SECURITIES AND EXCHANGE COMMISSISION
                            Washington, D.C.  20549

                                  FORM 10-KSB
                      [X] ANNUAL REPORT UNDER SECTION 13
                OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998

                    [  ] TRANSITION REPORT UNDER SECTION 13
                OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File No. 0-21852

                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                (Name of small business issuer in its charter)

                   Delaware                              94-3123210
        (State or other jurisdiction                  (I.R.S. Employer
     of incorporation or organization)             Identification Number)

       1265 Naperville Drive, Romeoville, Illinois 60446, (630) 759-7666
         (Address and telephone number of principal executive offices)

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

  Securities registered to Section  12(g) of   the Exchange Act:  Common
  Stock, $0.001 par value;  Redeemable Common Stock Purchase   Warrants;
  and Units, each Unit consisting of one share of Common Stock,   $0.001
  par value, and one Redeemable Common Stock Purchase Warrant.

  Check whether the issuer: (1) filed all reports required to be   filed
  by Section 13  or 15(d)  of the Exchange  Act during  the past  twelve
  months (or for such 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       No  X

  Check if there is  no disclosure of delinquent  filers in response  to
  Item 405 of Regulation S-B contained  in this form, and no  disclosure
  will  be  contained,  to  the  best  of  Registrant's   knowledge,  in
  definitive proxy or information  statements incorporated by  reference
  in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

  The Registrant's revenues for  the fiscal  year  ended  September  30,
  1998 totaled  $10,603,378.

  As of July 27, 1999, the  aggregate  market value of the voting  stock
  held by non-affiliates of  the Registrant  (assuming for  this purpose
  that  only  directors, officers and stockholders holding 5% or more of
  the Common Stock, of the Registrant are affiliates of the Registrant),
  based on the average  of the  closing  bid and   asked prices on  that
  date, was approximately $589,888.

  As of July  27, 1999,  there were  19,580,878 shares  of Common  Stock
  outstanding.

  Documents incorporated by reference: None

  Transitional Small Business Disclosure Format:  Yes           No  X
<PAGE>

                             INDEX TO FORM 10-KSB
                                      of
                   FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.        Page
                                                                    ----
                                  PART I

     ITEM 1.        DESCRIPTION OF BUSINESS                           1

     ITEM 2.        DESCRIPTION OF PROPERTY                           7

     ITEM 3.        LEGAL PROCEEDINGS                                 8

     ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF
                    SECURITY HOLDERS                                  8

                                 PART II

     ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED
                    STOCKHOLDERS MATTERS                              8

     ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                    FINANCIAL CONDITION AND RESULTS OF OPERATIONS     10

     ITEM 7.        FINANCIAL STATEMENTS                              F-1

     ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                    ON ACCOUNTING AND FINANCIAL DISCLOSURE            15

                                 PART III

     ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                    CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
                    OF THE EXCHANGE ACT                               15

     ITEM 10.       EXECUTIVE COMPENSATION                            18

     ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                    OWNERS AND MANAGEMENT                             21

     ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS    23

     ITEM 13.       EXHIBITS, LISTS AND REPORT ON FORM 8-K            25

<PAGE>
  PART I

  ITEM 1. DESCRIPTION OF BUSINESS

  The Business

       Franklin Ophthalmic Instruments Co., Inc., a Delaware corporation
  (the  "Company"),   sells   and  services   high-quality   examination
  instruments   and   equipment   used    in   examination   rooms    of
  ophthalmologists, optometrists,  medical  organizations  and  clinics.
  The Company currently  distributes over  2,000  products from over  40
  manufacturers.

  The Industry

       According to the National Eye Institute, an estimated 80  million
  Americans have  potentially blinding  eye  diseases, and  1.1  million
  people in the U.S. are legally blind. Approximately 12 million  people
  in the  U.S. have  some degree  of visual  impairment that  cannot  be
  corrected by glasses,  and more than  100 million people  in the  U.S.
  need corrective lenses to see properly.  In 1981, the economic  impact
  of visual disorders and  disabilities was approximately $14.1  billion
  per year. By  1995, this figure  was estimated to  have risen to  more
  than $38.4  billion  in direct  costs  and another  $16.1  billion  in
  indirect  costs  each  year.     (National  Eye  Institute  Web   Site
  www.nei.nih.gov)

       Based upon  information provided   by  Optometry Today  in  1998,
  publishers  of  an  industry  trade   publication,   there  are   over
  50,000 ophthalmologists  and  optometrists   in  the  United    States
  engaging  in  general  practice and  a   variety  of  sub-specialties,
  including  retina  and  vitreous,  glaucoma,   neuro,  ocularplastics,
  pediatric,  cataract, cornea  and  refractive  surgery.  Practitioners
  provide  services through   private  individual   practices,   private
  group   practices,   private   multi-specialty   clinics,   hospitals,
  universities and governmental agencies.

       The suppliers  of products  and services  within  the  ophthalmic
  industry fall into the following categories: (i) ophthalmic diagnostic
  equipment  firms (the  category in  which  the  Company  is  in); (ii)
  optical (glasses, frames and contact lenses) manufacturing/fabricating
  and distribution firms; (iii) surgical manufacturing and  distribution
  firms;  and (iv)  pharmaceutical manufacturing and distribution firms.
  Many firms in the industry do business in more than  one of  the above
  categories.
<PAGE>
       A majority of the Company's sales are comprised of products  that
  can be    characterized as  "capital  purchases," and  users  strongly
  scrutinize each  instrument according  to its  price and   operational
  efficiency.  Customers   often  do not expect  to pay  list price.  In
  addition, many of the  products are very durable,  making for a   long
  replacement cycle.  Users also  take advantage of refurbished   units.
  Despite the  foregoing,  the   Company believes   that  growth in  the
  marketplace will result from innovations in equipment development  and
  the aging of  the population in  the United States.   According to   a
  report by Frost & Sullivan, a firm specializing in research studies on
  the medical  marketplace, the  ophthalmic diagnostic  marketplace   is
  expected to grow  at an annualized  rate between 5  and 10% per   year
  through the year 2000.  The projected growth is expected as a   result
  of clinical  acceptance  of  new   technologies and such  technologies
  becoming more affordably priced. In addition,end users that  have been
  postponing purchases   of  traditional equipment    are expected    to
  replace existing devices with the latest technology during the  period
  of projected growth.  (Source: U.S.  Ophthalmic Diagnostic   Equipment
  Markets, Frost  and Sullivan,  1994.).   A  study by  Foster   Higgins
  National Survey of Employer-Sponsored Health Plans (presented in   the
  November 1997    issue   of    the   Vision    Council   of    America
  Planner)predicts that the  number  of  Americans over the   age of  65
  will  grow from  33 million to nearly  80 million   by the year  2050.
  The  Company believes that such  aging of the  population will  create
  not only  a need for  additional diagnostic  equipment, but  also  for
  diagnostic  equipment  that    allows  the    practitioner  to    more
  efficiently  see  a greater volume of patients.

       None of the  data sources cited  in this  section is  associated
  with the Company.

  Principal Products and Services

       Chairs and Stands.   A  mandatory component   of any   ophthalmic
  examination room is the  chair in which the  patient will sit   and/or
  lie while being examined. There are several types of chairs, which may
  adjust automatically   or  manually to  allow   for  several   patient
  positions  for   different  examinations   or  surgical    procedures.
  Instrument  stands  provide  for  one  or  an  array  of   examination
  instruments  to  be  available  to   the  examiner  at  the    patient
  examination  chair through use  of counterbalanced articulating  arms.
  The Company distributes chairs and instrument stands manufactured   by
  Reliance Medical Products ("Reliance")  and  Marco   Ophthalmic   Inc.
  ("Marco Ophthalmic").

       Ophthalmic Workstations.   The ophthalmic workstation   primarily
  consists  of  a  station  allowing  for  the  adaptation  of   certain
  instrumentation  and  for   the  control   of  electrical    functions
  (illumination and instrument  controls) in  an  examination room.  The
  Company currently is  a systems integrator  of such workstations   and
  customizes the material for such products to meet  the  specifications
  of the ophthalmic practitioner.
<PAGE>
       Slit Lamps.    A slit  lamp  is  used for  examinations  of   all
  portions of the eye.  It projects a slit of light onto the eye  itself
  (slit   illumination),   which   can  then   be   viewed  at  variable
  magnifications  and   illuminations. Although  the   slit   lamp    is
  primarily utilized by  ophthalmic practitioners,  many hospitals   are
  also equipped with  slit lamps.   The slit  lamp can  be expanded   by
  adding photographic adaptations  and/or digital applications   through
  the use of video or digital cameras, which allow the user to   receive
  hard copy  information  or  transmit data  through  phone  lines.  The
  Company sells slit  lamps manufactured by  Haag-Streit Service,   Inc.
  ("Haag-Streit"),  Marco  Ophthalmic,  Nikon  Inc.  Instrument    Group
  ("Nikon") and Reichert  Ophthalmic Instruments, a  division of   Leica
  Inc. ("Reichert/Leica").

       Refractors.  A refractor, also known as a phoroptor, is used  for
  exact diagnosis of  a person's  "refraction acuity."   The   refractor
  determines exactly how well  a person sees  without glasses and   what
  prescription lenses are required to correct that person's vision.    A
  refractor can be  categorized as manual  (an instrument where   lenses
  are manually  adjusted  to  the patient's   needs) or  automated   (an
  instrument utilizing micro-processor technology and infrared light  to
  determine a  person's refractive  error).   As  automated   refractors
  become more approachable in price and continue to allow for  increased
  efficiencies in  diagnosing  refractive  error, there  is  a   gradual
  tendency to up-grade to automated technology.  In addition,  automated
  refractors  provide   for   hard  copy   print-outs   of    refractive
  measurements and/or  provide the   ability for  the  practitioner   to
  transfer refractive  measurements  to computers  through   networking.
  The Company sells  manual phoroptors  manufactured by   Reichert/Leica
  and Marco Ophthalmic, and automated refractors manufactured by   Canon
  U.S.A., Inc. ("Canon") and Nikon.

       Retinal/Fundus Cameras.    A  retinal  or  fundus  camera  is  an
  instrument with optical  components that allows  the user to   capture
  images primarily through the posterior  portion of the eye   utilizing
  various fields  of  view and  magnifications.   Retinal  cameras   are
  classified as either mydriatic  or non-mydriatic.  The   non-mydriatic
  type is  utilized without  dilation of  the  patient's pupil  and   is
  primarily used for  general diagnostic purposes.   Mydriatic   cameras
  are used in conjunction  with a fluid which  causes full dilation   of
  the pupil and allows for larger fields of view for the observation  of
  problems, including tissue  degeneration and  vein enlargement  and/or
  hemorrhages.   Mydriatic   cameras   offer   versatile    photographic
  applications,  including  external  and  color  fundus    photography,
  fluorescein photography and stereo photography.  Images are   acquired
  from retinal/fundus cameras  by using film  (35mm or Polaroid   film),
  video and/or    digital  cameras.  The  Company  sells  retinal/fundus
  cameras manufactured by Canon and Nikon.

       Tonometers.   The tonometer  measures  intra-ocular  pressure,  a
  measure for the incidence of glaucoma.  Tonometers are either   manual
  or automated  (utilizing micro-processor  technology).   The   Company
  distributes manual tonometers  manufactured by Clement-Clarke,   Inc.,
  Haag-Streit and Nikon.  The Company distributes automated   tonometers
  manufactured  by  Keeler  Instruments,  Reichert/Leica    and   Mentor
  Corporation ("Mentor").
<PAGE>
       Keratometers.  A  keratometer  measures  the   curvature   of   a
  patient's cornea.    Keratometers  are either  manual  or   automated.
  Automated keratometers utilize   micro-processor technology and  allow
  for hard  copy  print-outs of  measurements  and/or the  transfer   of
  information digitally into  a computer.   Automated keratometers   are
  also  available  with  a  combined  autorefraction  capability    (see
  "Refractors"),  which  allows  for  dual  functionality.  The  Company
  distributes manual keratometers manufactured   by Reichert/Leica   and
  Marco Ophthalmic.   The  Company distributes  automated   keratometers
  manufactured by Canon and Nikon.

       Lensometers.  The lensometer is used to measure the curvature  of
  prescribed lenses in order  to verify  that the  lens is   appropriate
  prior to dispensing.  Lensometers may be manual or automated.   Manual
  lensometers require greater  knowledge of the  process and more   time
  for  measurements.    Automatic  lensometers  utilize  micro-processor
  technology and allow for hard copy print-outs of  measurements  and/or
  the  transfer  of   information  digitally.  The  Company  distributes
  manual and automatic lensometers manufactured  by  Marco   Ophthalmic,
  Nikon and Reichert/Leica.

       Projection  Systems.   The  Company  distributes   a  range    of
  projection  systems   which   project   acuity   testing    characters
  (arrangements of letters, numbers and/or symbols) onto a screen in  an
  examination room,  including projection  systems of  standard   manual
  type projectors,  automated projectors  which utilize  micro-processor
  technology and infrared  controls, and  projection systems   utilizing
  computer monitors to display  the aforementioned testing   characters.
  The  Company   distributes   projection   systems   manufactured    by
  Reichert/Leica  and  Marco  Ophthalmic,  and  automated  systems    by
  Reichert/Leica, Marco Ophthalmic, Mentor and Nikon.

       Used and Refurbished Equipment.  The Company also purchases,  and
  acquires through trade-in,  used equipment.   After the equipment   is
  checked and,  if required,  refurbished, the  equipment is  then   re-
  marketed, providing customers with a lower priced alternative to   new
  equipment.

       Other.  In addition to the above, the Company sells other   items
  such as  hand  held  diagnostic  instruments,  diagnostic  and   laser
  lenses, charts, disposables and parts.

