufacturing capacity and reducing
unit production cost, the Company must attract and retain qualified assembly
workers and must establish and maintain relationships with suppliers that
can deliver large numbers of components meeting applicable quality standards
in a timely and reliable manner at acceptable prices.

EMPLOYEES

As of March 31, 1997, the Company had 39 full-time employees with 5
employees engaged in research and product development, 10 in sales and
marketing, 15 in manufacturing and 9 in administration. The Company engages
a limited number of part-time consultants who participate in research
activities. The Company also employs temporary contract workers primarily
for assembly operations, the number of which varies, depending upon
production requirements. As of March 31, 1997, there was one consultant, 8
to 12 per diem nurses and one contract/temporary worker employed by the
Company. None of the Company's employees is represented by a labor union.

PRODUCT LIABILITY

The Company believes that its products reliably inject medications both
subcutaneously and intramuscularly when used in accordance with product
guidelines. The Company's current insurance policies provide coverage at
least equal to an aggregate limit of $6 million with respect to certain
product liability claims. The Company has not experienced any product
liability claims to date. There can be no assurance, however, that the
Company will not become subject to such claims, that the Company's current
insurance would cover such claims, or that insurance will continue to be
available to the Company in the future. The Company's business may be
adversely affected by product liability claims.

RISK FACTORS

Investment in securities of the Company involves a high degree of risk.
The following factors, among others, should be considered by investors.

NEED FOR ADDITIONAL FINANCING. The Company believes that its current
cash position and cash received from a private placement of common stock and
warrants in June 1997, combined with revenues and other cash receipts will
not be adequate to fund the Company's operations through the end of fiscal
1998. The Company has identified a number of potential financing sources and
is pursuing them aggressively. See "Forward Looking Statements". Even if the
Company is successful in raising additional financing, unforeseen costs and
expenses or lower than anticipated cash receipts from product sales or
research and development activities could accelerate or increase the
financing requirements. The Company has been successful in raising
additional financing in the past and believes that sufficient funds will
be available to fund future operations. See "Forward Looking Statements."
However, there can be no assurance that the Company's efforts will be
successful, and there can be no assurance that such financing will be
available on terms which are not significantly dilutive to existing
shareholders. Failure to obtain needed additional capital on terms
acceptable to the Company, or at all, would significantly restrict the
Company's operations and ability to continue product development and
growth and materially adversely affect the Company's business. The Company
has no banking line of credit or other established source of borrowing.
The Company's independent accountants have qualified their opinion with
respect to their audit of the Company's 1997 consolidated financial
statements as the result of doubts concerning the Company's ability to
continueas a going concern in the absence of additional financing.

UNCERTAINTY OF MARKET ACCEPTANCE. The Company's success will
depend upon market acceptance of its jet injection drug delivery system,
the Biojector 2000 system, and, to other products under development.
Currently, the dominant technology used for intramuscular and subcutaneous
injections is the hollow-needle syringe. Needle-syringes, while low in
cost, have limitations, particularly relating to contaminated needlestick
injuries. Use of the Biojector 2000 system for intramuscular and
subcutaneous injections virtually eliminates the associated risk of these
injuries; however, the cost per injection is significantly higher. As with
any new technology, there can be no assurance that the Biojector 2000 system
will compete successfully. A previous jet injection system manufactured by
the Company did not achieve market acceptance and is no longer being
marketed. The Biojector 2000 was introduced in January 1993. To date
the major portion of sales have been sales to HMI that were not placed in
service and which the Company agreed to repurchase at a substantial discount
to the original selling price. Failure of the Biojector 2000 system to
gain market acceptance would have a material adverse effect on the
Company's financial condition and results of operations.

HISTORY OF LOSSES; UNCERTAIN PROFITABILITY. Since its formation in
1985, the Company has incurred significant annual operating losses and
negative cash flow. At March 31, 1997 the Company had an accumulated deficit
of $34.2 million. The Company's revenues to date have been derived primarily
from licensing and technology fees, and from product sales, which were
principally sales to dealers for the stocking of inventories and to HMI.
There can be no assurance that the Company will be able to generate
significant revenues or achieve profitability. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

LIMITED MANUFACTURING EXPERIENCE; NEED TO REDUCE UNIT COST.
The Company has limited experience manufacturing its products in commercial
quantities. The Company has increased its production capacity for the
Biojector 2000 system through automation of, and changes in, production
methods. The current cost per injection of the Biojector 2000 system is
substantially higher than that of traditional needle-syringes, its principal
competition. A key element of the Company's business strategy is to reduce
the overall system cost through automating production and packaging. The
Company has experienced and may continue to experience setbacks and delays
in its cost reduction efforts including failure to deliver reduced cost parts
to specifications. There can be no assurance that the Company will be able
to develop and implement effective high volume production or achieve necessary
unit cost reductions. Failure to do either would adversely affect the
Company's financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation" and
"Manufacturing."

GOVERNMENTAL REGULATION. The Company's products and manufacturing
operations are subject to extensive government regulation,
both in the U.S. and abroad. In the U.S., the development, manufacture,
marketing and promotion of medical devices are regulated by the Food and
Drug Administration ("FDA") under the Federal Food, Drug, and Cosmetic Act
("FFDCA"). In 1987, the Company received clearance from the FDA under
Section 510(k) of the FFDCA to market a hand-held CO2-powered jet injection
system. The FFDCA provides that new premarket notifications under Section
510(k) of the FFDCA are required to be filed when, among other things, there
is a major change or modification in the intended use of a device or a
change or modification to a legally marketed device that could significantly
affect its safety or effectiveness. Although the Biojector 2000 system
incorporates changes from the system with respect to which the Company's
1987 510(k) marketing clearance was received and expands its intended use,
the Company made the determination that these were not major changes or
modifications in intended use or changes in the device that could
significantly affect the safety or effectiveness of the device and that,
accordingly, the 1987 510(k) clearance permitted the Company to market the
Biojector 2000 system in the U.S. In June 1994, the Company received
clearance from the FDA under 510(k) to market a version of its Biojector 2000
system in a configuration targeted at high volume injection applications.
In October 1996, the Company received 510(k) clearance for a non-needle
disposable vial access device. In March 1997, the Company received FDA
510(k) clearance to market the Biojector 2000 incorporating certain
enhancements to the product.

Future changes to manufacturing procedures could necessitate the filing of a
new 510(k) notification. Also, future products, product enhancements or
changes, or changes in product use may require clearance under Section
510(k), or they may require FDA premarket approval ("PMA") or other
regulatory approvals. PMAs and these other regulatory approvals generally
involve more extensive prefilling testing that a 510(k) clearance and a
longer FDA review process. Under current FDA policy, applications involving
prefilled syringes would he evaluated by the FDA as drugs rather than
devices, requiring NDAs or ANDAs. See "Governmental Regulation."
Depending on the circumstances, drug regulation can be more bureaucratic and
time consuming than device regulation.

FDA regulatory processes are time consuming and expensive, and there can be
no assurance that product applications submitted by the Company will be
cleared or approved by the FDA. In addition, the Company's products must be
manufactured in compliance with Good Manufacturing Practices ("GMP")
specified in regulations under the FDA Act. The FDA has broad discretion in
enforcing the FDA Act, and noncompliance with the Act could result in a
variety of regulatory actions ranging product detentions, device alerts
or field corrections, to mandatory recalls, seizures, injunctive actions,
and civil or criminal penalties.

Distribution of the Company's products in countries other than the U.S. may
be subject to regulation in those countries. An application was made to the
Japan Ministry of Health and Welfare to obtain necessary approvals to market
the Biojector 2000 system in Japan which was not carried to completion by
the Company's then Japanese distributor. See "Governmental Regulation."

UNCERTAINTY IN HEALTHCARE INDUSTRY; GOVERNMENT HEALTHCARE REFORM.
The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and
operations of healthcare facilities. During the past several years, the
healthcare industry has been subject to increased government regulation of
reimbursement rates and capital expenditures. Among other things, third
party payers are increasingly attempting to contain healthcare costs by
limiting both coverage and reimbursement levels for healthcare products and
procedures. Because the price of the Biojector 2000 system exceeds the
price of needle injection systems, cost control policies of third party
payers, including government agencies, may adversely affect use of the
Biojector 2000 system.

DEPENDENCE ON THIRD-PARTY RELATIONSHIPS. The Company is dependent on third
parties for distribution of the Biojector 2000 system to certain market
segments, for the manufacture of component parts, and for assistance
with the development and distribution of its future Betaseron self-injection
and application specific systems.

The Company intends to seek relationships to distribute to the physician
office market in the future. Past dealer relationships have not been
successful. There can be no assurance that the Company's future dealers
will provide sufficient sales support to establish the Company's current
product. See "Marketing and Competition."

The Company's current manufacturing processes for the Biojector 2000 jet
injector and disposable syringes consist primarily of assembly of component
parts supplied by outside suppliers. Certain of these components are
currently obtained from single sources, with some components requiring
significant production lead times. In the past, the Company has experienced
delays in the delivery of certain components, although to date no such
delays have had a material adverse effect on the Company's operations.
There can be no assurance that the Company will not experience delays in the
future, or that such delays would not have a material adverse effect on the
Company's financial condition and result of operations. See
"Manufacturing."