       Technical  Service  and  Support.    Approximately  75%  of   the
  Company's personnel  are trained  to  provide technical  service   and
  support  for  ophthalmic  instrumentation.    As  technology  in   the
  ophthalmic marketplace continues to evolve, the Company believes  that
  its ability to provide technical service and support will result in  a
  competitive advantage in the marketplace.
<PAGE>
  Marketing

       Sales/Service Representatives.   At July 20,  1999,  the  Company
  maintained   a sales  and  service force  of   16  representatives  in
  locations throughout  the  United States.    It is  the  sales/service
  representative's responsibility  to follow-up on  sales leads provided
  as a  result of past  business, marketing efforts  and referrals  from
  manufacturers of  the  equipment that  the  Company sells.  Sales  and
  service personnel are required to complete formal  training  sponsored
  by ophthalmic  manufacturers and  the  Company  in order  to  maintain
  familiarity with the latest technical developments.

       Direct  Mail.  The Company distributes a catalog as  a method  of
  marketing the equipment  and services that  the Company provides.  The
  mailing is sent   once every  twelve months to  approximately   40,000
  ophthalmologists, optometrists  and  other health  care  practitioners
  throughout the United States.

       Trade Shows. The Company  attends  and  exhibits at approximately
  15  trade shows  or  conventions per   year  including  regional   and
  national   shows    (including   those  sponsored   by   the  American
  Academy of Ophthalmology,  American Academy of  Optometry  and  Vision
  Expo-East  & West).  The  Company  has recently  reduced the number of
  trade shows it attends in comparison to past years in response to what
  the Company believes is a trend in the industry  for its customers  to
  attend  fewer  of  the  local  trade  shows in  favor   of the  larger
  meetings  that  offer  more  training  sessions, industry updates  and
  larger displays of technology.

  Customers

       The end-user  marketplace in  the  United States  for  ophthalmic
  instruments    is  comprised  of  different  classifications  of   eye
  practitioners and a diverse base of institutional private and   public
  health care providers. Sales of the Company are divided  approximately
  equally among the following classifications.

       The Ophthalmologist.    The ophthalmologist  is a medical  doctor
  specializing in  the diagnosis,  treatment and  care of  the eye   and
  related systems.  The ophthalmologist may  prescribe glasses,  contact
  lenses and medication and perform surgical procedures.

       The Optometrist.  An optometrist is a licensed doctor trained  in
  the diagnosis  of  refractive  errors  and  the  diagnosis  (and   the
  treatment in some procedures) of diseases of the eye.

       Other Customers.    In  addition to  the  eye-care  professionals
  described above  that  work in  individual  and group  practices,  the
  Company sells to hospitals, hospital groups, medical  clinics,  health
  maintenance organizations, surgical  centers,  universities,  teaching
  colleges, and various state and federal agencies.
<PAGE>
  History

       The Company  was incorporated  under the  laws of  the State   of
  Delaware in November 1992 for the purpose of reincorporating  Franklin
  Ophthalmic Instruments  Co., Inc.,  a California  corporation   ("FOI-
  California")  in  the  State   of  Delaware.    FOI-California,    was
  incorporated under the laws of the  State of California in   September
  1990.  Effective  January 1993,  FOI-California was  merged with   and
  into the Company, thereby effecting said reincorporation in the  State
  of Delaware.  Unless otherwise indicated, references made  hereinafter
  to the Company include FOI-California.

       FOI-California was incorporated for the purpose of acquiring  the
  ophthalmic  instrument  distribution  division  of  Franklin   Optical
  Company ("Franklin Optical"), which was incorporated in the State   of
  California  in   1932. Franklin  Optical's   primary   business    was
  operating retail locations in  California and Hawaii which   dispensed
  prescription eyeglasses and  contact lenses.   Franklin Optical   also
  operated an  ophthalmic instrument  distribution division.   In   June
  1990  and September  1990,  respectively,  Franklin  Optical  sold its
  two  lines  of  business  in  separate  transactions.   The ophthalmic
  instrument distribution division was purchased  by the  Company.   The
  retail dispensing business was  sold by Franklin  Optical to a   third
  party and  continues to  operate in  California as  Franklin   Optical
  Company. Franklin  Optical  Company   is  not   affiliated  with   the
  Company.

       In July 1993, the Company completed its initial public   offering
  (the "Initial Public Offering")  of 1,437,500 Units(the "Units")at  an
  initial offering price of $4.00 per Unit.  Each Unit consisted  of one
  share of  Common  Stock  and  one warrant   to purchase   a share   of
  Common Stock at  an exercise price  of $5.00 per  share through   July
  1998 (collectively,  the "Class  A Warrants").   All  of the  Class  A
  Warrants have expired unexercised.

       In January 1994, the Company acquired  certain of the assets  and
  assumed  certain  of  the   liabilities  of  Progressive    Ophthalmic
  Instruments,  Inc.,   a   Florida corporation ("POI"). In  July  1994,
  the Company acquired  all of   the issued and  outstanding  shares  of
  common stock of  Midwest Ophthalmic  Instruments, Inc.,  an   Illinois
  corporation  ("MOI").  MOI  initially   operated  as  a   wholly-owned
  subsidiary and was eventually merged into  the Company in March  1995.
  Shortly after the acquisition,  the Company relocated its   operations
  to Romeoville, Illinois.

       Since the close of the Company's  fiscal year ended September 30,
  1998, management  of  the  Company has  shifted  its  attention,  from
  seeking sales growth through expansion  into new territories and  into
  the ear  nose  and throat,  field  to  a strategy  of  evaluating  the
  expansions made and  attempting to  maximize profitability  throughout
  the Company.  See  "MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources
  and Outlook."
<PAGE>
  Competition

       The distribution of ophthalmic instruments  is  competitive.  The
  Company has historically competed  on the  basis   of price,  service,
  promptness    of  delivery,    reputation  and    relationship    with
  customers.  The  distribution of ophthalmic  instruments is  currently
  dominated by  one large  distributor which  covers a  majority of  the
  country and numerous regional owner-operated distributors (the Company
  is  the  only  publicly-held   distributor)  located  in   significant
  population   centers in  the country.  These   distributors  sell  and
  service most  well-known  brands of  equipment  in relatively    small
  geographical areas  and often have    long-established   relationships
  with strong  loyalties from   their clientele.     During the   fourth
  quarter of fiscal  1998, Lombart Instruments,  the largest  ophthalmic
  instruments distributor in the United States, acquired the  instrument
  division of Essilor Inc., which had been the industry's second largest
  distributor.   As  a result  of  the above  combination,  the  Company
  believes that it is now the  second largest distributor of  ophthalmic
  instruments in the industry.

  Backlog

       The Company has  not experienced  any significant  delays due  to
  backlog from its suppliers during the fiscal year ended September  30,
  1998.

  Employees

       As  of   July  27,  1999,   the  Company  employed  21  full-time
  employees,  including  3  management  personnel,  4  in  accounting  &
  operations, and 15  sales and service  representatives.  The   Company
  considers its relationship with its employees satisfactory and is  not
  a party to any collective bargaining agreement.

  Government Regulations

       The Company has  no knowledge  of  any  governmental  regulations
  which materially adversely affect its business operations.


  Environmental Protection Compliance

       The Company has  no knowledge  of any  federal, state  or   local
  environmental  compliance  regulations   which  affect  its   business
  activities.  The Company has not expended any capital to comply   with
  environmental protection statutes, and does not anticipate that   such
  expenditures will be necessary in the future.
<PAGE>
  ITEM 2.  Description of Property

       The Company maintains all executive, administrative,  operational
  and inventory distribution functions in a 19,000 square foot  building
  located in Romeoville, Illinois, a suburb of Chicago, Illinois.    The
  building is rented pursuant to a lease at a rate of $10,240 per  month
  which will expire on  April 30, 2001.   Subsequent to the fiscal  year
  ended September 30, 1998, the Company agreed to sub-lease a portion of
  its facility in Romeoville  to a third party  for a monthly rental  of
  $1,791. The  Company also   maintains  a  facility in    Jacksonville,
  Florida which  the Company subleases to  a tenant.  The lease and  the
  sublease on the facility in Florida are scheduled to expire in October
  1999.  The  monthly rental under  the lease is $5,425 and the sublease
  rental is currently $4,501.

       The Company owns no real estate and does not intend to invest  in
  real estate or  interests in real  estate, real  estate mortgages,  or
  securities of   or   interests in  persons primarily  engaged in  real
  estate activities for the foreseeable future.

  ITEM 3.  Legal Proceedings

       On September 29,  1998 the Company  filed a declaratory  judgment
  action against Eastman  Kodak Company ("Kodak")  in the U.S.  District
  Court for the Northern District of Illinois.  The action arose out  of
  a dispute  regarding  the  responsibilities of  the  parties  under  a
  settlement reached in a  prior lawsuit.  Under  the settlement of  the
  prior lawsuit,  certain  indebtedness  of the  Company  to  Kodak  was
  converted into restricted common stock,  subject to an undertaking  by
  the Company to register the common  stock under the Securities Act  of
  1933 (the "Securities Act") for resale  by Kodak by a specified  date.
  The  Company  filed  a  registration  statement  covering  the  stock.
  However, the registration statement was not declared effective and, by
  reason of an amendment  to Rule 144 under  the Securities Act  adopted
  after the  date  of the  settlement,  which rendered  restrictions  on
  Kodak's resale of the stock no longer applicable, the Company believed
  that completing the registration was unnecessary.  The purpose of  the
  declaratory judgment action was to seek confirmation that registration
  is unnecessary and, therefore, that the debt need not be reinstated.

       Kodak answered with  a five-count  amended counterclaim  alleging
  breach of contract and violations of  the Securities and Exchange  Act
  of 1934 and the Illinois Securities  Act.  Kodak's breach of  contract
  claims arise out of  the same facts upon  which the Company filed  its
  declaratory judgment  action.   Subsequent to  the fiscal  year  ended
  1998, the Securities violation claims  were dismissed.  The  potential
  liability to the Company under the  breach of contract claims  totaled
  approximately $155,000.

       Although the Company  believes that  the remaining  counterclaims
  are without merit, the Company and Kodak reached a tentative agreement
  subsequent to fiscal  1998 in which  the Company  would provide  Kodak
  with a $71,250 three  year promissory note   with an interest rate  of
  10.5% and an initial  payment of $3,750 in  exchange for the  eventual
  return of  102,285  shares  of  the  Company's  common  stock  to  the
  Company's treasury.  As a result of the above, the Company has accrued
  $75,000 for the fiscal year ended September 30, 1998.
<PAGE>
       Except for  such  lawsuit,  the Company  is  not  aware  of   any
  material pending or threatened litigation to which  the Company is  or
  would be a party.

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

       During the year ended September 30, 1998, no matters were  placed
  before the stockholders of the Company for consideration.

  PART II

  ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

       The Company's  and Common Stock  is quoted on the OTC  Electronic
  Bulletin board and  are traded under  the symbol   FKLN. The   Company
  has outstanding additional warrants  to  purchase Common  Stock  which
  are not publicly  traded.  See Note 6  to  the  Financial   Statements
  contained elsewhere herein.

       The following table sets forth,  for the periods indicated,   the
  reported high  and low  bid and   asked  price quotations  for  Common
  Stock  for  the   fiscal  years  ended  September 30, 1997, and  1998.
  Such quotations reflect  inter-dealer prices, without retail  mark-up,
  mark-down or commission, and may   not represent actual  transactions.
  Common Stock*
<TABLE>
                                Bid ($)            Asked ($)
      Period of Quote        High     Low        High      Low
      ---------------      ------     ----       ----      ---
      <S>                  <C>        <C>        <C>      <C>
      Fiscal 1997:
      First Quarter        1-3/8       3/8       1-5/8     7/16
      Second Quarter         7/8       5/16       1       17/50
      Third Quarter         11/25      1/4       47/100   27/100
      Fourth Quarter         1/2       1/4        3/5      7/25

      Fiscal 1998:
      First Quarter         37/100    13/100      2/5      3/20
      Second Quarter         8/25      3/25       7/20     1/8
      Third Quarter         27/100    21/100      3/10    23/100
      Fourth Quarter        11/50      3/20       6/25     4/25

      Fiscal 1999:
      First Quarter          9/50      7/100      9/50     7/100
      Second Quarter         3/25      9/100     27/100    9/100
      Third Quarter         15/100     1/20       1/5      3/50

</TABLE>
       *The Class A Warrants of the Company expired in July of 1998  and
  therefore no information is given with respect to the Class A Warrants
  or Units,  which Units  were comprised  of Common  Stock and  Class  A
  Warrants.

       At July 27, 1999,  there were  214  holders of  record  of Common
  Stock. The foregoing is  based in part  upon information furnished  by
  Continental Stock Transfer and  Trust  Company, New  York,  New  York,
  the  transfer agent for the Company's Common Stock.
<PAGE>
       There have been no cash dividends  paid in fiscal years 1997  and
  1998.  The   Company's Agreement with Harris  Trust and  Savings  Bank
  ("Harris Bank") includes a  covenant prohibiting the  distribution  of
  dividends by the  Company without the consent  of Harris  Bank.    See
  "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  OR  PLAN
  OF OPERATION--Liquidity and Capital Resources" and  Notes 2 and  3  to
  the Financial Statements contained elsewhere herein.

  ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS
  Overview

       During fiscal 1998, a major portion of the Company's efforts  and
  resources were  directed  towards  increasing  revenue  and  enhancing
  operations.   In  connection  with  increasing  revenue,  the  Company
  continued expansion efforts which initially started during fiscal 1997
  and  continued  into  1998  in  which  the  Company  expanded   direct
  territorial coverage.  In  addition  to the  expansion  of  ophthalmic
  distribution territorial coverage,  the Company  also started  selling
  into the ear nose and throat marketplace.  The increase of territorial
  coverage and expansion  into the ear  nose and  throat marketplace  in
  most cases entailed  adding sales  representatives with  little or  no
  initial payback from the Company's investment in new territories.

       As to  operations, the  Company acquired  and implemented  a  new
  computer system  to enhance  inventory  control and  other  accounting
  functions, provide for remote access of information for outside  sales
  and service representatives, enable the  Company to take advantage  of
  efficiencies provided by the  internet, and obtain  a system that  was
  Year 2000 Compliant.