The Company has entered into agreements with certain major pharmaceutical
companies for development and distribution of its jet injection systems.
These companies have the right to terminate these agreements at certain
phases as defined in the agreements. There can be no assurance these
companies interest and participation in the projects will continue. Failure
to receive additional funding from these companies could adversely affect
the development and production of the products involved and,
correspondingly, the Company's financial condition and results of
operations. See "Research and Product Development."

ABILITY TO MANAGE GROWTH. If the Company's products achieve
market acceptance, the Company expects to achieve rapid growth. This growth
strategy will require expanded customer services and support, increased
personnel throughout the Company, expanded operational and financial
systems, and the implementation of new control procedures. There can be no
assurance that the Company will be able to attract qualified personnel or
successfully manage expanded operations. As the Company expands, it may
from time to time experience constraints that would adversely affect its
ability to satisfy customer demand in a timely fashion. Failure to manage
growth effectively could adversely affect the Company's financial condition
and results of operations.

COMPETITION. The medical equipment market is highly competitive and
competition is likely to intensify. The Company's products compete
primarily with traditional needle-syringes, "safety syringes" and also with
other alternative drug delivery systems. In recent years, some needle-free
self injectors have also gained some market prominence including signing of
certain corporate partnerships. While the Company believes its products
provide a superior drug delivery method, there can be no assurance that the
Company will be able to compete successfully with existing drug delivery
products. Many of the Company's competitors have longer operating histories
as well as substantially greater financial, technical, marketing and customer
support resources than the Company. There can be no assurance that one or
more of these competitors will not develop an alternative drug delivery system
that competes more directly with the Company's products, or that the Company's
products would be able to compete successfully with such a product.
See "Marketing and Competition."

DEPENDENCE ON SINGLE TECHNOLOGY. The Company's strategy has been to
focus its development and marketing efforts on its jet injection technology.
This focus renders the Company particularly sensitive to competing products
and alternative drug delivery systems. The Company believes that healthcare
providers' desire to minimize the use of the traditional needle-syringe has
stimulated development of a variety of alternative drug delivery system such
as "safety syringes," jet injection systems and transdermal diffusion
"patches." In addition, pharmaceutical companies frequently attempt to
develop drugs for oral delivery instead of injection.

While the Company believes that for the foreseeable future there will
continue to be a significant need for injections, there can be no assurance
that alternative drug delivery methods will not be developed which are
preferable to injection. See "Marketing and Competition."

PATENTS AND PROPRIETARY RIGHTS. The Company relies on a combination
of trade secrets, confidentiality agreements and procedures, and patent
prosecution to protect its proprietary technologies. The Company has been
granted seven patents in the United States and two patents in certain other
countries covering certain technology embodied in its current jet injection
system and certain manufacturing processes. Additional patent applications
are pending in the U.S and certain foreign countries. There can be no
assurance that the claims contained in any patent application will be
allowed, or that any patent will provide adequate protection for the
Company's products and technology. In the absence of patent protection, the
Company may be vulnerable to competitors who attempt to copy the Company's
products or gain access to its trade secrets and know-how. In addition, the
laws of foreign countries may not protect the Company's proprietary rights
to this technology to the same extent as the laws of the U.S. The Company
believes that it has independently developed its technology and attempts to
ensure that its products do not infringe the proprietary rights of others,
and the Company knows of no infringement claims. However, any such claims
could have a material adverse affect on the Company's financial condition
and results of operations. See "Patents and Proprietary Rights."

PRODUCT LIABILITY. Producers of medical devices may face substantial
liability for damages in the event of product failure or if it is alleged
the product caused harm. The Company currently maintains product liability
insurance and has not experienced any product liability claims to date.
There can be no assurance, however, that the Company will not be subject to
such claims, that the Company's current insurance would cover such claims
and that adequate insurance will continue to be available on acceptable
terms to the Company in the future. The Company's business could be
adversely affected by product liability claims. See "Product Liability."

DEPENDENCE UPON KEY EMPLOYEES. The Company's success is dependent
upon the retention of its executive officers and other key employees.
Competition exists for qualified personnel, and the Company's success will
depend in part upon attracting and retaining such personnel. Failure in
these efforts ould have a material adverse effect on the Company's business,
financial condition or results of operations.

SHARES ELIGIBLE FOR FUTURE SALE. In November and December of 1995,
the Company completed a private placement of 2,303,009 units (each unit
representing one share of common stock and a warrant to purchase one share of
common stock). The Company also granted a warrant to its placement agent
in the private placement to purchase 137,086 shares of common stock.
The shares issued in the 1995 private placement were registered for resale
on a Registration Statement on Form S-3. The Company also granted
registration rights with respect to the shares issuable upon exercise of the
warrants. In December 1996, the Company completed a private placement of
3,434,493 units (each unit representing one share of common stock and a
warrant to purchase one share of common stock). The Company also granted a
warrant to its placement agent in the private placement to purchase 156,000
shares of common stock. The shares issued in the 1996 private placement and
the underlying shares issuable upon exercise of the warrants were registered
for resale on a Form S-3 Registration Statement. In June 1997, the Company
completed a private placement of 1,744,186 units (each unit representing one
share of common stock and a warrant to purchase one-half share of common
stock). The Company has an obligation to seek registration on Form S-3 for
the 1997 private placement shares and, if possible, the common shares
underlying the warrants. Sales of substantial numbers of shares of
common stock in the public market, or the availability of such shares for
sale, could adversely affect the market price for the common stock and make
it more difficult for the Company to raise funds through equity offerings in
the future.

POSSIBLE ADVERSE EFFECTS ON TRADING MARKET. The Common Stock is
quoted on the NASDAQ National Market. There are a number of continuing
requirements that must be met in order for the Common Stock offered hereby
to remain eligible for quotation on the NASDAQ National Market or the NASDAQ
Small Cap Market. In November 1996, NASDAQ approved changes to its
quantitative and qualitative standards for issuers listing on NASDAQ,
subject to public comment and approval by the Securities and Exchange
Commission. Among the proposed changes are the elimination of the alternative
test for issuers failing to meet the minimum bid price of $1.00 and an
increase in the quantitative standards for both the NASDAQ National Market
and the NASDAQ SmallCap Market. The failure to meet these maintenance criteria
in the future could result in the delisting of the Company's Common Stock
from NASDAQ. In such event, trading, if any, in the Common Stock may then
continue to be conducted in the non-NASDAQ over-the-counter market. As a
result, an investor may 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, if the Common Stock were delisted from trading on NASDAQ and the
trading price of the Common Stock were less than $5.00 per share, trading in
the Common Stock would be subject to the requirements of certain rules
promulgated under the Exchange Act, which require broker-dealers to make
additional disclosures and to implement additional procedures in connection
with any trades involving a stock defined as a penny stock. The additional
burdens imposed upon broker-dealers may discourage broker-dealers from
effecting transactions in penny stocks, which could reduce the liquidity of
the shares of Common Stock and thereby have a material adverse effect on the
trading market for the securities.

POSSIBLE VOLATILITY OF STOCK PRICE. The market for the Company's
common stock and for the securities of other early stage, small market-
capitalization companies is highly volatile. The Company believes that
factors such as quarter-to-quarter fluctuations in financial results, new
product introductions by the Company or its competition, public
announcements, changing regulatory environments, sales of Common Stock by
certain existing shareholders and substantial product orders could
contribute to the volatility of the price of the Company's Common Stock,
causing it to fluctuate dramatically. General economic trends such as
recessionary cycles and changing interest rates may also adversely affect
the market price of the Company's Common Stock. See "Market for the
Registrant's Common Equity and Related Stockholder Matters."

Item 2. PROPERTIES

The Company's principal offices are located in Portland, Oregon in
approximately 24,000 square feet of leased office and manufacturing space
under a lease which expires in September 2002. The monthly minimum lease
obligation for this facility is approximately $15,000. These facilities
include the Company's sales and administration offices and equipment,
research and engineering facilities, a clean room assembly area, assembly
line, testing facilities and a warehouse area.

The Company leases additional warehouse space totalling approximately
5,000 square feet for finished goods storage and shipments to customers.
This lease, which also expires in September 2002, has minimum monthly lease
obligations totalling $1,900.

The Company believes its current facilities will be sufficient to
support its operations for the next 2-3 fiscal years. As the Company
requires additional space to accommodate growth in its sales and
manufacturing activities, it is the Company's intention to lease additional
facilities adjacent to or near its present operations. The Company believes
that, if necessary, it will be able to obtain facilities at rates and under
terms comparable to those under the current leases.

Item 3. LEGAL PROCEEDINGS

None

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

None.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded on the NASDAQ National Market
under the Symbol "BJCT." The following table sets forth the high and low
closing sale prices of the Company's Common Stock on the NASDAQ National
Market.

High Low
_____ _____

Fiscal year Ended March 31, 1995:

First Quarter $3.00 $2.00
Second Quarter 4.13 3.25
Third Quarter 3.63 2.81
Fourth Quarter 2.50 1.50

Fiscal Year Ended March 31, 1996:

First Quarter 3.00 1.44
Second Quarter 2.97 1.19
Third Quarter 2.81 1.81
Fourth Quarter 1.94 1.25

Fiscal Year Ended March 31, 1997:

First Quarter 1.41 1.28
Second Quarter 1.03 0.97
Third Quarter 0.78 0.75
Fourth Quarter 0.78 0.63

The closing sale price on May 30, 1997, as reported on the NASDAQ National
Market, was $0.91 per share.