       In addition, during fiscal 1998  the Company replaced its  former
  credit facility with  a new  credit  facility with  Harris  Trust  and
  Savings  Bank ("Harris") which  increased  the Company's credit   line
  from $1.8 million  to an amount  up to $2.5  million and extended  the
  term of the  Company's line of  credit to March  31, 2000. The Company
  also settled in June  of 1998 a lawsuit  initiated by FOI in  December
  1996, resulting in a net gain of $266,483.  See  Notes 4 and 11 to the
  Financial Statements contained elsewhere herein.

  Going Concern and Management's 1999 Plans

       The report of  the Company's independent  certified   accountants
  contains an explanatory  paragraph as to  the substantial doubts  that
  exist concerning the Company's ability to continue as a going concern.
<PAGE>
       As discussed  in  the  notes  to  the  financial  statements  and
  elsewhere herein,  at the  end  of fiscal  1998,  the Company  was  in
  violation of  certain  loan  covenants pertaining  to  net  worth  and
  profitability.  Subsequent to fiscal  1998, the Company became  under-
  collateralized  under  its  loan  agreement  with  Harris  Bank  which
  requires loan amounts on the line of credit to be no greater than  80%
  of accounts receivable and 50% of inventory (inventory advance can  be
  no greater than $1 million). As a result of these matters, the Company
  received a notice  of default from  Harris and  the Company's  lending
  rate increased from .5% to 4.5% over Harris Bank's prime lending rate.
  Because of  these  defaults  and the  resulting  inability  to  obtain
  additional working  capital,  the Company,  in  some cases,  has  been
  unable to make  timely reductions in  the amount owed  to its  product
  suppliers.   As a  consequence, the  Company  is currently  unable  to
  obtain otherwise  customary  trade  credit and  could  be  limited  to
  purchases of  product  on limited  credit  terms or  with  payment  on
  delivery.

       The  Company's  ability  to  continue  as  a  going  concern   is
  ultimately dependent on its ability to increase its margins to a level
  that will allow it  to operate profitably  and generate positive  cash
  flows, and  to refinance  its  bank debt.    Although a  reduction  of
  expenses can  contribute to  the  necessary return  to  profitability,
  achieving profitability without an increase in sales and gross  profit
  margins would require much greater levels of expense reductions and in
  all likelihood  could  only  be  accomplished  through  a  significant
  reduction and restructuring of the nature  and scope of the  Company's
  operations.

       The Company  has initiated  a plan  to address  profitability  by
  emphasizing higher  margin territories  and  areas with  immediate  or
  short-term payback, re-focusing on higher margin revenue sources  such
  as technical service and  used equipment sales,  and the reduction  of
  expenses.  To address emphasis on higher margin territories and areas,
  the Company  has eliminated  unprofitable territories.  In  connection
  with focusing  on  higher  margin  revenue  sources  and  due  to  the
  completion of the Company's  computer systems conversion, the  Company
  has been able  to re-direct  technical personnel  back to  emphasizing
  technical service  and  used equipment  sales.   As  to  reduction  of
  expenses, although the most significant reduction in expenses will  be
  recognized due to the reduction of costs associated with  unprofitable
  territories, other expense  reductions should be  recognized in  other
  operating expenses due to, amongst other things, termination dates  of
  leases and/or through negotiating efficiencies.

       In addition to  the above, the  Company has  also established  an
  inventory   reduction  plan  to  emphasize  inventory   reduction  by:
  1) limiting  the amount of purchases for stock of non-essential items;
  2) highlighting current inventory for substitution of existing orders;
  3) reducing  and/or  eliminating  importing  of  product in which  the
  Company has to outlay cash up front and/or with limited credit  terms;
  and 4) a  reduction  of  used  equipment  levels.  The above inventory
  reduction  is intended to increase  liquidity and  thereby reduce  the
  financing of inventory that is needed to fund higher inventory levels,
  and  help  enable  the Company  to  get  back  within  the  collateral
  parameters as set forth in its loan agreement with Harris. The Company
  does not believe that the above will in and of itself reduce sales.
<PAGE>
       The Company  is  currently  in negotiations  with  Harris  for  a
  forebearance agreement and the establishment of   a plan to bring  the
  Company back within the lending terms  of its original agreement  with
  Harris.  Overall, the Company believes that with (i) the completion of
  the above mentioned restructuring of its debt; (ii) the completion  of
  its systems conversion that should allow the Company to redirect focus
  and personnel to increasing efficiencies in inventory and  operations;
  and (iii) concentrating on territorial coverage with greater  returns;
  that the Company should be able  to address the issues that gave  rise
  to non-compliance  with  its  loan  agreement  and  address  liquidity
  issues.

       There  can  be   no  assurance  that   with  the   aforementioned
  restructuring that the Company will be  able to increase sales  levels
  that would  achieve profitability  which could  force the  Company  to
  significantly   reduce its  operations in  order to  reduce  expenses,
  refinance its bank  debt or take  other actions  to resolve  liquidity
  constraints that may arise.


  Results of Operations

       Sales increased  by  $1,035,026  or   10.8%  from  $9,568,352  in
  fiscal 1997 to  $10,603,378 for  the  year ended  September  30, 1998.
  Of the $1,035,026 sales increase, $708,661 occurred during the  fourth
  quarter of fiscal  1998 and represented  an increase of  27% over  the
  prior year's fourth quarter.  Management believes that the increase is
  primarily due  to   the continued  maturation of  the Company's  sales
  force, the development  of sales   personnel within   new  territories
  which the Company added  during fiscal 1997 and  1998, an increase  in
  orders for medical residency programs and optometric schools, and  the
  elimination of one  of the Company's  primary competitor's during  the
  fourth quarter which resulted in the Company acquiring  representation
  in territories it was  previously not in and  reduced the quantity  of
  competitors in certain markets that the Company currently sells  into.

       The Company's gross margin on sales   decreased from   $2,675,269
  for fiscal  1997 to  $2,199,464 for  fiscal 1998.  Gross margin  as  a
  percentage of sales decreased from 28.0%  in fiscal 1997 to 20.7%   in
  fiscal 1998.  The decrease in  gross margin as a percentage of   sales
  for  the  fiscal   year  1998  is    primarily attributable to 1)  the
  increase  in  sales  into  new  territories  where  the  Company   was
  attempting to establish  a customer base;  2) the  increase of  school
  orders as a  percentage of sales  which because  of volume  discounts,
  provided lower profit margins; 3) a reduction of used equipment  sales
  which are at higher profit margins;  4) the shifting of key  technical
  service personnel to  oversee the implementation  of the new  computer
  system which reduced  service revenue; and  5) a  reduction of  rebate
  programs sponsored by suppliers as compared to the prior year.

       Selling, general and administrative ("SG&A") expenses   increased
  from  $2,572,419   in  fiscal   1997 to $2,974,058 in   fiscal   1998.
  The Company attributes the increase  to inefficiencies related to  the
  transition  of  computer  systems  and  expenses  attributed  to   the
  Company's expansion into new territories.
<PAGE>
       Amortization and depreciation expense  decreased  from   $307,797
  for the fiscal  year ended  September 30,  1997 to  $276,720 for   the
  fiscal year  ended September   30, 1998.    The decrease is  primarily
  attributable to the elimination   of amortization  expense related  to
  employment agreements from the Company's acquisition of MOI.

       Due to the increasing uncertainty of realization of the  goodwill
  on the Company's books related to the acquisition of MOI, the Company,
  deeming the value of the asset permanently impaired in accordance with
  Statement of Financial  Accounting Standard No.  121, "Accounting  for
  the Impairment of Long-Lived Assets", has taken a non-recurring charge
  of $1,869,312 to write off the  remaining balance of goodwill  related
  to MOI.   This decision  has been made  due to  recurring losses  from
  operations and as a result, the Company has changed its focus.

       During December of  1996, the Company  filed a complaint  against
  the auditing and accounting  firm of Marinelli &  Scott.  During  June
  1998, a settlement was reached and  the complaint was withdrawn.   The
  settlement resulted in a net gain  of $272,180 during the fiscal  year
  1998. The Company also  reached  a tentative settlement subsequent  to
  fiscal 1998,  with  Eastman  Kodak, Inc.  ("Kodak")  under  which  the
  Company has a three year  promissory note for $71,250 with an interest
  rate of 10.5%  and an initial  payment of $3,750  in exchange for  the
  return of  102,285  shares  of  the  Company's  common  stock  to  the
  Company's treasury upon the  payment in full  of the promissory  note.
  The Company recorded an accrual of  $75,000 for the fiscal year  ended
  September 30, 1998.

       Interest Expense  increased from  $150,612  for fiscal  1997   to
  $214,214 for  fiscal 1998.   The  increase in  interest is   primarily
  attributable to the   prior   year's interest expense   with   Silicon
  Bank being  offset  by interest  that  was accrued when the  Company's
  bank debt  with Silicon was  restructured during the first quarter  of
  fiscal  1997.  Without the interest  that was accrued at  the time  of
  the above    mentioned  restructuring   with  Silicon,  the  Company's
  interest expense  would have  been $295,737  for fiscal  1997,  versus
  $171,518 for fiscal 1998. This decrease  is primarily attributable  to
  the  Company  refinancing   its  credit  facility   and  Silicon   and
  transferring its lending facility with Silicon Bank  to  Harris.   The
  new credit  facility with  Harris Bank provides for a lending rate  of
  .5% over  the  Harris  prime lending  rate  from  the 2%  to  3%  over
  Silicon's prime  lending rate that were charged during the  comparable
  prior periods. For fiscal 1998 the decrease is  a result of the  above
  mentioned bank refinancing with Harris and the Company's restructuring
  of its   bank financing   with Silicon   in which  Silicon   converted
  $3,175,105  of principal  and interest  into 2,088,884 shares  of  the
  Company's  Common  Stock which   took  place during the quarter  ended
  December 31, 1996.   See  Notes 2 and  3 to  the Financial  Statements
  contained elsewhere herein.
<PAGE>
  Liquidity and Capital Resources

       Cash flow   from  operations   was a   negative   $442,817 and  a
  negative $1,039,368   in   fiscal   1998  and 1997  respectively.  The
  $596,551 decrease was  primarily attributed to  increases in  accounts
  receivable, inventory and prepaid  expenses to support the   Company's
  growth, and  an increase in  customer deposits and accounts   payable.
  The Company financed  the negative cash  flows with  increased  credit
  from bank financing.  See  Notes  4 and 6 to the Financial  Statements
  included elsewhere herein.

       Until December 30, 1997, the Company's principal credit  facility
  had been  a revolving   credit facility  with  Silicon.   On  December
  30, 1997, the Company  reached agreement with   Harris on  an  Amended
  and  Restated Loan and Security  Agreement ("Harris  Loan  Agreement")
  in which Harris  purchased   from Silicon  all of   Silicon's  rights,
  title and  interest in the  Company's Revised Agreement  with Silicon.
  The agreement provides for credit facilities comprised  of a Revolving
  Credit Note  for an amount   up to $2,200,000  ("Revolving Note")  and
  a  Secured Promissory  Note  in the  amount  of  $300,000 ("Promissory
  Note").   The  Revolving Note  is  secured by  all  of  the  Company's
  assets, and provides  for a line of  credit comprised of  a  borrowing
  base equal to the sum of  (i)  80% of the amount of eligible  accounts
  receivable and (ii)  the lesser  of  50%  of eligible inventories   or
  $1,000,000.  The Revolving  Note expires on March 31, 2000.

       The Promissory Note  provides for a  loan of  $300,000 in   which
  principal payments of $3,750  are to commence  on February 1,1998  and
  continue through March 1, 2000.  On March 31, 2000, a final  principal
  payment equal to the entire unpaid principal balance hereof,  together
  with any and all amounts due under the Promissory Note.

       In addition, under the terms of  the Harris Loan Agreement,   the
  Company will have the option of borrowing rates on the Revolving  Note
  and the  Promissory Note  based on  either Harris  Bank's   Commercial
  Prime Rate plus  .5% (the "Base  Rate") or the  London Interest  Based
  Rate ("LIBOR")  plus 3%.  The Company was also charged a one time loan
  origination fee  of $15,000.   The  terms of  the  loan  also  include
  the personal guarantees of Messrs. Michael J. Carroll, James J. Urban,
  and Brian M.  Carroll, the Company's  CEO, COO  and CFO  respectively,
  for an amount not to exceed $200,000.

       The Harris Loan Agreement includes certain financial covenants as
  follows: (1) a consolidated adjusted tangible net worth such  that the
  Consolidated Tangible Net Worth increases  (i) by $200,000 during  the
  period from October 1,   1997 to September  30, 1998,(ii) by  $250,000
  during the  period from  October 1,  1998 to  September 30,  1999  and
  (iii)by $250,000 during the period form October 1, 1999  to  September
  30, 2000; (2)   a net book value  equal to or greater  than $1,450,000
  ; and (3)  during each   fiscal quarter of  each Fiscal   year show  a
  fixed  charge ratio, as  defined, of 1.4:1  for the  Company's  fiscal
  year ending September 30, 1998  and  a ratio of 2.0:1 thereafter.
<PAGE>
       As a result of  losses incurred during  fiscal 1998, the  Company
  was in violation of the loan covenants with Harris for 1) net tangible
  net worth increase;  2) the net  book value; 3)  and the fixed  charge
  ratio. In  addition, subsequent  to fiscal  1998, the  Company  became
  under-collateralized according to the provisions of its line of credit
  in which the  Company is able  to borrow up  to an amount  up to  $2.2
  million under collateral provisions of 80% of accounts receivable  and
  50% of  inventory (for  an  amount not  to  exceed $1,000,000  of  net
  borrowing).   In  connection  with  the  under-collateralization,  the
  Company received a notice  of default from  Harris subsequent to  year
  end.  As a result of such default, Harris Bank is charging the Company
  a default rate on the  credit facilities of 4%  in excess of the  Base
  Rate as  from time  to time  in effect.  The Company  is currently  in
  negotiations  with  Harris  for  a  forebearance  agreement  and   the
  establishment of a plan to bring  the Company back within the  lending
  terms of its original agreement.  However, there can be no  assurances
  that the Company will be successful in its negotiations with Harris.