The Company has declared no dividends during its history and has no
intention of declaring a dividend in the foreseeable future. As of
May 30, 1997 the number of shareholders of record of the Company's
Common Stock was 19,540,413.

Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

FINANCIAL DATA

The statement of operations and balance sheet data set forth below for
the five fiscal years in the period ended March 31, 1997 have been derived
from the consolidated financial statements of the Company. The selected
consolidated financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and with the detailed consolidated financial
statements and notes thereto included elsewhere in this Report.

SUMMARY FINANCIAL INFORMATION
(in thousands, except per share data)

YEAR ENDED MARCH 31,
1997 1996 1995 1994 1993
______ ______ ______ ______ ______

Statement of Operations Data:

Revenues $2,235 $4,209 $2,924 $1,463 $1,146
Operating expenses 6,531 9,640 8,580 5,858 4,449
Net loss (4,296) (5,431) (5,656) (4,395) (3,303)
Net loss per share (0.26) (0.39) (0.43) (0.39) (0.34)
Shares used in per
share calculation 16,705 14,074 13,167 11,230 9,686

AS OF MARCH 31,
1997 1996 1995 1994 1993
______ ______ ______ ______ ______

Balance Sheet Data:

Working capital $2,858 $4,327 $6,404 $12,593 $4,264
Total assets 7,088 7,519 9,498 13,836 5,727
Long-term debt - - - - -
Shareholders' equity 5,766 6,027 7,964 13,377 4,752

The Company has declared no dividends during its history and has no
intention of declaring a dividend in the foreseeable future.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Operating losses have resulted in an accumulated deficit of approximately $34.3
million as of March 31, 1997. In fiscal 1995 and 1996, the Company incurred
significantly increased costs associated with the production and sale of the
Biojector 2000 system, including sales and marketing efforts, manufacturing
ramp-up and inventory build-up. The Company has been working on a product
cost reduction program which commenced phase-in during fiscal 1996 and results
from the initial phase of which were reflected in fiscal 1997 operating
performance. The Company's ability to achieve and sustain profitability will
depend in part upon customer acceptance of the Biojector 2000 system, sustained
product performance, implementing additional product cost reductions and
attaining revenues sufficient to support profitable operations.

In August 1994, Bioject signed an agreement with Health Management,
Inc. (HMI), granting HMI exclusive rights to purchase Bioject's Needle-Free
Injection Management System (trademark), the Biojector 2000, for use in the
home healthcare market. In return for HMI's commitment to purchase a minimum
of 8,000 Biojector units over the ensuing two years, the Company granted
volume pricing discounts to HMI. During the term of the contract, the
selling price of Biojectors to HMI exceeded their standard cost. During
fiscal 1995 and 1996, the Company sold approximately 2,100 and 4,300
Biojectors to HMI for total sales revenue including syringes of $1.1 million
and $2.2 million, respectively. HMI did not place the great majority of
these Biojectors with patients pending completion of negotiations with
pharmaceutical companies for certain pricing concessions for medication to
be administered with the Biojectors. In January 1996 HMI requested that
Bioject suspend shipments to HMI. In February 1996, the Company learned
from HMI's press releases that HMI expected to default under its loans, to
take significant write-offs for accounts receivable and inventories, planned
operational consolidations, and would restate certain prior period financial
statements. In fiscal 1997, although not obligated to do so, the
Company agreed to repurchase certain of the HMI inventories, including up to
6,000 Biojector units, for cash and forgiveness of accounts receivable
totalling $660,000. The repurchase of these inventories was at a
substantial discount to the original selling price to HMI.

In March 1994, the Company entered into an agreement with Schering AG,
Germany, for the development of a self-injection device for delivery of
Betaseron(R) to multiple sclerosis patients. During fiscal 1995, the Company
developed a proof-of-concept prototype and demonstrated this prototype to
Schering. The Company and Schering finalized product specifications. The
Company also commenced development of the preproduction clinical prototype.
During fiscal 1996, the Company delivered the preproduction clinical
prototypes to Schering and worked on finalizing the production prototype
design. During fiscal 1997, the Company entered into a supply agreement with
Schering AG and commenced activities related to full production of the self
injector. Schering loaned the Company a total of $1.6 million to purchase
molds and tooling for production of the product. In January 1997, the Company
received notice that its contract with Schering AG would be cancelled. Under
provisions of the contract, Schering AG had the option of canceling the
agreement if the FDA required extensive clinical studies beyond an originally
planned safety study. Schering AG received a review letter from the FDA which
would have required Schering to conduct additional material clinical studies
in order to use non-traditional delivery mechanisms with its Betaseron(R)
product. Under terms of the contract, Schering was required to convert its
$1.6 million note due from Bioject into approximately 460,000 shares of
Bioject common stock at a conversion price of $3.50 per share. In addition,
$106,000 of accrued interest was converted into approximately 27,000 shares
of Bioject common stock at a conversion price of $3.50 per share.
Approximately 487,000 shares of Bioject stock are held by Schering AG. In
addition, Schering is obligated to pay Bioject for the cost of product ordered
through the date of cancellation of the contract.

In January 1995, the Company signed a joint development agreement with
Hoffmann-La Roche to develop proprietary drug delivery systems for Roche
products. The agreement provides for Bioject to develop, manufacture and
sell Biojector needle-free drug delivery systems designed to Roche
specifications. In return, Bioject has granted Roche exclusive worldwide
rights to distribute these systems and their components for use with certain
Roche products. Hoffmann-La Roche Inc. is the United States affiliate of
the multinational group of companies headed by Roche Holding of Basel,
Switzerland, one of the world's leading research-intensive healthcare
companies. As of 1995 fiscal year end, the Company had commenced design of
a prototype device and had agreed with Roche on product specifications.
During fiscal 1996, the Company developed and delivered to Roche
preproduction prototypes for testing and developed the clinical
preproduction prototypes which were delivered to Roche in April 1996. As of
March 31, 1997, the Company and Hoffmann-LaRoche were finalizing their
submission to obtain regulatory approval to market the product. Hoffmann-
LaRoche was also gathering marketing information in order to sign a supply
agreement. In February 1995, Hoffmann-La Roche paid a one-time licensing
fee totalling $500,000 and the agreement provides that it will pay specified
product development fees on an agreed upon schedule of which $900,000 was
paid in fiscal 1996 and $250,000 was paid in fiscal 1997.

Throughout fiscal 1994 and 1995, the Company's manufacturing processes
were primarily manual. These processes did not permit the Company to
produce its products at costs which would allow it to operate profitably.
During fiscal 1996, the Company implemented a plan to increase manufacturing
capacity and refine production methods to meet anticipated future demand and
to reduce product costs. For the Biojector 2000, cost reduction efforts
included converting from a two piece to a one piece housing, converting to
continuous process manufacturing and implementing volume purchasing programs
from suppliers. For the Biojector syringes, these efforts included
increasing supplier mold capacity and automating final assembly and
packaging. During fiscal 1997, the Company's manufacturing activities
focused on retesting the devices repurchased from HMI to ensure their
continuing compliance with new product standards and elective upgrade of
certain of these units to current version configuration. Manufacturing
also focused on finalizing product engineering and on planning
for, designing and bringing up the new self injector device and syringe
manufacturing lines in advance of product launch.

The Company's revenues to date have not been sufficient to cover
operating expenses. However, the Company believes that if its products
achieve market acceptance and the volume of sales increases, and its product
costs are reduced, its costs of goods as a percentage of sales will decrease
and eventually the Company will generate net income. See "Forward Looking
Statements" and "Business - Risk Factors." The level of sales required to
generate net income will be affected by a number of factors including the
pricing of the Company's products, its ability to attain efficiencies that
can be attained through volume and automated manufacturing, and the impact
of inflation on the Company's manufacturing and other operating costs.
There can be no assurance that the Company will be able to successfully
implement its manufacturing cost reduction program or sell its products at
prices or in volumes sufficient to achieve profitability or offset increases
in its costs should they occur.

Revenues and results of operations have fluctuated and can be expected
to continue to fluctuate significantly from quarter to quarter and from year
to year. Various factors may affect quarterly and yearly operating results
including (i) length of time to close product sales, (ii) customer budget
cycles, (iii) implementation of cost reduction measures, (iv) uncertainties
and changes in purchasing due to third party payor policies and proposals
relating to national healthcare reform, (v) timing and amount of payments
under technology development agreements and (vi) timing of new product
introductions by the Company and its competition.

In the future, the Company may incur a non-cash charge to compensation
expense in connection with the issuance of 100,000 shares of Common Stock to
the Company's Chief Executive Officer. Under terms of his employment
agreement, the Company's Chairman will receive 100,000 shares of common
stock when the Company first achieves two consecutive quarters of positive
earnings per share. Upon issuance of such shares the Company will record a
non-cash charge to compensation at the fair market value of the stock on the
last day of the quarter in which the shares are earned.

During the next fiscal year, the Company will continue to focus its
efforts on expanding sales, reducing the cost of its products, developing
a 1.5 ml. injector for Hoffmann-La Roche, pursuing additional alliances with
pharmaceutical companies and conserving its fiscal resources. The Company
does not expect to report net income from operations in fiscal 1998.
See "Forward Looking Statements" and "Risk Factors."

RESULTS OF OPERATIONS

Product sales increased from $1.5 million in fiscal 1995 to $3.1 million
in fiscal 1996 and declined to $1.3 in fiscal 1997. Sales in fiscal 1995
consisted of $1.1 million of sales to Health Management Inc., and the
remainder to hospitals, large clinics, individual physician offices and
certain selected distributors. Sales in fiscal 1996 consisted of $2.3 million
of sales to HMI with the remainder primarily to public health and flu
immunization clinics. Sales in fiscal 1997, consisted of $1.1
million of sales to public health and flu immunization clinics with the
balance to a strategic partner.

License and technology fees varied from $1.4 million in fiscal 1995 to $1.2
million in fiscal 1996 and $966,000 in fiscal 1997. The fiscal 1995 fees
included a one-time $500,000 licensing fee for access to the Company's
technology received from Schering and a similar one-time $500,000 licensing
fee received from Hoffmann-La Roche with the balance of the fiscal 1995 fees
consisting of product development revenues recognized in connection with the
Schering agreement. The fiscal 1996 and 1997 fees consisted principally of
product development revenues recognized for work performed under the Schering
and Hoffmann-La Roche agreements.

Manufacturing expense consists of the costs of product sold and manufacturing
overhead expense related to excess manufacturing capacity. The total of these
costs varied from $3.4 million in fiscal 1995 to $5.2 million in fiscal 1996
and $2.2 million in fiscal 1997 due in part to changes in sales and,
therefore, to changes in the total costs of product sold. The increase from
1995 to 1996 also reflects increased regulatory and quality assurance staff
to support the higher level of manufacturing and increased depreciation
expense associated with automated assembly equipment installed during fiscal
1996. The decrease in expense from fiscal 1996 to 1997 reflects reductions in
materials and labor for injectors and syringes and reductions in fixed and
variable manufacturing overhead expense. Fixed manufacturing overhead
totalled $1.3 million, $1.9 million and $1.5 million in fiscal 1995, 1996
and 1997, respectively.

Research and development expense increased slightly from to $1.4 million in
fiscal 1995 to $1.5 million in fiscal 1996 and then decreased to $1.3 million
in fiscal 1997. Fiscal 1995 expenditures related to work associated with
development of the Schering device and to initial work on the Hoffmann-La
Roche device. Fiscal 1996 expenditures related entirely to work performed
under the Schering and Hoffmann-La Roche agreements. Fiscal 1997 expenditures
related to final design and transfer to manufacturing of the Schering device
and additional development work on the Hoffmann-LaRoche system. Costs vary
from year to year depending on product activity.

Selling, general and administrative expense totalled $4.2 million, $3.2
million and $3.2 million in fiscal 1995, 1996 and 1997, respectively. Fiscal
1995 included expenses incurred in connection with the chief executive
officer transition totalling approximately $780,000 (or $0.06 per share) and
to higher levels of legal, insurance, bad debt and certain
promotional expenses. The decrease in fiscal 1996 resulted from planned
reductions in overhead personnel. Sales and marketing expenses comprise
slightly more than 50% of selling, general and administrative expenses in
fiscal 1996 and 1997.

Other income consists of earnings on available cash balances. Other income
varied as a result of changes in cash balances and interest rates from year
to year.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception in 1985, the Company has financed its operations, working
capital needs and capital expenditures primarily from private placements of
securities, exercises of stock options, proceeds received from its initial
public offering in 1986, proceeds received from a public offering of Common
Stock in November 1993, licensing and technology revenues and more recently
from sales of products. Net proceeds received upon issuance of securities
from inception through March 31, 1997 totalled approximately $40.0 million.
The Company has no long-term debt.

Cash, cash equivalents and marketable securities totalled $4.1 million at
March 31, 1996 and $2.1 million at March 31, 1997, which represented a
decrease of $2.0 million from 1996 to 1997. The decrease resulted from
operating losses and capital expenditures offset in part by net proceeds
from a private placement of common stock and warrants in December 1996 and
of long-term debt borrowing from Schering including accrued interest
which was converted into 487,390 shares of common stock in February 1997.
In June 1997, the Company completed private placement of its common stock
and warrants totalling $750,000.

Inventories increased from $1.3 million at March 31, 1996 to $1.7 million at
March 31, 1997 due to the build-up of inventories to support anticipated future
product sales and the repurchase of inventories from HMI.

The Company has fixed commitments for facilities rent and equipment leases
which total approximately $260,000 for fiscal 1998.

The Company expended approximately $1.6 million for capital equipment in
fiscal 1997. Substantially all of these expenditures related to ramp-up of
manufacturing for the Schering product launch. These assets continue to be
carried at their cost on the Company's balance sheet because the product is
suitable for other home injection applications which the Company is pursuing.
The Company expects to expend approximately $50,000 on non-manufacturing
capital equipment additions in fiscal 1998.

The Company believes that its current cash position and cash received from a
private placement of common stock and warrants in June 1997, combined with
revenues and other cash receipts will not be adequate to fund the Company's
operations through the end of fiscal 1998. The Company has identified a
number of potential financing sources and is pursuing them aggressively.
See "Forward Looking Statements." Even if the Company is successful in
raising additional financing unforeseen costs and expenses or lower than
anticipated cash receipts from product sales or research and development
activities could accelerate or increase the financing requirements. The
Company has been successful in raising additional financing in the past and
believes that sufficient funds will be available to fund future operations.
See "Forward Looking Statements." However, there can be no assurance that
the Company's efforts will be successful, and there can be no assurance that
such financing will be available on terms which are not significantly dilutive
to existing shareholders. Failure to obtain needed additional capital on
terms acceptable to the Company, or at all, would significantly restrict the
Company's operations and ability to continue product development and growth
and materially adversely affect the Company's business. The Company has no
banking line of credit or other established source of borrowing. The Company's
independent accountants have qualified their opinion with respect to their
audit of the Company's 1997 consolidated financial statements as the result
of doubts concerning the Company's ability to continue as a going concern in
the absence of additional financing.

Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

TABLE OF CONTENTS TO FINANCIAL STATEMENTS

Report of Independent Public Accountants

Consolidated Balance Sheets at March 31, 1997 and 1996

Consolidated Statements of Operations for the years ended
March 31, 1997, 1996 and 1995

Consolidated Statements of Shareholders' Equity for the years
ended March 31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows for the years ended
March 31, 1997, 1996 and 1995

Notes to Consolidated Financial Statements

Supplementary Data (none required)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Bioject Medical
Technologies Inc:

We have audited the accompanying consolidated balance sheets of Bioject
Medical Technologies Inc. (an Oregon corporation) and subsidiaries as of
March 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
in the period ended March 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bioject Medical
Technologies Inc. and subsidiaries, as of March 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years
in the period ended March 31, 1997, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations and, at March 31, 1997, has an accumulated deficit of $34.3
million that raises substantial doubt about the Company's ability to
continue as a going concern. Management's plan in regards to these matters
is also described in Note 1. The financial statements do not include any
adjustments relating to recoverability and classification of asset
carrying amounts that might result should the Company be unable to continue
as a going concern.

/S/ ARTHUR ANDERSEN LLP

Portland, Oregon

May 2, 1997 (except with respect to the matter discussed in Note 7 for
which the date is June 18, 1997)

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

March 31,
1997 1996
____________ __________

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,116,478 $ 3,098,251
Securities available for sale - 993,056
Accounts receivable, net of allowance for
doubtful accounts of $27,500 and $55,000,
respectively 311,856 424,859
Inventories 1,706,456 1,255,945
Other current assets 45,222 45,714
____________ ___________
Total current assets 4,180,012 5,817,825
____________ ___________

PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment 1,897,174 1,428,001
Production molds 1,798,630 777,353
Furniture and fixtures 176,897 163,116
Leasehold improvements 80,447 73,854
Capitalized Interest _____106,228 __________-
4,059,376 2,442,324
Less - accumulated depreciation (1,462,338) (1,048,638)
____________ ___________
2,597,038 1,393,686
____________ ___________
OTHER ASSETS 310,981 307,105
____________ ___________
$ 7,088,031 $ 7,518,616
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 659,973 $ 550,174
Accrued payroll 213,130 158,225
Other accrued liabilities 199,384 216,924
Deferred revenue 250,000 566,000
____________ ___________
Total current liabilities 1,322,487 1,491,323
____________ ___________
COMMITMENTS (Note 5) - -

SHAREHOLDERS' EQUITY:
Preferred stock, no par, 10,000,000 shares
authorized; no shares issued and outstanding - -
Common stock, no par, 100,000,000 shares
authorized; issued and outstanding 19,540,413
and 15,585,232 shares at March 31, 1997 and
1996, respectively 40,035,736 36,001,158
Accumulated deficit (34,270,192) (29,973,865)
____________ ___________
Total shareholders' equity 5,765,544 6,027,293
____________ ___________
$ 7,088,031 $ 7,518,616
============ ===========