  Outlook

       For fiscal 1999, the Company intends to concentrate on  improving
  profitability by  emphasizing  territories  which  have  the  greatest
  profitability  and  or  short  term  prospects  of  profitability.  In
  addition, in  connection with  the  completion of  the  aforementioned
  conversion of computer systems, the Company has focused on operational
  and financial  concerns  by  optimizing inventory  levels  to  improve
  liquidity, reduce the  financing necessary to  fund inventory  levels,
  and allow the Company to hopefully complete it financial restructuring
  with Harris.

  Inflation

       While inflation has not  had a material  effect on the  Company's
  operations in the past, there can be  no  assurance that the   Company
  will be able to  continue to offset the  effects  of  inflation on the
  costs of  its products  or services  through price  increases  to  its
  customers without  experiencing a  reduction  in  the  demand  for its
  products; or that inflation  will not  have an  overall effect on  the
  ophthalmic medical  instruments market  that  would  have  a  material
  affect on the Company.

  Implementation of New Accounting Standards

       In June 1997,  the Financial Accounting  Standards Board   issued
  SFAS No. 130,  "Reporting Comprehensive  Income".   The new   standard
  discusses how to report and display  income and is effective for years
  beginning after December  15,  1997.   When  the  Company adopts  this
  statement, it is  not expected   to  have  a  material  impact on  the
  presentation of the Company's financial statements.

       In June 1997,  the Financial Accounting  Standards Board   issued
  SFAS No.  131,  "Disclosures About Segments   of  an  Enterprise   and
  Related Information".  This  standard requires enterprises to   report
  information about operating  segments, their  products and   services,
  geographic areas, and  major customers.   This standard is   effective
  for years  beginning  after  December 15, 1997.   When   the   Company
  adopts this statement, it is not  expected to have a material   impact
  on the presentation of the Company's financial statements.
<PAGE>
  Year 2000 Compliance

       In response to the Year 2000 issue, the Company has evaluated its
  accounting system and has modified existing programs and/or  converted
  to  Year  2000 compliant software.  The Company estimates that it  has
  expended  approximately $120,000 on such modifications.  In  addition,
  the Company  has  received  information from its major suppliers  that
  such  suppliers  have updated their systems to comply with Year  2000.
  As  no  single  customer  accounts  for a  material  portion  of   the
  Company's revenues, the  Company  has not had, and does not intend  to
  have discussions with its customers about their Year 2000  compliance.
  Based  on  the  foregoing, the  Company   believes that its  business,
  financial condition and results of  operations will not be  materially
  adversely affected by the Year 2000 issue.  Forward Looking Statements

       This   Annual  Report on  Form  10-KSB contains  forward  looking
  Statements within the meaning of Section 27a of the Securities Act  of
  1933, as amended, and Section  21E  of the Securities Exchange Act  of
  1934,  as  amended.   The  Company's  actual  results  could    differ
  materially  from  those  set  forth in the forward looking  statements
  as  a  result  of  various  factors,  including  but  not  limited  to
  consolidations and  other  competitive  developments in the  Company's
  industry; the continuing effectiveness of the Company's sales efforts,
  including the Company's ability to attract and retain qualified  sales
  representatives;  the  Company's   ongoing  ability  to  comply   with
  financial covenants under  the  Harris  Loan Agreement; the impact  of
  increases in market interest  rates on the Company's borrowing  costs;
  increases in the cost of labor or products of the Company that  cannot
  fully be recouped in sales prices to the Company's customers;  failure
  of the Company's or its suppliers' software to operate as expected  in
  compliance with Year 2000; and other general economic risks.

<PAGE>
  ITEM 7.   Financial Statements


                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                      INDEX TO FINANCIAL STATEMENTS


                                                                   Page

     Report of Independent Certified Public Accountants            F-2

     Balance Sheets                                                F-3

     Statements of Operations                                      F-5

     Statements of Cash Flow                                       F-6

     Statements of Stockholders Equity (Deficit)                   F-7

     Notes to the Financial Statements                             F-8



                                   F-1
<PAGE>
            REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

  To the Board of Directors
  of Franklin Ophthalmic Instruments Co., Inc.
  Romeoville, Illinois

       We have  audited the  accompanying  balance sheets  of   Franklin
  Ophthalmic Instruments Co.,   Inc. as  of   September 30,   1997   and
  1998  and  the related statements of operations, stockholders'  equity
  (deficit), and cash flows for the  years then ended.  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
  Franklin Ophthalmic Instruments  Co., Inc. at  September 30, 1997  and
  1998, and the results   of their operations  and their cash flows  for
  the years then ended 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 2 to the financial statements, the Company has suffered recurring
  losses from operations and has  a deficiency in stockholders'  equity.
  In addition, the Company  has violated various  covenants of its  bank
  credit agreement.  The Company does not have the ability to pay  these
  debts  should  the  lender  demand  payment.    These  factors   raise
  substantial doubt about the Company's ability  to continue as a  going
  concern.   Management's plans  in regard  to  these matters  are  also
  discussed in  Note 2.  The financial  statements  do not  include  any
  adjustments that might result from the outcome of this uncertainty.

  /s/ BDO Seidman, LLP
  Chicago, Illinois
  January 22, 1999

                                   F-2
<PAGE>
<TABLE>
                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                              BALANCE SHEETS
                                  ASSETS

                                                September   September
                                                   30,         30,
                                                  1997        1998
                                              -----------   -----------
  <S>                                        <C>           <C>
  Current Assets:
     Cash and cash equivalents               $         -   $          -
     Accounts receivable, less allowance for
      doubtful accounts of $23,438                851,574     1,198,578
     Inventory, less allowance of $60,000
      and $85,000 respectively                  1,583,510     1,798,301
     Prepaid expenses and other assets            170,787       181,512
                                              -----------   -----------
        Total current assets                    2,605,871     3,178,391
                                              -----------   -----------
  Property and equipment, at cost:
     Furniture and equipment                      638,938       326,698
     Automobiles and trucks                       119,193        42,093
     Leasehold improvements                       121,915        35,121
                                              -----------   -----------
                                                  880,046       403,912
     Less: Accumulated depreciation and
      amortization                                707,837       200,672
                                              -----------   -----------
        Total net property and equipment          172,209       203,240
                                              -----------   -----------
  Other assets:
     Deposits                                      13,903        13,903
     Intangible assets, net of accumulated
       amortization of $924,978                 2,053,916             -
                                              -----------   -----------
        Total other assets                      2,067,819        13,903
                                              -----------   -----------
        Total assets                         $  4,845,899  $  3,395,534
                                              ===========   ===========

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                   PART OF THESE FINANCIAL STATEMENTS.

                                   F-3
</TABLE>
<PAGE>
<TABLE>
                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                              BALANCE SHEETS
                               (CONTINUED)
             LIABILITIES AND STOCKHOLDERS'  EQUITY (DEFICIT)

                                                September   September
                                                   30,         30,
                                                  1997        1998
                                              -----------   -----------
  <S>                                        <C>           <C>
  Current liabilities:
     Bank overdrafts                         $     95,309  $    115,035
     Bank line of credit                                -     2,111,506
     Current portion of long-term debt            157,127       268,397
     Accounts payable                           1,075,382     1,670,921
     Current portion of capitalized
      lease obligations                            18,314        46,757
     Deposits                                     114,839       238,929
     Accrued liabilities                          259,089       389,101
                                              -----------   -----------
        Total current liabilities               1,720,060     4,840,646
                                              -----------   -----------
  Long-term debt:
     Long-term portion of line of
      credit with bank                          1,659,314             -
     Long-term debt, less current portion               -        65,853
     Capitalized lease obligations,
      less current portion                         12,382             -
                                              -----------   -----------
        Total long-term debt                    1,671,696        65,853
                                              -----------   -----------
        Total liabilities                       3,391,756     4,906,499
                                              -----------   -----------
  Stockholders' equity (deficit):
     Common stock: $0.001 par value;
      authorized 25,000,000 shares;
      19,583,378 shares issued and
      outstanding at September 30, 1997
      and September 30, 1998                       19,583        19,583
     Additional paid-in capital                11,022,940    11,022,940
     Accumulated deficit                       (9,588,380)  (12,553,488)
                                              -----------   -----------
        Total stockholders' equity (deficit)    1,454,143    (1,510,965)
                                              -----------   -----------
        Total liabilities and
         stockholders' equity (deficit)      $  4,845,899  $  3,395,534
                                              ===========   ===========

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                   PART OF THESE FINANCIAL STATEMENTS.

                                   F-4
</TABLE>
<PAGE>
<TABLE>
                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                         STATEMENTS OF OPERATIONS

                                            For the year ended
                                               September 30,
                                            1997          1998
                                      -------------  -------------
  <S>                                <C>            <C>
  Sales                              $    9,568,352 $   10,603,378
       Cost of sales                      6,893,083      8,403,914
                                      -------------  -------------
  Gross profit                            2,675,269      2,199,464

  Less:
     Selling, general and
      administrative expenses             2,572,419      2,974,058
     Amortization and depreciation          307,797        276,720
     Impairment of goodwill                       -      1,869,312
                                      -------------  -------------
  Loss from operations                     (204,947)    (2,920,626)
                                      -------------  -------------
  Other income (expense):
     Interest expense                      (150,612)      (214,214)
     Settlement income, net                       -        191,483
     Loss on fixed assets                         -        (24,139)
     Other income                                 -          2,389
                                      -------------  -------------
        Other income (expense), net        (150,612)       (44,481)
                                      -------------  -------------
  Loss before extraordinary item           (355,559)    (2,965,108)

  Extraordinary item, gain from
  debt restructuring                      2,871,513              -
                                      -------------  -------------
  Net income (loss)                  $    2,515,954 $   (2,965,108)
                                      =============  =============

  Income (loss) per common share:
     Loss before extraordinary item  $        (0.02)$        (0.15)
                                      =============  =============
     Extraordinary item                        0.17              -
                                      -------------  -------------
     Net income (loss)               $         0.15  $      (0.15)
                                      =============  =============
     Weighted average number of
        common shares outstanding        16,719,389     19,583,378
                                      =============  =============

 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                   F-5
</TABLE>
<PAGE>
<TABLE>
                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                         STATEMENT OF CASH FLOWS

                                             For the fiscal year ended
                                                   September 30,
                                                 1997          1998
                                             ----------    -----------
  <S>                                       <C>           <C>
  Cash flows from operating activities:
     Net income (loss)                      $ 2,515,954   $ (2,965,108)
     Adjustments to reconcile net
      income (loss) to net cash used
      in operating activities:
        Depreciation                             89,443         92,116
        Amortization                            218,354        184,604
        Impairment of goodwill                        -      1,869,312
        Loss on disposal of fixed assets              -         24,138
        Gain from debt restructuring         (2,871,513)             -
        Loss on litigation                            -         75,000
        Changes in current assets and
         liabilities:
           Accounts receivable                 (131,297)      (347,004)
           Inventory                           (227,453)      (214,791)
           Prepaid expenses                    (151,759)       (10,725)
           Other assets                              32              -
           Deposits                            (315,005)       124,090
           Accounts payable, trade and
            accrued liabilities                (166,124)       725,551
                                             ----------    -----------
  Net cash used in operating activities      (1,039,368)      (442,817)
                                             ----------    -----------
  Cash flows from investing activities:
     Acquisition of equipment                   (45,807)      (147,285)
                                             ----------    -----------
  Net cash used in investing activities         (45,807)      (147,285)
                                             ----------    -----------
  Cash flows from financing activities:
     Net change in bank overdrafts               39,712         19,726
     (Decrease) increase in capital leases      (16,124)        16,061
     Net change in borrowings under
      line of credit                           (142,686)       554,315
     Net proceeds from issuance of
      common stock                            1,365,263              -
     Decrease in long-term debt                (160,990)             -
                                             ----------    -----------
  Net cash provided by financing activities   1,085,175        590,102
                                             ----------    -----------
  Net decrease in cash and cash equivalents           -              -
  Cash and cash equivalents at
   beginning of period                                -              -
                                             ----------    -----------
  Cash and cash equivalents at
   end of period                            $         -   $          -
                                             ----------    -----------

 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
                                   F-6
</TABLE>
<PAGE>
<TABLE>

                    FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                   STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)


                             Common stock
                               $0.001 par                             Total
                                 value    Additional               stockholder's
                     Number of             paid-in                   equity
                       shares   Amount     capital      Deficit     (deficit)
                       ---------  ------   ----------  -----------   ----------
<S>                    <C>        <C>     <C>         <C>           <C>
BALANCE,Sept.30, 1996   9,544,810 $9,545  $ 8,868,577 $(12,104,334) $(3,226,212)

Private placement-qtr.
ended 12/31/96(Note 7)  4,801,000  4,801    1,195,449            -    1,200,250
Conversion of notes
payable (Note 6)          248,684    248       61,923            -       62,171
Silicon conversion of bank
debt (Notes 3,4,7)      2,088,884  2,089      520,132            -      522,221
Private placement-quarter
ended 6/30/97 (Note 7)  2,900,000  2,900      577,100            -      580,000
Offering costs of private                                               -
 placements                                  (200,241)                 (200,241)
Net Income                                               2,515,954    2,515,954
                        ---------  ------   ----------  -----------   ----------
BALANCE,Sept.30,1997   19,583,378 19,583   11,022,940   (9,588,380)   1,454,143

 Net loss                      -       -            -   (2,965,108)  (2,965,108)
                        ---------  ------   ----------  -----------   ----------
BALANCE,Sept.30,1998   19,583,378 $19,583 $11,022,940 $(12,553,488) $(1,510,965)
                       ==========  ======   ==========  ===========   ==========



                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                   PART OF THESE FINANCIAL STATEMENTS.