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

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended March 31,
1997 1996 1995
_______________________________________

REVENUES:

Net sales of products $ 1,269,882 $ 3,059,018 $1,479,948
Licensing/technology fees 965,500 1,150,000 1,444,000
___________ __________ __________
2,235,382 4,209,018 2,923,948
___________ __________ __________

EXPENSES:

Manufacturing 2,184,050 5,195,914 3,394,089
Research and development 1,275,580 1,486,607 1,427,861
Selling, general and administrative 3,177,228 3,168,618 4,186,549
Other (income) expense (105,149) (211,049) (428,402)
___________ ___________ __________
6,531,709 9,640,090 8,580,097
___________ ___________ __________

LOSS BEFORE TAXES (4,296,327) (5,431,072) (5,656,149)

PROVISION FOR INCOME TAXES - - -
___________ ___________ ___________

NET LOSS $(4,296,327) $(5,431,072) $(5,656,149)
=========== =========== ===========

NET LOSS PER SHARE $ (0.26) $ (0.39) $ (0.43)
============ =========== ===========

SHARES USED IN PER SHARE CALCULATION 16,705,274 14,074,349
13,167,301
============ =========== ===========

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

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

COMMON STOCK
________________________ Accumulated
Shares Amount Deficit Total
__________ ___________ ____________ ___________

BALANCES, MARCH 31, 1994 13,158,074 $32,263,783 $(18,886,644)
$13,377,139

Issuance of common stock in
exchange for services 101,000 243,312 - 243,312

Net loss - - (5,656,149) (5,656,149)
__________ __________ ____________ ___________

BALANCES, MARCH 31, 1995 13,259,074 32,507,095 (24,542,793)
7,964,302

Issuance of common stock in
exchange for services 23,149 39,962 - 39,962

Issuance of common stock under
a private placement in
November and December 1995 2,303,009 3,454,101 - 3,454,101

Net loss - - (5,431,072) (5,431,072)
__________ ___________ ____________ ___________

BALANCES, MARCH 31, 1996 15,585,232 36,001,158 (29,973,865)
6,027,293

Issuance of common stock in
exchange for services 33,298 159,350 - 159,350

Issuance of common stock under
a private placement in
December 1996 3,434,493 2,163,000 - 2,163,000

Issuance of stock to Schering AG
in exchange for debt 487,390 1,712,228 - 1,712,228

Net loss - - (4,296,327) (4,296,327)
__________ ___________ _____________ ___________

BALANCES, MARCH 31, 1997 19,540,413 $40,035,736 $(34,270,192)
$5,765,544
========= ========= ========== ========

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

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended March 31,
1997 1996 1995
____________________________________________

CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $(4,296,327) $(5,431,072) $(5,656,149)
Adjustments to net loss:
Depreciation and amortization 443,700 520,714 247,183
Contributed capital for services 159,350 39,962 243,312
Net changes in assets
and liabilities:
Accounts receivable 113,003 305,864 (561,616)
Inventories (450,511) (147,237) (144,982)
Other current assets 492 6,435 (6,773)
Accounts payable 109,799 (257,704) 593,498
Accrued payroll 54,905 (92,512) 52,436
Other accrued liabilities (17,540) (102,080) 273,305
Deferred revenue (316,000) 410,000 156,000
__________ ___________ ___________
Net Cash Used in Operating Activities (4,199,129) (4,747,630) (4,803,786)
__________ ___________ ___________

CASH FLOWS FROM INVESTING ACTIVITIES:
Securities purchased - (1,977,856) (6,951,390)
Securities sold 993,056 4,974,268 9,795,130
Property and equipment (1,617,052) (597,100) (956,487)
Other assets (33,876) (64,916) (65,723)
__________ ___________ ___________
Net Cash Provided By (Used In)
Investing Activities (657,872) 2,334,396 1,821,530
__________ ___________ ___________

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from common stock 2,163,000 3,454,101 -
Borrowing from long-term debt
subsequently converted to common stock 1,712,228 - -
__________ ___________ ___________
Net Cash Provided by Financing
Activities 3,875,228 3,454,101 -
__________ ___________ ___________

CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash
and cash equivalents (981,773) 1,040,867 (2,982,256)
Cash and cash equivalents at
beginning of year 3,098,251 2,057,384 5,039,640
__________ ___________ ___________

Cash and cash equivalents at
end of year $2,116,478 $3,098,251 $2,057,384
========== =========== ===========

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

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY:

The consolidated financial statements of Bioject Medical Technologies Inc.
and its subsidiaries (the "Company"), include the accounts of Bioject
Medical Technologies Inc. ("BMT") and its wholly owned subsidiary,
Bioject Inc. ("BI"). All significant intercompany transactions have been
eliminated. BMT was incorporated on December 17, 1992 under the laws of the
State of Oregon for the purpose of acquiring all of the outstanding common
shares of Bioject Medical Systems, Ltd. ("BMSL") in exchange for an
equivalent number of common shares of BMT stock under a plan of U.S.
reincorporation approved by the Company's shareholders on November 20, 1992.
BMSL was incorporated on February 14, 1985, under the laws of British
Columbia, and terminated in July 1996. BI was incorporated on February 8,
1985, under the laws of the State of Oregon.

The Company commenced operations in 1985 for the purpose of developing,
manufacturing and distributing a new drug delivery system. Since its
formation, the Company has been engaged principally in organizational,
financing, research and development, and marketing activities. In the last
quarter of fiscal 1993, the Company launched U.S. distribution of its
Biojector 2000 system primarily to the hospital and large clinic market.

The Company's products and manufacturing operations are subject to extensive
government regulation, both in the U.S. and abroad. In the U.S., the
development, manufacture, marketing and promotion of medical devices is
regulated by the Food and Drug Administration ("FDA") under the Federal
Food, Drug, and Cosmetic Act ("FFDCA"). In 1987, the Company received
clearance from the FDA under Section 510(k) of the FFDCA to market a hand-
held CO2-powered jet injection system. In June 1994, the Company received
clearance from the FDA under 510(k) to market a version of its Biojector
2000 system in a configuration targeted at high volume injection
applications. In March 1997, the Company received a 510(k) clearance from
the FDA to market a version of its Biojector 2000 with certain additional
features.

Since its inception the Company has incurred operating losses and at March 31,
1997 has an accumulated deficit of approximately $34.3 million. The Company's
revenues to date have been derived primarily from licensing and technology
fees and more recently from sales of the Biojector 2000 system and Biojector
syringes to public health clinics and flu immunization programs. Future
revenues will depend upon acceptance and use by healthcare providers of the
Company's jet injection technology. Uncertainties over government regulation
and competition in the healthcare industry may impact healthcare provider
expenditures and third party payer reimbursements and, accordingly, the
Company cannot predict what impact, if any, subsequent healthcare reforms
might have on its business. The Company's ability to achieve and sustain
profitability will depend in part upon the customer acceptance of the
Biojector 2000 system, sustained product performance, implementing additional
product cost reductions and attaining revenues sufficient to support
profitable operations.

The Company's revenues to date have not been sufficient to cover operating
expenses. However, the Company believes that if its products achieve market
acceptance and the volume of sales increase, and its product costs are reduced,
its cost of goods as a percentage of sales will decrease and eventually the
Company will generate net income. The level of sales required to generate
net income will be affected by a number of factors including the pricing of
the Company's products, its ability to attain efficiencies that can
be attained through volume and automated manufacturing, and the impact of
inflation on the Company's manufacturing and other operating costs. There
can be no assurance that the Company will be able to successfully implement its
manufacturing cost reduction program or sell its products at prices or in
volumes sufficient to achieve profitability or offset increase in its costs
should they occur.

The Company believes that its current cash position and cash received from a
private placement of common stock and warrants on June 1997 (see note 7),
combined with revenues and other cash receipts will not be adequate to fund
the Company's operations through the end of fiscal 1998. The Company has
identified a number of potential financing sources and is pursuing them
aggressively. Even if the Company is successful in raising additional financing
unforeseen costs and expenses or lower than anticipated cash receipts from
product sales or research and development activities could accelerate or
increase the financing requirements. The Company has been successful in
raising additional financing in the past and believes that sufficient funds
will be available to fund future operations. However, there can be no assurance
that the Company's efforts will be successful, and there can be no assurance
that such financing will be available on terms which are not significantly
dilutive to existing shareholders. Failure to obtain needed additional capital
on terms acceptable to the Company, or at all, would significantly restrict the
Company's operations and ability to continue product development and growth
and materially adversely affect the Company's business.

The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts that might result
should the Company be unable to continue as a going concern.

2. ACCOUNTING POLICIES:

CASH EQUIVALENTS
The Company considers cash equivalents to consist of short-term, highly
liquid investments with an original maturity of less than three months.

SECURITIES AVAILABLE FOR SALE
The Company accounts for its investments in marketable securities in
accordance with Financial Accounting Standards Board Statement No. 115,
Accounting for Certain Investments in Debt and Equity Securities (SFAS 115).
Under provisions of SFAS 115, the Company is required to classify and account
for its security investments as trading securities, securities available
for sale or securities held to maturity depending on the Company's intent to
hold or trade the securities at time of purchase. As of March 31, 1997 and
1996, all securities held by the Company consisting entirely of short-term
debt instruments were available for sale and, accordingly, are stated on the
balance sheet at their fair market values which approximate cost. Realized
gains or losses are determined on the specific identification method and are
reflected in the accompanying financial statements. There were no significant
realized gains or losses for fiscal 1997, 1996 and 1995.

INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined in
a manner which approximates the first-in, first out (FIFO) method. Costs
utilized for inventory valuation purposes include labor, materials and
manufacturing overhead. Net inventories consist of the following:

March 31,
1997 1996
__________ __________

Raw Materials $ 815,868 $ 697,694
Work in Process 9,763 12,467
Finished Goods 880,825 545,784
__________ __________
$1,706,456 $1,255,945
========== ==========

PROPERTY AND EQUIPMENT
For financial statement purposes, depreciation expense on property and
equipment is computed on the straight-line method using the following lives:

Furniture and Fixtures............................5 years
Machinery and Equipment...........................7 years
Computer Equipment................................3 years
Production Molds..................................5 years

Leasehold improvements are amortized on the straight-line method over the
shorter of the remaining terms of the lease or the estimated useful lives of
the assets.

OTHER ASSETS
Other assets include costs incurred for the application of patents, net of
amortization on a straight-line basis over 17 years. Accumulated
amortization totalled $144,713 and $114,713 at March 31, 1997 and 1996,
respectively. Amortization expense for the years ended March 31, 1997, 1996
and 1995 totalled $30,000, $20,000 and $31,000 respectively.

ACCOUNTING FOR LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of"(SFAS 121), which requires the Company to review
for impairment of its long-lived assets and certain identifiable intangibles
whenever events or changes in circumstances indicate that the carrying
amount of an asset might not be recoverable. In certain situations, an
impairment loss would be recognized. SFAS 121 became effective for the
Company's year ended March 31, 1997. The Company has studied the
implications of SFAS 121 and, based on its evaluation, does not believe
that an adjustment to the carrying value of its long-lived assets is
necessary.

REVENUE RECOGNITION FOR PRODUCT SALES
The Company records revenue from sales of its products upon shipment. In
fiscal 1997, 1996 and 1995, sales to one customer accounted for 17%, 75% and
74% of net sales of products, respectively. At March 31, 1997, 62% of accounts
receivable were accounted for by one customer.

RESEARCH AND DEVELOPMENT AND LICENSING/TECHNOLOGY REVENUES
Licensing fees are recognized as revenue when due and payable. Product
development revenue is deferred upon receipt and is recognized as revenue as
qualifying expenditures are incurred. Expenditures for research and
development are charged to expense as incurred.

In March 1994, the Company entered into a joint development agreement with
Schering AG, a major pharmaceutical manufacturer, for the development of an
application specific self injection system. Under terms of the agreement,
the Company received a $500,000 licensing fee in April 1994 and has received
partial funding of product development expenses on an agreed schedule. In
fiscal 1995, the Company received a total of $1.1 million from the
pharmaceutical company, composed of $500,000 in licensing fees which were
recognized as revenue during fiscal 1995 and $600,000 of Phase I product
development revenues, $444,000 of which were recognized as revenue in fiscal
1995. In fiscal 1996, the Company received an additional $660,000 and a total
of $751,000 was recognized as revenue. In fiscal 1997, the Company received
a final product development payments totalling $349,500 and recognized revenue
of $414,500. During fiscal 1997, the Company entered into a supply agreement
with Schering AG and commenced activities related to full production of the
self injector. Schering loaned the Company a total of $1.6 million to purchase
molds and tooling for production of the product. In January 1997, the Company
received notice that its contract with Schering AG would be cancelled. Under
provisions of the contract, Schering AG had the option of canceling the
agreement if the FDA required extensive clinical studies beyond an
originally planned safety study. Schering AG received a review letter from
the FDA which would have required Schering to conduct additional material
clinical studies in order to use non-traditional delivery mechanisms with its
Betaseron(R) product. Under terms of the contract, Schering was required to
convert its $1.6 million note due from Bioject into approximately 460,000
shares of Bioject common stock at a conversion price of $3.50 per share.
In addition, $106,000 of accrued interest was converted into approximately
27,000 shares of Bioject common stock at a conversion price of $3.50 per
share. Schering is obligated to pay Bioject for the cost of product ordered
through the date of cancellation of the contract.

In January 1995, the Company entered into a joint development agreement with
Hoffmann-La Roche, a major pharmaceutical manufacturer, for the development
of application specific products. The Company received a licensing fee
totalling $500,000 which was recognized as revenue in fiscal 1995. The
Company is also receiving specified product development fees on an agreed
upon schedule. In fiscal 1996, the Company received $900,000, of which
$399,000 was recognized as revenue. In fiscal 1997, the Company received
$250,000 in product development fees and recognized revenue of $501,000.

INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting For Income Taxes (SFAS
109). Under the liability method specified by SFAS 109, the deferred tax
assets and liabilities are determined based on the temporary differences
between the financial statement and tax bases of assets and liabilities as
measured by the enacted tax rates for the years in which the taxes are
expected to be paid. At March 31, 1997, the Company had total deferred tax
assets of approximately $13.0 million, consisting principally of available
net operating loss carryforwards. No benefit for these operating losses has
been reflected in the accompanying financial statements as they do not
satisfy the recognition criteria set forth in SFAS 109. Total deferred tax
liabilities were insignificant as of March 31, 1997.

As of March 31, 1997, BMT has net operating loss carryforwards of
approximately $799,000 available to reduce future federal taxable income,
which expire in 2008 through 2012. BI has net operating loss carryforwards of
approximately $34 million available to reduce future federal taxable income,
which expire in 2001 through 2012. Approximately $3.0 million of BI's
carryforwards were generated as a result of deductions related to exercises
of stock options. When utilized, this portion of BI's carryforwards, as tax
effected, will be accounted for as a direct increase to contributed capital
rather than as a reduction of that year's provision for income taxes.
The principal differences between net operating loss carryforwards for
tax purposes and the accumulated deficit result from capitalization of
certain start-up costs and deductions related to the exercise of stock options
for income tax purposes.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of
common shares outstanding during the period. The effects of common stock
equivalents have not been included in the calculation as they would be anti-
dilutive.

3. 401(K) RETIREMENT BENEFIT PLAN:

The Company has a 401(k) Retirement Benefit Plan for its employees. All
employees subject to certain age and length of service requirements are
eligible to participate. The plan permits certain voluntary employee
contributions to be excluded from the employees' current taxable income
under provisions of the Internal Revenue Code Section 401(k) and regulations
thereunder. Effective January 1, 1996, the Company amended the plan to
provide for voluntary employer matches of employee contributions up to 6% of
salary and for discretionary profit sharing contributions to all employees.
Such employer matches and contributions may be in either cash or Company
common stock. For calendar 1996, the Company agreed to match 25% of
employee contributions up to 6% of salary with Company stock. For calendar
1997, the Company has agreed to match 37.5% of employee contributions up to
6% of salary with Company stock. In fiscal 1997 and 1996, the Company
recorded an expense of $25,000 and $4,800, respectively, related to voluntary
employer matches under the 401(k) Plan. The Board of Directors has reserved
up to 100,000 shares of common stock for these voluntary employer matches of
which 31,630 shares have been committed through March 31, 1997.

4. SHAREHOLDERS' EQUITY:

PREFERRED STOCK
The Company has authorized 10 million shares of preferred stock, without par
value, to be issued from time to time with such designations and preferences
and other special rights and qualifications, limitations and restrictions
thereon, as permitted by law and as fixed from time to time by resolution of
the Board of Directors. As of March 31, 1997, no preferred shares had been
issued by the Company.

COMMON STOCK
Holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by shareholders. No shares have been
issued subject to assessment, and there are no preemptive or conversion
rights and no provision for redemption, purchase or cancellation, surrender
or sinking or purchase funds. Holders of common stock are not entitled to
cumulate their shares in the election of directors. A total of 100,000 shares
of common stock have been reserved by the Board of Directors for issuance to
401(k) plan participants (see note 3) of which 31,630 shares have been issued
through March 31, 1997.

ESCROWED SHARES
As a result of the Company's initial public offering on the Vancouver Stock
Exchange, 1.5 million shares of the Company had been held in escrow pursuant
to an Escrow Agreement dated May 30, 1986, among the Company, WAM Partnership
and the escrow agent, Montreal Trust Company. WAM Partnership was owned by
Carl E. Wilcox, former Chairman and C.E.O., and J. Thomas Morrow, former
Director, and managed by Mr. Wilcox. Both Mr. Wilcox and Mr. Morrow are
founders of the Company. The Escrow Agreement provided that these escrowed
shares would be released from escrow based on a cash flow formula or,
alternatively, the shares could be released by making application and
obtaining consent of the Superintendent of Brokers of British Columbia based
on demonstrating company value. Under the escrow agreement, any shares not
released by July 14, 1996 would be cancelled.

In connection with Mr. Wilcox's resignation as chairman and chief executive
officer of the Company (see Note 6), the Board of Directors granted Mr. Wilcox
a special power of attorney to exclusively perform all acts necessary to obtain
extension of the escrow and/or release of the WAM Partnership escrow shares.