                                   F-7
</TABLE>
<PAGE>

                FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                      NOTES TO FINANCIAL STATEMENTS

  1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       (A)  Nature of Business

       Franklin Ophthalmic  Instruments  Co.,   Inc.  (the   "Company"),
  located in Romeoville,  Illinois, is  engaged in  the national  retail
  sale of  ophthalmic instruments   which   are   marketed  to  doctors,
  hospitals, universities and the U.S. governmental institutions through
  the use of  catalogs and outside sales representatives.  The Company's
  principal  markets are located  in the Midwest, Southeast and the West
  Coast   of  the  United  States.   The  Company's  operations  involve
  granting credit  to local,  regional and national  medical  practices,
  hospitals, universities and to the military.  Concentrations of credit
  risk are  limited by   the  large number  of entities  comprising  the
  Company's customer base and the geographic diversity of the  Company's
  customers.  The Company operates under the trade name "Franklin MOI".

       (B)  Use of Estimates

       The preparation of the  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 and  disclosure of contingent 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.

       (C)  Inventories

       Inventories consisting  of  new  equipment, used  equipment   and
  parts, are valued at the lower of cost (using the first in first   out
  method) or market.

       (D)  Property and Equipment

       Property and equipment  are recorded at  cost.  Depreciation   is
  provided  using  straight  line  and  accelerated  methods  over   the
  estimated   useful   lives   of   three to   seven   years.  Leasehold
  improvements are amortized on a straight-line basis over the lesser of
  the estimated  useful lives of the assets or  the related lease terms.

       (E)  Intangible Assets

       Intangible assets consist primarily of goodwill, which  represent
  the excess of cost over fair  market  value  of  net assets   acquired
  in the  purchase of Midwest Ophthalmic Instruments Co., Inc.  ("MOI"),
  and are being amortized on the straight line method over 15 years.
<PAGE>
       It is the Company's policy to periodically evaluate the  carrying
  value of its  operating assets, including  goodwill, and to  recognize
  impairments when the estimated future net  operating cash flows to  be
  generated from the  use of the  assets are less  than their   carrying
  value.  The Company measures impairment of goodwill by the  difference
  between the carrying  value and the  estimated discounted cash   flows
  from the assets.  In fiscal 1998, goodwill related to the purchase  of
  MOI was fully  written off as  these assets were  deemed to have  been
  permanently impaired.  See Note 12 for further discussion.

       Amortization expense related  to  intangible assets was  $218,354
  for the year ended September 30,1997  and $184,604 for the year  ended
  September 30, 1998.

       (F)  Income Taxes

       The Company  provides  for  deferred  taxes  on  the   difference
  between  the  financial  reporting  and  tax  bases  of  assets    and
  liabilities  in  accordance with  Statement of  Financial   Accounting
  Standards No. 109.

       (G)  Net Income/(Loss) per Share

       In Fiscal 1998, the Company  adopted the provisions of  Statement
  of  Financial  Accounting  Standards  No.  128,  Earnings  Per  Share.
  Statement No. 128 replaces the previously reported primary and  fully-
  diluted earnings per share with basic and diluted earnings per  share.
  Unlike primary earnings per share,  basic earnings per share  excludes
  any dilutive effects  of options and  convertible securities.  Diluted
  earnings per share is computed similarly to fully diluted earnings per
  share.  All earnings per share amounts for all periods presented  have
  been restated to conform to the requirements of Statement No. 128.

       Basic and  diluted net  income (loss)  per share  is computed  by
  dividing net income (loss)  by the weighted  average number of  common
  shares outstanding. Outstanding common stock options and warrants have
  been excluded from  the computation of  earnings (loss)  per share  as
  their effect would be anti-dilutive.


       (H)  Cash and Cash Equivalents

       The Company considers  all highly liquid  investments that  have
  maturity of three months or less on  the date of purchase to be  cash
  equivalents.

       (I)  Financial Instruments

       Financial instruments which potentially  subject the Company   to
  concentrations of risk consist principally of accounts receivable. The
  accounts receivable  are from  numerous entities   located  throughout
  the United  States and the associated credit risks are limited.    The
  carrying values  reflected in the balance sheet at September 30,  1998
  reasonably approximate  the fair  values for  accounts receivable  and
  payable.
<PAGE>
       (J)  Revenue Recognition

       The  Company  recognizes  revenue  and  the  related  costs  when
  merchandise is shipped.

       (K)  Advertising

       Advertising costs  are  expensed  as  incurred  and  included  in
  "selling, general and administrative expenses".  Advertising  expenses
  amounted to approximately $57,000 in fiscal   1997 and   approximately
  $96,000 in fiscal 1998.

       (L)  Recent Accounting Pronouncements

       In June 1997,  the Financial Accounting  Standards Board   issued
  SFAS No. 130,  "Reporting Comprehensive  Income".   The new   standard
  discusses how to report and display is effective for years   beginning
  after December 15, 1997.  When the Company adopts this statement,   it
  is not expected to have a material impact on the presentation of   the
  Company's financial statements.

       In June 1997, the  Financial  Accounting Standards Board   issued
  SFAS No.  131,  "Disclosures  About Segments  of  an  Enterprise   and
  Related Information".  This  standard requires enterprises to   report
  information about operating  segments, their  products and   services,
  geographic areas, and  major customers.   This standard is   effective
  for years beginning after December 15, 1997.  When the Company  adopts
  this statement, it is not  expected  to have a material impact on  the
  presentation of the Company's financial statements.

  2.  GOING CONCERN

      The  report  of   the  Company's   independent  certified   public
  accountants contains an  explanatory paragraph as  to the  substantial
  doubts that exist concerning  the Company's ability  to continue as  a
  going concern.

       As discussed in Note  4, at the end  of fiscal 1998, the  Company
  was in violation of certain loan covenants pertaining to net worth and
  profitability.  Subsequent to fiscal  1998, the Company became  under-
  collateralized according  to  its  loan  agreement  with  Harris  Bank
  ("Harris")which requires loan amounts on the  line of credit to be  no
  greater  than  80%  of  accounts  receivable  and  50%  of   inventory
  (inventory advance can be no greater than $1 million). As a result  of
  these matters, the Company received a  notice of default from  Harris.
  Because of  these  defaults  and the  resulting  inability  to  obtain
  additional working capital, the Company has been unable to make timely
  reductions in  the  amount  owed  to its  product  suppliers.    As  a
  consequence, the  Company  is  currently unable  to  obtain  otherwise
  customary trade credit and could be limited to purchases of product on
  limited credit terms or with payment on delivery.
<PAGE>
       The  Company's  ability  to  continue  as  a  going  concern   is
  ultimately dependent on its ability to increase its margins to a level
  that will allow it  to operate profitably  and generate positive  cash
  flows, and  to refinance  its  bank  debt.   Although a  reduction  of
  expenses can  contribute to  the  necessary return  to  profitability,
  achieving profitability without an increase in sales and gross  profit
  margins would require much greater levels of expense reductions and in
  all likelihood  could  only  be  accomplished  through  a  significant
  reduction and restructuring of the nature  and scope of the  Company's
  operations.

       To address the above issues, the Company has initiated a plan  to
  address profitability  by emphasizing  higher margin  territories  and
  areas with  immediate or  short-term  payback, re-focusing  on  higher
  margin revenue sources  such as technical  service and used  equipment
  sales, and the reduction of expenses.   To address emphasis on  higher
  margin territories and areas, the Company has eliminated  unprofitable
  territories.  In  connection with  focusing on  higher margin  revenue
  sources  and  the  completion   of  the  Company's  computer   systems
  conversion, the Company has been able to re-direct technical personnel
  back to emphasizing technical service and used equipment sales.  As to
  reduction of  expenses, although  the  most significant  reduction  in
  expenses will be recognized due to  the reduction of costs  associated
  with unprofitable  territories,  other expense  reductions  should  be
  recognized in other operating expenses  due to, amongst other  things,
  termination dates and/or through negotiating efficiencies.

       In addition to  the above, the  Company has  also established  an
  inventory reduction  plan  to  emphasize inventory  reduction  by:  1)
  limiting the amount of purchases for stock of non-essential items;  2)
  highlighting current inventory for substitution of existing orders; 3)
  reducing and/or eliminating importing of product in which the  Company
  has to outlay cash up front and/or with limited credit terms; and 4) a
  reduction of used equipment levels.  The above inventory reduction  is
  intended to increase  liquidity and  thereby reduce  the financing  of
  inventory that is  needed to fund  higher inventory  levels, and  help
  enable the Company to get back within the collateral parameters as set
  forth in its loan agreement with Harris.

       In connection with  the Company's primary  lending facility,  the
  Company is currently  in negotiations with  Harris for a  forebearance
  agreement and the establishment of   a plan to bring the Company  back
  within the  lending  terms  of its  original  agreement  with  Harris.
  Overall, the  Company believes  that with  (i) the  completion of  the
  above mentioned restructuring of its debt; (ii) the completion of  its
  systems conversion that should allow the Company to redirect focus and
  personnel to increasing efficiencies in inventory and operations;  and
  (iii) concentrating on territorial coverage with greater returns; that
  the Company should  be able to  address the issues  that gave rise  to
  non-compliance with its loan agreement and address liquidity issues.

       There  can  be   no  assurance  that   with  the   aforementioned
  restructuring that the Company will be  able to increase sales  levels
  that would  achieve profitability  which could  force the  Company  to
  significantly   reduce its  operations in  order to  reduce  expenses,
  refinance its bank  debt or take  other actions  to resolve  liquidity
  constraints that may arise.
<PAGE>
  3.   RESTRUCTURING

       During the first quarter of the  fiscal year ended September  30,
  1997, the Company completed a restructuring that  began  during fiscal
  1995  with  the  consolidation  of  the  Company's    facilities  into
  Romeoville, Illinois (the location of MOI) and a change  in management
  that  included  the  appointment  of  the  Company's current CEO,  COO
  and  CFO.  During the   fourth quarter of   fiscal  1996, the  Company
  reached  agreements with Silicon Valley Bank ("Silicon"), its  primary
  trade  creditors   and  certain    of  its   debt-holders   for    the
  restructuring of some of the Company's outstanding debt.  In addition,
  the Company was  able to raise  $1,200,250 and   $580,000 through  the
  private placements  of equity  in the  first  and  third  quarters  of
  fiscal 1997 respectively.

       Pursuant to  the   agreement with  Silicon,   during the    first
  quarter of fiscal  1997 approximately $3.2  million owing to   Silicon
  was converted  into  shares  of  the  Company's  Common  Stock  at   a
  conversion rate of  $1.52 per share  and the  remaining $1.8   million
  owing to Silicon  was transferred  into a  new credit  facility.    In
  connection with the  restructuring of  trade debt  during the   fourth
  quarter of fiscal  1996 and  the first   quarter of  fiscal 1997:  (i)
  $533,000 of trade  debt was converted  to  stock in  the Company at  a
  rate of $1.52 per  share; (ii)  $201,000  was  forgiven;   and   (iii)
  approximately $335,000 was converted  to promissory notes with   terms
  of  up  to  24  months.    The  debt  restructuring  resulted  in   an
  extraordinary gain of $2,871,513 for the fiscal years ended 1997.

  4.   NOTES PAYABLE - BANK

       Until December 30, 1997, the Company's principal credit  facility
  had been  a revolving  credit facility  with Silicon.   The  line   of
  credit, which was secured by essentially all of the Company's  assets,
  initially provided for borrowings of up to $4,000,000, limited to  (i)
  80% of  the amount  of eligible  accounts  receivable; and  (ii)   the
  lesser  of  $1,500,000  or  50%  of   the  book  value  of    eligible
  inventories, reduced by trade accounts payable.   The line of   credit
  provided for the payment of interest  monthly at the rate of 1%   over
  the bank's  prime  rate for  borrowings  collateralized by    accounts
  receivable  and  3%  over  the  bank's  prime  rate  for    borrowings
  collateralized by inventory.   The line  of credit  was scheduled   to
  mature on February  5, 1998. See  Note 3 to the  Financial  Statements
  included elsewhere herein.

       The Amended Agreement with Silicon provided a line of credit   to
  the Company with advances against the line of credit for the lower  of
  $1.8 million or the amounts supported by a formula derived   borrowing
  base.  The  borrowing base  was equal  to (i)  80% of  the amount   of
  eligible accounts receivable and (ii)  50% of eligible inventories  or
  $1,000,000. The lending rate  on  the Amended  Agreement was 2%   over
  Silicon's prime rate and was payable on a monthly basis.
<PAGE>
       During  August  1997,  the  Company  and  Silicon  agreed  to  an
  extension of the line of credit to September 30, 1997, which  maturity
  date could be further  extended by the Company  to February 28,   1998
  upon payment of a fee to Silicon and  as long as the Company was   not
  in default under the  Amended Agreement.   The interest rate   charged
  under the Revised Agreement was increased to 3% over  Silicon's  prime
  lending rate, increasing to 4% over  Silicon's prime lending rate   if
  the Company was  still indebted to  Silicon at January  1, 1998.    In
  addition the  Revised Agreement   provided for  a   loan fee that  was
  payable as follows: (i)  $4,000 upon  effectiveness  of  the   Revised
  Agreement; (ii) $6,000 on September 30,  1997 if the Company   elected
  to extend the maturity of the line of credit to February 28, 1998; and
  (iii) $8,000   on January 1,   1998 in  the  event  that the   Company
  remained indebted to   Silicon at such   date.  The Revised  Agreement
  provided that the Company would   be deemed to  be  in  default if  it
  failed to (i) have a net  profit of at  least one dollar for each   of
  the Company's fiscal quarters, and (ii) have an operating profit of at
  least one dollar  for the Company's  fiscal year ending  September 30,
  1997. For purposes of the Revised Agreement only, operating profit was
  defined  as   the   Company's   earnings   before   interest,   taxes,
  depreciation, and amortization.

       On December 30, 1997, the Company reached agreement with   Harris
  on  an Amended and  Restated  Loan  and  Security  Agreement  ("Harris
  Loan Agreement")  in  which Harris  purchased   from  Silicon  all  of
  Silicon's rights,  title  and   interest  in the    Company's  Revised
  Agreement    with  Silicon.      The  agreement  provides  for  credit
  facilities comprised  of a Revolving Credit Note  for an amount  up to
  $2,200,000  ("Revolving Note") and   a  Secured  Promissory  Note   in
  the  amount  of  $300,000 ("Promissory Note").  The Revolving Note  is
  secured by  all of  the Company's  assets, and provides for a line  of
  credit comprised of a borrowing base equal to  the sum of  (i) 80%  of
  the amount of eligible accounts  receivable  and   (ii)  the    lesser
  of  50%  of   eligible inventories or $1,000,000.  The Revolving  Note
  expires on March  31, 2000.

       The Promissory Note  provides for a  loan of  $300,000 in   which
  principal payments of $3,750 are to commence on February 1, 1998   and
  continue through March 1, 2000.  On March 31, 2000, a final  principal
  payment equal to the entire unpaid principal balance hereof,  together
  with any and all amounts due under the Promissory Note.

       In addition, under the terms of  the Harris Loan Agreement,   the
  Company will have the option of borrowing rates on the Revolving  Note
  and the  Promissory Note  based on  either Harris  Bank's   Commercial
  Prime Rate plus .5% or the London Interest Based Rate ("LIBOR")   plus
  3%.  The Company was also charged a one time loan origination fee   of
  $15,000.    The   terms of   the   loan   also include   the  personal
  guarantees of Messrs. Michael J. Carroll,  James J. Urban, and   Brian
  M. Carroll,  the Company's  CEO, COO  and  CFO respectively,  for   an
  amount not to exceed $200,000.
<PAGE>
       The Harris Loan Agreement  includes certain financial   covenants
  as follows: (1) a Consolidated Adjusted Tangible Net Worth such   that
  the Consolidated Tangible Net Worth increases (i) by $200,000   during
  the period  from October  1,  1997 to  September  30, 1998,  (ii)   by
  $250,000 during the period from October 1, 1998 to September 30,  1999
  and (iii)  by $250,000  during the  period form  October 1,  1999   to
  September 30, 2000; (2)   a net book value  equal to or greater   than
  $1,450,000 ; and  (3) during each fiscal quarter of each Fiscal   year
  show a fixed  charge ratio,  as defined,  of 1.4:1  for the  Company's
  fiscal year ending September 30, 1998 and a ratio of 2.0:1 thereafter.

       As a  result  of the  losses  incurred during  fiscal  1998,  the
  Company was in violation of the loan covenants with Harris for 1)  Net
  Tangible Net Worth Increase; 2) the  net book value; 3) and the  fixed
  charge ratio.  In addition,  subsequent to  fiscal 1998,  the  Company
  became under-collateralized according to the provisions of its line of
  credit in which the Company is  able to borrow up  to an amount up  to
  $2.2 million under collateral provisions of 80% of accounts receivable
  and 50% of inventory  (for an amount not  to exceed $1,000,000 of  net
  borrowing).  As  a result  of these  matters, the  Company received  a
  notice of default from Harris subsequent  to year-end. As a result  of
  such default, Harris Bank  is charging the Company  a default rate  on
  the credit facilities of 4% in excess of the Base Rate as from time to
  time in effect. The Company is  currently in negotiations with  Harris
  for a forebearance agreement and the establishment of a plan to  bring
  the Company back within the lending  terms of its original  agreement.
  However, there can be no assurance that the Company will be successful
  in its negotiations with Harris.

       As a result of the violations of the credit agreement with Harris
  Bank, the Company's notes payable  to bank  have been  classified  as
  short-term  debt  at September 30, 1998.


  5.   SHORT TERM DEBT - RELATED PARTY

       During August of  1996, the   Company borrowed $215,188 from   an
  individual under a 30 day promissory note bearing interest at 10%  per
  annum and a note origination fee of $6,450.  In October, the note  was
  converted to  860,752  shares  of common  stock  in  the  Company   as
  participation in  the  Company's  Private  Placement  offering   which
  commenced on  October  1, 1996.  See  Note 7.  In  addition,  warrants
  exercisable   for $1.00   were   also   issued   as   part   of    the
  participation in the aforementioned  Private Placement offering  which
  warrants have expired unexercised.
<PAGE>
  6.   LONG-TERM DEBT
<TABLE>
          Long-term debt consists of the following:
                                                         September 30,
                                                       1997          1998
                                                    ---------    ---------
     <S>                                           <C>          <C>
     Notes Payable collateralized by automobiles
      and trucks, with interest rates between
      4.8% and 9.3%, principal and interest payable
      monthly, due on or before September 1998     $    4,668   $       -

     10% trade creditor promissory note payable
      monthly through October 1998                     97,421            -

     10% trade creditor promissory note payable
      monthly from December 1996 through
      November 1998 of which $14,567
      represents amounts for deferred interest.        55,038            -

     Notes Payable secured by all business assets,
      Interest rate 8.25%, principal and interest
      payable monthly, due on or before March 31,
      2000.                                                 -      263,000

     Notes Payable, secured by a stock pledge and
      Security agreement, interest 10.5%, principal
      and in interest payable quarterly, due on
      before July 1, 2002.                                  -       71,250

                                                    ---------    ---------
     Total long-term debt                             157,127      334,250

     Less current portion                             157,127      268,397
                                                    ---------    ---------
     Long-term debt, less current portion          $        -   $   65,853
                                                    =========    =========

  The aggregate amounts of long term debt mature as follows:

       Year ending September 30,                        Amount
       -------------------------                        -------
               <C>                                     <C>
               1999                                    $268,397
               2000                                      23,750
               2001                                      23,750
               2002                                      17,831
                                                        -------
                                                       $334,250
</TABLE>
<PAGE>
       During August of 1996, the Company reached agreement with a trade
  creditor  in   which  of  the   $222,104  owed,   $66,631   would   be
  converted to a 24 month promissory note with simple interest at   10%,
  and the balance, $155,473 would be  converted into 102,285 shares   of
  the Company's Common Stock  (a  conversion rate of $1.52 per   share).
  In November of 1997, the Company reached agreement with another  trade
  creditor in which  of the  $540,000 owed,$162,000  would be  converted
  into 248,684 shares of the Company's  Common Stock(a conversion   rate
  of $1.52 per share).  See Note 7 to the Financial Statements  included
  elsewhere herein.

       In  September  1996,  in  connection  with  the  Company's   debt
  restructuring, the Company  elected to provide  a conversion rate   on
  certain 9% Notes  from a private  debt issuance  during fiscal   1994,
  such that  the  amounts  outstanding under  the  9%  Notes  could   be
  converted at  the rate  of $.25  per  share (the  rate at  which   the
  Company commenced a  Private Placement of  Equity in  the  Company  on
  October 1,  1996).   In  connection  with  the  above,  $112,500   was
  converted to shares of the Company's  common stock  at a rate  of $.25
  per share (the same pro rata  price as sold in the  Company's  private
  placement) during the fourth quarter of fiscal 1996.

       In connection with a tentative agreement between the Company  and
  Eastman Kodak Company ("Kodak") reached subsequent to fiscal 1998, the
  Company accrued for  a three year  promissory note for  $71,250 and  an
  initial payment of $3,750 with an  interest rate of 10.5% in  exchange
  for the return of 102,285 shares of the Company's common stock to  the
  Company's treasury upon the payment in full of the promissory note.

       The Company believes  that the interest  rates on its   long-term
  debt are generally below the rates that would currently be   available
  for similar debt instruments issued by similar borrowers, and that  as
  a result, the market  value of the Company's  long-term debt is   less
  than the carrying amount.  However,  a determination of the   specific
  market value of the Company's long-term debt would involve   excessive
  costs.

  7.   STOCKHOLDERS' EQUITY

       (A)  Common Stock  and Common  Stock Warrant  Transactions   (the
  "Securities Transactions").

       In addition to the securities transactions described in Notes  3,
  4, 5 and 6 above, the following occurred during fiscal 1997 and 1998:

       During the first quarter  of fiscal   1997, the  Company   raised
  $1,200,250 of capital through the sale of 2,400,500 Units which   were
  sold pursuant to a private placement  of Units (each Unit   consisting
  of two shares of common stock  and one common stock purchase  warrant,
  exercisable between  6-18 months  after the  issuance of  such  common
  stock purchase warrant). The sale of the 2,400,500 Units  exceeded the
  minimum of 2,000,000  Units required  pursuant to  the terms  of   the
  private placement,  which was  conducted by  the  Company on  a  "best
  efforts" basis and provided for the sale and offer of up to a  maximum
  of 3,200,000  Units.   The amount  raised in  the private   placement,
  together with the effectiveness of personal guarantees by Messrs.   M.
  Carroll, J. Urban and B. Carroll, satisfied all remaining   conditions
  with Silicon.
<PAGE>
       The Company entered into an agreement   on April 11, 1997,  which
  was amended  on  May 8,  May  9, and  May  11, 1997  (the  "Investment
  Agreement"),  with     Prinz-Franklin   L.L.C., an   Illinois  limited
  liability company ("Prinz"), pursuant to which the Company agreed   to
  sell to Prinz up to  3,000,000 shares of  Common Stock at a price   of
  $0.20 per share.  The Investment  Agreement granted  Prinz   piggyback
  registration rights  with respect  to the  shares of  Common Stock  so
  purchased.   Pursuant  to  such piggy-back  registration  rights,  any
  shares  of  Common  Stock  which  Prinz  elects  to  include    in   a
  registration  statement of the   Company shall  be   held  in   escrow
  during  the  effective  period  of  such registration statement  until
  the  following conditions  are met:  (i)  25% of the shares  purchased
  may  not be sold or released from   escrow until the closing price  of
  the Company's Common  Stock is  equal to   or greater  than $0.75  per
  share for  five  consecutive  trading days;  and  (ii)  the  remaining
  common stock   may not be  sold  or  released  from  escrow until  the
  closing price of  the Company's Common  Stock is equal  to or  greater
  than $1.25 per share  for five consecutive  trading days. Such  escrow
  restrictions shall terminate at  the  earlier of the  time the  common
  stock sold to Prinz is  exempt  under  Rule  144  as promulgated under
  the Securities Act of 1933, as amended, or one year from the  date  of
  each   purchase  of    the   respective    shares.  In  addition,  the
  Investment Agreement provided for the issuance to Prinz of warrants to
  purchase up to  400,000 shares of  Common  Stock at  a price of  $1.00
  per share  within  a  period of  four  years  from   issuance  of  the
  applicable warrants.  During the quarter  ended June 30,  1997,  Prinz
  had  purchased  2,900,000   of the   shares   of  Common   Stock   for
  $580,000 and  was granted  warrants  to purchase  400,000   additional
  shares of Common Stock.  The  Investment Agreement also provided   for
  the appointment  of  John Prinz  to  the  Board of  Directors  of  the
  Company.

       In connection  with the  Company's restructuring  of the  Silicon
  debt during the quarter ended December  31, 1996, the Company   agreed
  to issue an additional 1,767 shares of Common Stock in August of  1997
  to  reconcile the amount of interest that was accrued up to the   date
  of the effectiveness of the Silicon conversion in November of 1996.

  In accordance with anti-dilution rights of Class A Warrants that  were
  issued during the Company's Initial Public Offering in July 1993,  the
  exercise price  for  the Class A   Warrants was reduced during  fiscal
  1997 from its original level  of $5.00  per  share of Common Stock  to
  $2.30 per share,  and  the  aggregate number   of  shares  of   Common
  Stock issuable upon  exercise  of such  warrants  were also  increased
  from 2,062,500 to 4,487,740. During July of 1998, the Class A warrants
  expired unexercised.

       (B)  Outstanding Stock Purchase Warrants

  Class A  Warrants.  A total of 2,062,500 Class A Warrants were  issued
  and outstanding at September 30, 1997. During July of fiscal 1998, all
  Class A Warrants outstanding expired unexercised.

  Class B   and Class   C Warrants.     A total  of   2,156,500 Class  B
  Warrants  and 244,000  Class C Warrants were  issued at September  30,
  1997. During the  quarter ended June  30, 1998, the  B and C  Warrants
  expired unexercised.
<PAGE>
       Other Warrants.  In connection with certain modifications of  the
  Company's line of credit with Silicon,  the provider of the  Company's
  line of credit  facility up to  December of 1997,  the Company  issued
  44,119 warrants to Silicon  exercisable  on or before March 31,   2000
  at a  price  of $0.50  per  share.  The Company  also  issued  400,000
  warrants to  Prinz-Franklin,  L.L.C.  in  connection  with  a  private
  placement   during the  third quarter  of  fiscal 1997,  with  200,000
  exercisable  on or  before April  10, 2001  and 200,000 exercisable on
  or before May 10,  2001 at a price  of $1.00 per  share.  The  Company
  also issued 200,000  warrants to Mr.  Brian M.  Carroll in  connection
  with an  employment  agreement  executed during  May  of  1998.    The
  warrants issued to Mr. Brian Carroll provide for an exercise price  of
  $.23 per share and expire during April of 2002.

       The following  sets  forth  the common  stock  purchase  warrants
  outstanding which were exercisable as of September 30, 1998:

<TABLE>
          Shares Obtainable        Per Share                Exerciseable
          on Exercise              Exercise Price           Through
          <S>                      <C>                      <C>
           44,119                  $ .50                    March 2000

          200,000                  $1.00                    April 2001

          200,000                  $1.00                    May 2001

          200,000                  $ .23                    April 2002

</TABLE>
       (C)  Stock Options and Stock Appreciation Rights

       In February  1993, the  Company adopted  the Franklin  Ophthalmic
  Instruments Co., Inc. 1993 Stock Option and Appreciation Rights   Plan
  (the "1993    Plan")  which  provides for  the  grant  of  options  to
  officers, directors, employees and   consultants to purchase not  more
  than an aggregate of  200,000 shares of Common  Stock.  The 1993  Plan
  provides for the grant of options  intended to qualify as   "incentive
  stock options" under   Section 422  of the Internal  Revenue Code,  as
  amended, as well as options which do not so qualify.