On June 3, 1996, the British Columbia Securities Commission informed the
Company that its Executive Director (formerly the Superintendent of Brokers)
consented to the release of all shares originally held in escrow. This
means that the 1.5 million shares of common stock which had been held under
this escrow arrangement are now held by the owners of the shares without
risk of cancellation and may be sold. Upon release, approximately 150,000
of these shares were considered to have been contributed back to the Company
and reissued to certain former employees in consideration for past services
rendered on behalf of the Company. The Company recorded the shares as
contributed capital with a corresponding non-cash charge to compensation
expense at the fair market value of the stock on the date of issuance.
Accordingly, a non-cash charge of $120,000 was recorded in the financial
statements in the first quarter of fiscal 1997.

STOCK OPTIONS
Options may be granted to directors, officers and employees of the Company
by the Board of Directors under terms of the Bioject Medical Technologies
Inc. 1992 Stock Incentive Plan (the "Plan"), which was approved by the
Company's shareholders on November 20, 1992 and adopted by the Board
effective December 17, 1992. Under the terms of the Plan, eligible employees
may receive statutory and nonstatutory stock options, stock bonuses and
stock appreciation rights for purchase of shares of the Company's common
stock at prices and vesting as determined by a committee of the Board.
Except for options whose terms were extended, options granted under a prior
plan maintain their previous option price, vesting and expiration dates. As
amended in fiscal 1995, a total of up to 3,000,000 shares of the Company's
common stock including options outstanding at the date of initial
shareholder approval of the Plan may be granted under the Plan. Options
outstanding at March 31, 1997 expire through March 31, 2005.

In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, Accounting for Stock-Based Compensation (SFAS 123), which
establishes a fair value-based method of accounting for stock-based
compensation plans and requires additional disclosures for those companies
that elect not to adopt the new method of accounting. The Company has elected
to continue to account for stock options under APB Opinion No. 25, Accounting
for Stock Issued to Employees. However, as prescribed by SFAS 123 the Company
has computed, for pro forma disclosure purposes, the value of all options
granted during fiscal year 1997 and 1996 using the Black-Scholes option-pricing
model, using the following weighted average assumptions for grants in 1997 and
1996:

Risk-free interest rate 6%
Expected dividend yield 0%
Expected life 1.5 years
Expected volatility 47%

The total value of options granted during 1997 and 1996 would be amortized on
a pro forma basis over the vesting period of the options. Options generally
vest equally over three years. If the Company had accounted for these plans in
accordance with SFAS 123, the Company's net loss and net loss per share would
have increased as reflected in the following pro forma amounts
(in thousands of $):

Year ended March 31,
1997 1996
______ ______
Net loss:
As reported $(4,296) $(5,431)
Pro forma (4,480) (5,541)
Net loss per share:
As reported (0.26) (0.39)
Pro forma (0.27) (0.39)

The above determination of proforma expense has been calculated consistent
with SFAS 123 which does not take into consideration limitations on
exercisability and transferability imposed by the Company's Stock Incentive
Plan. Further, the valuation model is heavily weighted to stock price
volatility, even with a declining stock price, which tends to increase
calculated value. The actual value, if any, and, therefore, imputed
proforma expense will vary based on the exercise date and the market price
of the related common stock when sold.

Stock option activity is summarized as follows:

Exercise
Shares Price Amount
_________ ____________ __________

Balances March 31, 1994 1,068,625 $3.20 - 5.00 $4,424,252
Options granted 1,427,250 2.60 - 4.75 5,387,632
Options exercised - - -
Options canceled or expired (952,225) 3.00 - 5.00 (3,904,917)
_________ ____________ ___________
Balances March 31, 1995 1,543,650 2.60 - 5.00 5,906,967
Options granted 1,316,439 1.25 - 4.50 3,129,177
Options exercised - - -
Options canceled or expired (1,161,150) 2.34 - 5.00 (4,302,332)
__________ ____________ ___________
Balances March 31, 1996 1,698,939 1.25 - 4.50 4,733,812
Options granted 705,525 1.00 - 1.30 830,006
Options exercised -
Options canceled or expired (472,906) 1.00 - 4.00 (809,880)
__________ ____________ ___________
Balances March 31, 1997 1,931,558 $1.00 - 4.50 $4,753,938
========== ============ ===========

The following table sets forth as of March 31, 1997 the number of shares
outstanding, exercise price, weighted average remaining contractual life,
weighted average exercise price, number of exercisable shares and weighted
average exercise price of exercisable options by groups of similar price and
grant date:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE

Exercise Outstanding Weighted Average Weighted Exercisable Weighted
Price shares Remaining Average Options Average
at 3/31/97 Contractual Exercise Exercise
Life(Years) Price Price
- - ------ ----------- ----------- -------- ---------- --------

$1.00- 1.25 690,125 4.37 $1.17 476,688 $1.23
1.26 - 2.50 338,933 5.01 1.57 181,999 1.75
2.51 - 3.75 380,000 6.60 3.07 305,000 2.97
3.76 - 4.88 522,500 4.29 4.08 322,500 4.16

As of March 31, 1997, current officers and employees of the Company held
approximately 1.0 million stock options, under the original terms of their
issuance included above. Subsequent to year end, the Stock Option Committee of
the Board of Directors approved a plan whereby employees may elect to reprice
their outstanding options to an exercise price of $.75 per share subject to
a 25% reduction in outstanding option shares and a deferral of exercisability
until April 3, 1998.

WARRANTS
Warrant activity is summarized as follows:

Exercise
Shares Price Amount
_________ ____________ __________

Balances March 31, 1994 60,000 $ 4.50 $ 270,000
Warrants exercised - - -
Warrants canceled or expired (60,000) 4.50 (270,000)
_________ ____________ __________
Balances March 31, 1995 - - -
Warrants issued expiring Nov. 2000 1,864,343 1.97 - 2.00 3,724,401
Warrants issued expiring Feb. 1998 575,752 2.00 1,151,505
Warrants exercised - - -
Warrants canceled or expired - - -
_________ ____________ __________
Balances March 31, 1996 2,440,095 1.97 - 2.00 4,875,906
Warrants issued expiring Dec. 2001 3,590,490 .82 - 1.00 3,562,413
Warrants exercised - - -
Warrants canceled or expired - - -
_________ ____________ __________
Balances March 31, 1997 6,030,585 $ .82 - 2.00 $8,438,319
========== ============ ==========

5. COMMITMENTS:

BI has operating leases for its manufacturing, sales and administrative
facilities and warehouse facilities with options to renew for an additional
five-year term upon expiration. BI also leases office equipment under
operating leases for periods up to five years. At March 31, 1997, future
minimum payments under noncancellable operating leases with terms in
excess of one year are as follows:

Year Ending March 31, Facilities Equipment
__________ _________

1998 $212,000 $45,000
1999 219,000 24,000
2000 220,000 4,000
2001 235,000 3,000
2002 236,000 -
118,000 -
Thereafter

Lease expense for the years ended March 31, 1997, 1996 and 1995 totalled
$283,000,$221,000, and $214,000, respectively.

6. RELATED PARTY TRANSACTIONS:

On January 12, 1995, the Board of Directors announced the resignation of the
Company's Chairman and Chief Executive Officer, Carl E. Wilcox. In
consideration for Mr. Wilcox's long service to the Company, the Board
granted Mr. Wilcox 100,000 shares of common stock valued at $241,000 and
cash compensation totalling $247,000. The Board agreed to pay Mr. Wilcox
$20,000 per year for two years under a covenant not-to-compete. The Board also
vested 200,000 previously granted option shares at $4.00 per share and extended
the expiration date to January 14, 1998. The Board granted Mr. Wilcox
a special power of attorney to exclusively perform all acts necessary to
obtain extension and/or release of the WAM Partnership escrow shares.
In addition, the Board agreed to pay up to $10,000 of costs associated with
such extension and/or release. On June 3, 1996, the British Columbia Securities
Commission informed the Company that release of the escrow shares had been
granted (see Note 4). The value of the severance agreement totalling $488,000
was recorded as general and administrative expense in the accompanying
financial statements in fiscal 1995.

7. SUBSEQUENT EVENT:

On June 18, 1997, the Company completed a private placement of units (one unit
consisting of one share of common stock and one-half warrant for purchase of
common stock at $.71 per share)for total proceeds of $750,000. The Company
has committed to register the $1.7 million shares and, if possible, the common
shares underlying the 872,000 warrants issued in the private placement on a
Form S-3 registration statement within 20 days of close of the transaction.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

The Company has omitted from Part III the information that will appear
in the Company's definitive proxy statement for its annual meeting of
shareholders to be held on September 11, 1997 (the "Proxy Statement"), which
will be filed within 120 days after the end of the Company's fiscal year
pursuant to Regulation 14A.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference to
the information under the caption "DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT" in the Proxy Statement.

Item 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to
the information under the caption "EXECUTIVE COMPENSATION AND OTHER
TRANSACTIONS" in the Proxy Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this Item is incorporated by reference to the
information under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT" in the Proxy Statement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the
information under the caption "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" in the Proxy Statement.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this report:

(1) Consolidated Financial Statements and Report of
Independent Public Accountants are included under
Item 8, in Part II.