       With respect to qualified options, no option may be granted  more
  than ten years after the effective date of the 1993 Plan or  exercised
  more than  ten years  after the  date  of grant  (five years  if   the
  optionee owns  more than  ten  percent of  the  Common Stock  of   the
  Company).  The option price may not  be less than 100 percent of   the
  fair market value of the Common Stock  on the date of the grant   (110
  percent if the  optionee owns  more than  ten percent  of the   Common
  Stock of  the  Company).   Subject  to  certain  limited   exceptions,
  options may not  be exercised unless,  at the time  of exercise,   the
  optionee is in the service of the Company.
<PAGE>
       The 1993  Plan was  subsequently amended  in December  1993   and
  January 1994 to ensure compliance  with federal and state   securities
  laws, and  to permit  an option  holder to  arrange for  a   "cashless
  exercise" wherein an  option may be  exercised and  the common   stock
  sold on the same  day with a  portion of the  proceeds from the   sale
  delivered to the  Company to pay  the exercise price  of the   option.
  These amendments  were approved  by the  shareholders at  the   annual
  shareholders' meeting held on March 11, 1994.

       In December  1993, the  Company's  board of  directors,   adopted
  (subject to shareholder approval which was subsequently obtained)  the
  Franklin Ophthalmic Instruments Inc., Inc. 1994 Combined Stock  Option
  and Appreciation Rights Plan   (the "1994 Plan").  The 1994 Plan   was
  also amended to conform with state securities laws.  The  shareholders
  approved the adoption  of the  1994 Plan  and its  amendments at   the
  annual shareholders' meeting held on March 11, 1994.

       The terms  and  conditions of  the  1994 Plan  are  substantially
  identical to those of the 1993 Plan with the following two significant
  differences: (i) the  number of shares  of Common  Stock available  to
  purchase through the grant of options and rights  under the 1994  Plan
  aggregates 330,000; and (ii) directors who are not also employees  are
  not eligible to participate in the 1994 Plan.


       The following sets forth the activity for the 1993 Plan and the
  1994 Plan for fiscal 1997 and 1998:
<TABLE>

                              1993 Plan               1994 Plan
                         Shares   Exercise Price  Shares   Exercise Price
                         -------    ----------    ------      ----------
     <S>                 <C>       <C>            <C>        <C>
     Outstanding at
      September 30, 1996 120,000   $ .50-4.625    67,500     $2.625-3.19
                         -------    ----------    ------      ----------
     Fiscal 1997
          Granted              -   $         -         -               -
          Forfeited            -             -    14,000     $      3.19
     Outstanding at      -------    ----------    ------      ----------
      September 30, 1997 120,000   $ .50-4.625    53,500     $2.625-3.19

     Fiscal 1998
          Granted              -   $         -         -               -
          Forfeited      120,000             -    53,500     $         -
     Outstanding at      -------    ----------    ------      ----------
      September 30, 1998       -   $       -           -     $         -
                         =======    ==========    ======      ==========

</TABLE>
       Options and warrants issued subsequent to January 1, 1996 are not
  material under the provisions of SFAS No. 123.
<PAGE>
  8.   INCOME TAXES

       The following sets forth the deferred tax assets and  liabilities
  resulting from temporary differences between the financial   reporting
  and tax bases of assets and liabilities:
<TABLE>
                                                     September 30,
                                                   1997         1998
                                                 ---------    ---------
          <S>                                   <C>           <C>
          Deductible temporary differences
          Net operating loss carry forwards     $2,874,000    3,276,000
          Allowance for doubtful accounts           10,000       10,000
          Valuation reserve for inventory
           obsolescence                             24,000       34,000
          Valuation allowance for deferred
            tax assets                          (2,908,000)  (3,320,000)
                                                 ---------    ---------
               Net deferred tax asset           $        -      $     -
                                                 ---------   -----------
</TABLE>

       As of September  30, 1998, the  Company has  net operating   loss
  carryforwards of approximately $8,200,000 which may be used to  reduce
  taxable income and income taxes in  future years. The availability  of
  certain  operating loss carryforwards  to offset future years' taxable
  income is  subject  to  certain limitations  due  to  changes  in  the
  Company's ownership  during the   year  ended September 30, 1993.  The
  carryforwards expire from  fiscal 2008  to  fiscal 2011.
<PAGE>
  9.    COMMITMENTS AND CAPITAL LEASE OBLIGATIONS

       The Company  leases  office, warehouse  and  service   facilities
  under operating leases through 2001.   Rent expense (net of   sublease
  income) was  $112,696  for the  year  ended September  30,  1997   and
  $124,343 for the year ended September 30, 1998.

       Future obligations under the non-cancelable operating leases with
  initial remaining terms in  excess of one year  at September 30,  1998
  are as follows:
<TABLE>

          Year Ending         Minimum               Minimum
          September 30,    Rental Payments      Sublease Income      Net
          ----                 --------          --------       --------
          <S>                  <C>              <C>             <C>
          1999                  185,955            56,907        129,048
          2000                  126,522             4,833        121,689
          2001                   70,653                -          70,653
                               --------          --------       --------
          Total                $383,130         $  61,740       $321,390

     The  Company  leases  equipment   under  capital  lease   financing
  arrangements.   Amortization  expense associated  with  the  equipment
  leases for the years  ended September 30, 1997  and 1998 was  $15,794,
  and $21,655 respectively.

          Future minimum capital lease payments are as follows:

           Year ending September 30,                   Amount
           -------------------------                   -------
               <S>                                     <C>
                 1999                                  $35,966
                 2000                                  $21,143
                                                       -------
               Total before interest deduction         $57,109
               Less amount representing interest       $10,352
                                                       -------
               Capital lease obligations               $46,757
                                                       =======
</TABLE>
<PAGE>
  10.   STATEMENT OF CASH FLOWS

<TABLE>                                             For the year ended
                                                       September 30,
                                                    1997         1998
                                                    ----         ----
  <S>                                           <C>            <C>
  Supplemental disclosure of cash
   flow information:

  Cash paid during the period for interest      $ 331,569      $ 210,914

  Supplemental schedule of non-cash
      investing and financing activities:

       Note payable issued to vendor as a
       Result of litigation settlement          $       -      $  75,000

       Common stock issued in connection
        with the conversion of debt               799,138              -
                                                 --------       --------
   Total non-cash investing and
    financing activities                        $ 799,138      $  75,000
                                                 ========       ========
</TABLE>
  11.  LITIGATION SETTLEMENTS

        During December of 1996, the Company filed a complaint   against
  the auditing and  accounting firm of  Marinelli &  Scott. During  June
  1998, a settlement was  reached and the  complaint was withdrawn.  The
  settlement resulted in a net gain of $266,483  during the fiscal  year
  1998.

       In September 1998,  the Company filed  a judgment action  against
  Eastman Kodak Company ("Kodak"), regarding the responsibilities of the
  parties under  a  settlement  reached  in  a  prior  lawsuit.    Kodak
  responded  with  a  counterclaim  alleging  breach  of  contract   and
  securities violations.   The  Company and  Kodak reached  a  tentative
  settlement subsequent to fiscal  1998, under which  the Company has  a
  three year  promissory note for $71,250 with an interest rate of 10.5%
  and a down  payment of $3,750  in exchange for  the return of  102,285
  shares of the Company's  common stock to  the Company's treasury  upon
  the payment in full  of the promissory note.  The Company recorded  an
  accrual of  $75,000  for the  settlement  for the  fiscal  year  ended
  September 30, 1998.

  12.  INTANGIBLE ASSETS

       Due to the increasing uncertainty of realization of the  goodwill
  on the Company's books related to the acquisition of MOI, the Company,
  deeming the value of the asset permanently impaired in accordance with
  Statement of Financial  Accounting Standard No.  121, "Accounting  for
  the Impairment of Long-Lived Assets", has taken a non-recurring charge
  of $1,869,312 to write off the  remaining balance of goodwill  related
  to MOI.   This decision  has been made  due to  recurring losses  from
  operations and as a result, the Company has changed focus.
<PAGE>
  13.   EMPLOYEE BENEFIT PLAN

       The Company established a profit-sharing 401(k) plan in May 1997,
  for the benefit of substantially all of its employees. The plan allows
  employee  contributions  under  a  deferred  compensation  arrangement
  (401(k)). The plan provides for employer discretionary  profit-sharing
  contributions.  There were  no  company  contributions for the  fiscal
  years ended September 30, 1997 and 1998.  The year end for the plan is
  based on a calendar year.

  14.  FOURTH QUARTER ADJUSTMENTS

       The Company  recorded numerous  year-end adjustments  during  the
  fourth quarter of  1998 which resulted  in earnings  being reduced  by
  $2,525,632  during  this  period.    The  adjustments  were  primarily
  attributed to the write-off of  goodwill of $1,869,312 and  unrecorded
  liabilities of $468,636.


  15. QUARTERLY FINANCIAL DATA (Unaudited)

          During the fourth  quarter of 1998  the Company also  recorded
  various yearend  adjustments  related  primarily  to  amortization  of
  prepaid expenses, inventory  and accrued expenses,  which resulted  in
  adjustments to its  previously reported earnings  for the first  three
  quarters of 1998.  The impact of these adjustments is as follows:
<TABLE>

                      December 31, 1997    March 31, 1997    June 30, 1998
                           --------            --------         ---------
  <S>                     <C>                 <C>              <C>
  Net Income
   As Previously
       Reported           $  26,160           $   1,139        $  251,550

  Impact of Fourth
   Quarter Adjustments      (84,517)           (163,855)         (187,380)
                           --------            --------         ---------
  Adjusted Net
   Income (Loss)          $ (58,357)          $(162,716)       $   64,170
                           ========            ========         =========
  Earnings Per Share
   As Previously Reported $    0.00           $    0.00        $     0.01
                           ========            ========         =========
  Adjusted Earnings
    (Loss) Per Share      $    0.00           $   (0.01)       $     0.00
                           ========            ========         =========
</TABLE>
<PAGE>
  ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
  AND FINANCIAL DISCLOSURES

          None.

  PART III

  ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

       Directors and Executive Officers

       The following table sets forth the names, ages and positions held
  with  respect to  each director and executive officer  of  the Company
  as of September 30, 1998:
<TABLE>
          Name                    Age   Position with the Company
          ------------------      ---   -------------------------
          <S>                      <C>  <C>
          Michael J. Carroll       59   President, Chief Executive
                                        Officer and Director

          James J. Urban           61   Senior Vice President, Chief
                                        Operating Officer and Director

          Brian M. Carroll         35   Vice-President and Chief
                                        Financial Officer

          James F. Forrester       55   Director

          Philip Kantz             55   Secretary

          John Prinz               38   Director

         Michael J. Cavuoti        29   Director and Secretary
</TABLE>

       Michael J.  Carroll  was  appointed  President  of  the   Company
  effective January  1, 1995 and in  April 1995,  Mr. Carroll  was  also
  appointed Chief Executive Officer and a director of the Company. Prior
  to  joining the  Company,  Mr. Carroll, along with James J. Urban, was
  a stockholder/founder  of  MOI,  until  July  1994  when  all  of  the
  outstanding capital stock of MOI  was  acquired by the Company.    Mr.
  Carroll was  Vice President and  Sales Manager of  MOI.  Prior to  the
  organization of   MOI in   1982,  Mr.  Carroll held various  executive
  positions in ophthalmic  instrument and optical  firms including  Vice
  President of House   of Vision, Inc.   (a firm in   the  business   of
  manufacturing  optical  products  and  the distribution  of ophthalmic
  instruments    with  over  150  locations    and  approximately  1,100
  employees).  During  October of 1998,  Mr. Carroll  resigned from  his
  position as President, Chief Executive  Officer, and Director and  was
  subsequently appointed to  a sales position  with the Company.  During
  June of 1999, Mr. M. Carroll  was re-appointed as President and  Chief
  Executive Officer.
<PAGE>
       James J. Urban  was appointed  Senior Vice  President and   Chief
  Operating Officer  effective January  1, 1995.  Prior to  joining  the
  Company,  Mr.   Urban,   along   with   Mr.   Michael   Carroll,   was
  stockholder/founder  of  MOI,  until  July   1994  when  all  of   the
  outstanding capital  stock of MOI  was acquired  by the  Company.  Mr.
  Urban served as  President of  MOI from  its incorporation  in   1982.
  Prior to  the inception  of MOI,  Mr.  Urban held  various   executive
  positions with several  ophthalmic instrument distribution  companies.
  During October  of 1998,  Mr. Urban  was replaced  as Chief  Operating
  Officer by Michael  J. Ryan  ("Mr. Ryan"),  the Company's  operation's
  manager.   During June  of  1999, Mr.  Urban  was reappointed  to  the
  position of Chief  Operating Officer, upon  Mr. Ryan's appointment  as
  the Company's Vice President of technical services.

       Brian M. Carroll was appointed Vice President and Chief Financial
  Officer effective April  1, 1995.  Mr. Carroll was co-founder of MOI's
  digital imaging division and Doctors Financial Services, Inc. ("DFS").
  DFS  was a  finance/leasing   company concentrating in the  ophthalmic
  industry.    Mr. Carroll holds  a B.A. degree  in finance from  Loyola
  University of  Chicago, an  M.B.A. degree  in accounting  from  DePaul
  University and  a J.D.  degree from  The   John Marshall  Law  School.
  Brian M. Carroll is  the son  of Michael  J. Carroll.  During  October
  of 1998  Mr.  B.  Carroll was  appointed  President,  Chief  Executive
  Officer, and a Director  upon the resignation  of Michael J.  Carroll,
  in addition to his duties as Chief Financial Officer.  During June  of
  1999, Mr. B. Carroll resigned from his position as President and Chief
  Executive Officer, and was replaced  by Mr. Michael Carroll  whereupon
  Mr. B. Carroll  was re-appointed  Vice President  and Chief  Financial
  Officer.

       James  F.  Forrester  was  appointed  as  a  Director  upon   the
  resignation of Philip Winters during May of 1998.  Mr. Forrester is an
  Executive Vice President and the head  of the Corporate Finance  Group
  of Silicon  Valley  Bank  in Santa  Clara,  CA.  Silicon  Valley  Bank
  currently is a beneficial owner of 10.89% of the Company's outstanding
  Common Stock.  In addition to  the above responsibilities at  Silicon,
  Mr. Forrester has managed its Special Industries, Northern  California
  Technology and Strategic Financial Services Groups.  Mr. Forrester  is
  an alumnus of Vanderbilt University, from which he earned a  Bachelors
  Degree in Mathematics, and also holds an M.B.A. from Loyola University
  in Maryland.