(2) Consolidated Financial Statement Schedules and Report
of Independent Public Accountants on those schedules:

None required

(3) Exhibits: The following exhibits are filed as part
of this report. An asterisk (*) beside the exhibit number
indicates the subset of the exhibits containing each
management contract, compensatory plan, or arrangement
required to be identified separately in this report.

Exhibit
Number Exhibit Description
_______
_________________________________________________________________

3.1 Articles of Incorporation of Bioject Medical Technologies Inc.
incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended January 31, 1993.

3.2 Amended and Restated By-laws of Bioject Medical Technologies Inc.
Incorporated by reference to the same exhibit number of the
Company's Form 10-Q for the quarter ended September 30, 1994.

4.3* Bioject Medical Technologies Inc. 1992 Stock Incentive Plan, as
amended through July 25, 1996.

10.4 Lease Agreement dated March 21, 1989 between Spieker-Hosford-
Eddy-Souther #174, Limited Partnership and Bioject Inc. for the
Portland, Oregon facility incorporated by reference to the same
exhibit number of Company's Form 10-K for the year ended January
31, 1989.

10.4.1 Amended Lease Agreement dated June 18, 1992 between Bridgeport
Woods Investors (successors in interest to Spieker-Hosford-Eddy-
Souther #174 Limited Partnership) and Bioject Inc. for the
Portland, Oregon facility incorporated by reference to the same
exhibit number of the Company's Form 10-K for the year ended
January 31, 1993.

10.4.2 Lease Agreement dated September 10, 1996 between Bridgeport Woods
Business park and Bioject Inc. for the Portland, Oregon facility.
Incorporated by reference to the same exhibit number of the Company's
Form 10-Q for the period ended September 30, 1996.

10.5 Lease Extension Agreement dated October 4, 1994, between Earl J. Itel
and Loris Itel Trust and Bioject, Inc., for the 6000 sq. ft.
Tualatin, Oregon warehouse. Incorporated by reference to the
same exhibit number of the Company's Form 10-Q/A for the period ended
December 31, 1996.

10.7* Executive Employment Contract with Peggy J. Miller, dated
January 18, 1993 incorporated by reference to the same exhibit
number of the Company's Form 10-K for the year ended
January 31, 1993.

10.8* Executive Employment Contract with J. Michael Redmond, dated
February 8, 1996. Incorporated by reference to the same exhibit
number of the Company's Form 10-K for the year ended March 31, 1996.

10.14 Common Stock Purchase Agreement between Eli Lilly and Company
and Bioject Medical Systems Ltd. dated April 29, 1992
incorporated by reference to the same exhibit number of Company's
Form 8, dated May 28, 1992, amending Company's Form 10-K for the
year ended January 31, 1992.

10.17 Development and Licensing Agreement between Eli Lilly & Company
and Bioject Inc., dated April 29, 1992 incorporated by reference
to the same exhibit number of Company's Form 8, dated October 9,
1992, amending Company's Form 10-Q for the quarter ended
April 30, 1992. Confidential treatment has been granted with
respect to certain portions of this exhibit pursuant to an
Application for Confidential Treatment filed with the Commission
under Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.

10.17.1 Amendment to Development and Licensing Agreement between Eli
Lilly and Company and Bioject Inc., effective May 5, 1993
incorporated by reference to the same exhibit number of Company's
Form S-1, No. 33-68846, dated November 1, 1993. Confidential
treatment has been granted with respect to certain portions of
this exhibit pursuant to an Application for Confidential
Treatment filed with the Commission under Rule 406 under the
Securities Act of 1933, as amended. Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant
to an Application for Confidential Treatment filed with the
Commission under Rule 24b-2 under the Securities Exchange Act of
1934, as amended.

10.23 Development and Licensing Agreement between Schering, AG, Bioject
Inc. and Bioject Medical Technologies Inc. dated March 28, 1994
incorporated by reference to the same exhibit number of the
Company's Form 10-K for the year ended March 31, 1994. Confidential
treatment has been granted with respect to certain portions of this
exhibit pursuant to an Application for Confidential Treatment filed
with the Commission under Rule 24b-2 under the Securities exchange
Act of 1934, as amended.

10.26 Heads of Agreement between Hoffmann-La Roche Inc. and Bioject
Inc. dated January 10, 1995. Confidential treatment has been
granted with respect to certain portions of this exhibit pursuant
to an Application for Confidential Treatment filed with the
Commission under Rule 24b-2 under the Securities Exchange Act of
1934 as amended.

10.27* Employment Agreement with James C. O'Shea dated October 3, 1995
incorporated by reference to the same exhibit number of the
Company's Form 10-Q for the quarter ended September 30, 1995.

10.28 Form of Amended and Restated Registration Rights Agreement
between Bioject Medical Technologies Inc. and the participants in
the 1995 private placement incorporated by reference to exhibit
4.2 of the Company's Registration Statement on Form S-3
(No. 33-80679).

10.29 Form of Amended and Restated Series "A" Common Stock Purchase
Warrant incorporated by reference to exhibit 4.3 of the Company's
Registration Statement on Form S-3 (No. 33-80679).

10.30 Form of Series "B" Common Stock Purchase Warrant incorporated by
reference to exhibit 4.4. of the Company's Registration Statement
on Form S-3 (No. 33-80679).

10.31 Form of Amended and Restated Series "C" Common Stock Purchase
Warrant incorporated by reference to exhibit 4.5 of the Company's
Registration Statement on Form S-3 (No. 33-80679). Confidential
treatment has been granted with respect to certain portions of
this exhibit pursuant to an Application for Confidential Treatment
filed with the Commission under Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.

10.32 Supply Agreement dated June 26, 1996 between Bioject Inc. and Schering
Aktiengesellschaft. Incorporated by reference to the same exhibit
number of the Company's Form 8-K/A dated June 26, 1996. Confidential
treatment has been granted with respect to certain portions of this
exhibit pursuant to an Application for Confidential Treatment filed
with the Commission under Rule 24b-2 under the Securities exchange Act
of 1934, as amended.

10.32.1 Security Agreement dated June 26, 1996 between Bioject Inc. and
Schering Aktiengesellschaft. Incorporated by reference to the same
exhibit number of the Company's Form 10-Q for the period ended
June 30, 1996.

10.33 Form of Series "D" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.6 of the Company's form 8-K dated December
11, 1996.

10.34 Form of Series "E" Common Stock Purchase Warrant. Incorporated by
reference to exhibit 4.7 of the Company's Form 8-K dated
December 11, 1996.

10.35 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1996 private
placement. Incorporated by reference to exhibit 4.8 of the Company's
Form 8-K dated December 11, 1996.

10.36 Form of Series "F" Common Stock Purchase Warrant.

10.37 Form of Series "G" Common Stock Purchase Warrant.

10.38 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1997 private
placement.

21.1 List of Subsidiaries incorporated by reference to Exhibit No.
22.1 of Company's Form 10-K for the year ended January 31, 1993.

23.2 Consent of Independent Public Accountants

27.1 Financial Data Schedule

(b) Forms 8K filed since last report:

Form 8-K January 14, 1997 reporting unaudited proforma results
of operations and financial position as of November 30,1996
reflecting results of the private placement completed in
December 1996.

Form 8-K January 28, 1997 reporting cancellation of the
Schering contract.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Bioject Medical Technologies
Inc. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized:

BIOJECT MEDICAL TECHNOLOGIES INC.
(Registrant)

By: /S/ JAMES C. O'SHEA
James C. O'Shea
Chairman of the Board, President
and Chief Executive Officer

Pursuant to the request of the Securities Exchange Act of 1934,
this report has been signed below on behalf of the Registrant and
in the capacities indicated on the dates shown.

SIGNATURE TITLE

/S/ JAMES C. O'SHEA Chairman of the Board, President
James C. O'Shea and Chief Executive
Officer

/S/ PEGGY J. MILLER Vice President, Chief Financial
Peggy J. Miller Officer and Secretary/Treasurer

/s/ DAVID H. DE WEESE Director
David H. de Weese

/S/ GRACE K. FEY Director
Grace K. Fey

/S/ WILLIAM A. GOUVEIA Director
William A. Gouveia

/S/ ERIC T. HERFINDAL Director
Eric T. Herfindal

/S/ RICHARD PLESTINA Director
Richard Plestina

/S/ JOHN RUEDY, M.D. Director
John Ruedy, M.D.

INDEX TO EXHIBITS

Exhibit
Number Exhibit Description
_______ __________________________________________________________

4.3 Bioject Medical Technologies, Inc. 1992 Stock Incentive Plan,
as amended through July 25, 1996.

10.36 Form of Series "F" Common Stock Purchase Warrant.

10.37 Form of Series "G" Common Stock Purchase Warrant.

10.38 Form of Registration Rights Agreement between Bioject Medical
Technologies Inc. and the participants in the 1997 private
placement.

23.2 Consent of Independent Public Accountants

27.1 Financial Data Schedule

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-3, File No. 33-80679 and File No. 333-18933,
and Registration Statements on Form S-8, File Nos. 33-94400, 33-56454 and
33-42156.

/S/ ARTHUR ANDERSEN LLP

Portland, Oregon
June 27, 1997

[ARTICLE] 5