       Michael J. Cavuoti was  appointed to the  position as a  Director
  and elected as Secretary  in order to fill  the vacancy when Linda  S.
  Zimdars resigned  during May  of 1998.   Mr.  Cavuoti is  currently  a
  beneficial owner of 8.3%   of the  Company's outstanding Common  Stock
  and has  assisted  the  Company as  a  non-compensated  consultant  in
  various matters  since  1996  including the  Company's  financial  and
  operational restructuring which took place during the first quarter of
  fiscal 1997.   Mr.  Cavuoti currently  manages a  3BN index  arbitrage
  portfolio for the Royal Bank of Canada Dominion Securities located  in
  New York,  New  York.   Prior  to joining  the  Royal Bank  of  Canada
  Dominion Securities, Mr. Cavuoti traded  and managed index and  equity
  derivatives for Susquehanna  Investment Group.   Mr.  Cavuoti holds  a
  Bachelors Degree in English from Harvard University.
<PAGE>
  Philip C. Kantz was appointed to  the position of Director during  May
  of 1998 when the Company elected to increase the size of the Board  of
  Directors from five  to six.   Mr.  Kantz currently  is President  and
  Chief Executive  Officer of  Tab Products  of Palo  Alto,  California.
  Prior to joining Tab Products in  1997, Mr. Kantz served as  President
  and Chief  Operating Officer  of Trans  Ocean Ltd.,  a privately  held
  container leasing company  of which he  had been a  Director for  five
  years.   In  addition to  the  above, Mr.  Kantz  has also  served  as
  President of  a transportation  services subsidiary  for  Transamerica
  Corporation and  was  also  head  big-ticket  financing  and  merchant
  banking services for GE Capital.  Mr. Kantz also is a Director to  the
  following companies:  (1)  3Com  Corporation, a  $3.5  billion  public
  company which sells products and  services to the computer  networking
  market; (2) Falcon  Building Products,  Inc., a  publicly owned  North
  American manufacturer and  distributor of  highly engineered  building
  products for the residential and commercial construction markets;  (3)
  ParcPlace-Digitalk,  Inc.,  a  publicly  owned  software   development
  company which  develops and  markets tools  and Smalltalk  application
  development; and (4) Mine Reclamation Corporation in Palm Springs, CA.
  Mr. Kantz is an alumnus of New York State Maritime College from  which
  he earned a Bachelors of Science  Degree and Hofstra University   from
  which he earned an M.B.A.

       John Prinz became a director of  the Company in May, 1997.    Mr.
  Prinz  is   controlling  partner   in  Prinz-Franklin   L.L.C.   which
  beneficially owns 16.5% of the Company.  In addition, Mr. Prinz is the
  President of  Prinz  and  Associates, a  firm    specializing  in  the
  restructuring and  capitalization  of private  and  public  companies.
  From 1994  through 1996,   Mr. Prinz  was a   founder  and served   as
  Chief  Financial  Officer of  Cormark, a designer and manufacturer  of
  interactive  displays.   During   1995,  Mr.   Prinz   facilitated   a
  reorganization of Dauphin  Technologies, a  manufacturer of  hand-held
  computers,  and served as  a  director of such  company. Between  1988
  and 1995, Mr. Prinz worked in the securities business as a  registered
  person for a subsidiary of Raymond James Securities  and as a   broker
  for  Robert W.  Baird.    Mr. Prinz graduated  from the University  of
  Nebraska with a degree  in finance and received  a M.B.A. from  Temple
  University.

  Classification of the Board of Directors

       To provide for continuity of management, the Board of   Directors
  is classified into three classes:  Class I (Michael J. Carroll), Class
  II (James  J. Urban   and  John  Prinz) and  Class   III  (Michael  J.
  Cavuoti, James Forrester and Philip Kantz).  Each member of the  Board
  of Directors  serves for   a  term   of three    years   or until    a
  successor  has  been elected and qualified.  When the classified Board
  was established, it was contemplated that one class of directors would
  be elected at  each annual  meeting of  stockholders. When  the   next
  annual meeting is scheduled, appropriate arrangements will need to  be
  made for the election of the various classes of directors.  Subsequent
  to fiscal 1998, Mr. Brian M. Carroll replaced Michael J. Carroll as  a
  Director of the Company.
<PAGE>
  Indemnification of Directors and Officers

       Section 145 of the Delaware General  Corporation Law empowers   a
  corporation to indemnify its directors  and officers and to   purchase
  insurance with respect to liability arising out of their capacity   or
  status as directors and officers  provided that this provision   shall
  not eliminate  or limit  the liability   of  a director  (i) for   any
  breach of the director's  duty of loyalty to  the corporation or   its
  stockholders, (ii) for acts or omissions  not in good faith or   which
  involve intentional misconduct or a  knowing violation of law,   (iii)
  arising under Section 174 of the Delaware general Corporation Law,  or
  (iv)  for   any  transaction   from   which  the   director    derived
  indemnification permitted thereunder shall not be deemed exclusive  of
  any other rights to which the directors and officers may be   entitled
  under the corporation's by-laws, any agreement, vote of   shareholders
  or otherwise.  The Company's Certificate of Incorporation   eliminates
  the personal liability of directors  to the fullest extent   permitted
  by Section 102(b)(7) of the Delaware General Corporation Law.

       The effect  of  the  foregoing is  to  require  the  Company   to
  indemnify the officers  and directors of  the Company  for any   claim
  arising against such  persons in  their official  capacities if   such
  person acted  in  good faith  and  in  a manner  that  he   reasonably
  believed to  be  in  or  not  opposed to   the  best interests of  the
  corporation, and, with respect to any criminal action or   proceeding,
  had no reasonable cause to believe his conduct was unlawful.

       Insofar as  indemnification for liabilities  arising  under   the
  Securities Act may  be permitted  to directors,  officers or   persons
  controlling the  Company pursuant  to the  foregoing provisions,   the
  Company has been informed that in  the opinion of the Securities   and
  Exchange Commission, such indemnification is against public policy  as
  expressed in the Securities Act and is therefore unenforceable.

  Committees of the Board of Directors

       The Board of  Directors has established  an Audit Committee   and
  a  Compensation Committee. James F.  Forrester and Michael J.  Cavuoti
  are the members  of the  audit committee,  and John  Prinz and  Philip
  Kantz are  the members  of the  Compensation  Committees.   The  Audit
  Committee recommends  to the  Board  of Directors  independent  public
  accountants   for the  Company   and reviews   related  matters.   The
  Executive  Compensation   Committee   reviews   and   recommends   the
  compensation of executive officers and  employees.  The   Compensation
  Committee administers the Company's stock option plans.

  Section 16(a) Beneficial Ownership Reporting Compliance

       Section 16(a) of the Securities Exchange Act of 1934, as  amended
  (the "Exchange Act"), requires the Company's officers and   directors,
  and persons who own  more than ten percent  of a registered class   of
  the Company's equity  securities, to  file reports  of ownership   and
  changes in  ownership  of   equity  securities  to   file  reports  of
  the  Company  with  the   Securities  and  Exchange  Commission   (the
  "Commission") and NASDAQ.  Officers,  directors and greater than   ten
  percent  stockholders  are  required  by regulation  to  furnish   the
  Company with copies of all Section 16(a) forms that they file.
<PAGE>

  ITEM 10. EXECUTIVE COMPENSATION

  Summary Compensation Table

       The following sets forth the aggregate cash compensation paid  to
  the Company's Officers  for services rendered  to the Company   during
  the fiscal year indicated.  None of the Company's executive   officers
  who served as  such at  the end  of the  last fiscal  year earned   in
  excess of $100,000 during the fiscal years indicated.
<TABLE>
                          Annual Compensation         Long  Term Compensation

 Name and Position   Year Salary Bonus Compensation Awards SARS(#) Compensation
 ------------------  ----  ------ ----  -----------  ----   -----   ----------
  <S>                <C>  <C>     <C>      <C>       <C>    <C>     <C>
  Michael J. Carroll 1998 $72,000   -      $6,000      -       -         -
  President & Chief  1997 $72,000   -      $6,000      -       -         -
  Executive Officer  1996 $66,000   -      $6,000      -       -         -

</TABLE>

  Stock Option Plans

       The Company  currently has  two stock  option  plans:   (i)   the
  Franklin Ophthalmic  Instruments, Co.,  Inc.  1993  Stock  Option  and
  Appreciation Rights Plan (the "1993 Stock Option Plan"); and  (ii) the
  Franklin Ophthalmic  Instruments  Co.,  Inc.  1994  Stock  Option  and
  Appreciation Rights Plan (the "1994 Stock Option Plan").

       The 1993 Stock Option Plan provides for the grant of options   to
  officers, directors (including employee and non-employee   directors),
  employees and consultants to purchase not  more than an aggregate   of
  200,000 shares of Common Stock of the Company.  The 1994 Stock  Option
  Plan is substantially similar  to the 1993  Stock Option Plan   except
  that it provides for the grant of options to officers, directors  (who
  are also employees), employees and  consultants to purchase not   more
  than an aggregate of 330,000 shares of Common Stock.  The 1993   Stock
  Option Plan and the 1994 Stock  Option Plan (collectively the   "Stock
  Option Plans" )  provide for: (i)  the grant of  options intended   to
  qualify as  "incentive  stock  options"  under  Section  422  of   the
  Internal Revenue Code  of 1986,  as amended;  and (ii)  the grant   of
  options which  do not  so qualify.  In addition,   stock  appreciation
  rights  may  be  granted   in conjunction  with the  grant of  options
  under the Stock Option Plans.
<PAGE>
       Subject to Rule 16b-3 under the Exchange Act, each Stock   Option
  Plan shall be administered  by: (i) the Board  of Directors  if   each
  member of the  Board of Directors  is a  "disinterested `person"   (as
  defined under Rule 16b-3);  or (ii) a  committee (the "Committee")  of
  not  less than two members of the Board of Directors, each of whom  is
  a "disinterested person."   The Board of   Directors or the  Committee
  generally has the authority, subject to  the provisions of the   Stock
  Option Plans, to  determine the individuals  to whom and  the date  on
  which discretionary options and rights are to be granted, the   number
  of shares to be subject to options and rights, the exercise price   of
  shares subject  to  options and  rights,  the terms  of  any   vesting
  forfeiture schedule and the other terms and provisions of options  and
  rights.  The 1993  Stock Option Plan and  the 1994 Stock Option   Plan
  are separately administered  by the Compensation Committee   comprised
  of John Prinz and Philip Kantz.

       While the price at  which shares of Common  Stock subject to   an
  option may be purchased shall be determined by the Board of  Directors
  or the Committee, as  applicable, pursuant to  the provisions of   the
  Stock Options Plans,  the purchase price  of shares  of Common   Stock
  issuable upon exercise of an incentive  option must not be less   than
  100% of  the  fair market  value  of such  shares  on the  date   such
  incentive option is granted and the exercise price of a  non-qualified
  option shall not be  less than 85%  of the fair  market value of   the
  Common Stock on the date of grant thereof.

       The Board  of Directors  or the  Committee, as  applicable,   may
  require as a condition to the grant of any option or right, that   the
  grantee enter  into a  stock option  agreement which  shall   require,
  among other  things, that  with respect  to  any options  granted   to
  directors or officers, at least six months must elapse from the   date
  such options are  granted to the  date on which  any share of   Common
  Stock underlying such options are sold  or any right associated   with
  such option  is  exercised, unless  the  Board of  Directors  or   the
  Committee, as applicable, otherwise consents in writing.  No   options
  may be granted under the Stock Option Plans more than ten years  after
  the date of approval of the  Stock Option Plans by the   stockholders.
  Options granted under  the Stock  Option Plans  are not   transferable
  except upon  death.  Except  for  options   granted  to   non-employee
  directors  under  the  non-discretionary  formula,  options   may   be
  exercised only while the option holder is employed by the  Company, or
  in some cases, within three months of termination of employment.

       Options/SAR Grants in Last Fiscal Year

       None.

       Aggregate Option/SAR  Exercises in  Last Fiscal  Year and  Fiscal
       Year- End Option/SAR Values

       None.
<PAGE>
  Employment Agreements

       In connection with the purchase of MOI, the Company entered  into
  employment agreements with Michael  J. Carroll, currently   President,
  Chief Executive  Officer and  a director  of  the Company,  James   J.
  Urban, currently Senior Vice President, Chief Operating Officer and  a
  director of  the  Company,  and  Brian  M.  Carroll,  currently   Vice
  President and Chief Financial Officer. Each such employment  agreement
  provided for an  initial term of  three years ending  June 29,   1997;
  however, in  accordance  with  the  agreements,  the  terms  of   each
  agreement were extended  for a period  of two years  ending June   29,
  1999 where  upon the  agreements were to be   renewed on  a   year-to-
  year basis. Such agreements  also provided   that Michael Carroll  and
  James Urban were  to receive salaries  of $78,000 per  year and  Brian
  Carroll was to receive a salary of  $60,000.  During May of 1998,  Mr.
  Brian M. Carroll's  agreement was  revised to  provide, amongst  other
  things: 1)  annual salaries  of  $88,000 for  the  first year  of  the
  agreement, $92,000 for the second year  and $96,000 for year three  of
  the agreement; 2)  a performance pay  bonus plan in  each fiscal  year
  during the term of  the contract, commencing  with fiscal 1998  (using
  fiscal 1997 as  the basis)under  which   if the  Company's net  income
  exceeds its net income for the prior year (if there is a net loss  for
  the year, the basis shall be zero) the Company will pay a bonus to Mr.
  B. Carroll consisting  of $1,000 for  each $20,000  increment of  such
  excess; 3) a term of three years; and 4) a warrant plan which provides
  the issuance  of  200,000 warrants  issued  at fair  market  value  to
  purchase common stock  upon execution  of the  contract revision,  the
  issuance of 100,000 warrants issued at  fair market value to  purchase
  common stock at the beginning of year  two of the term of the  revised
  contract, and the issuance of 100,000  warrants issued at fair  market
  value to purchase common stock at  the beginning of year three of  the
  term of the revised contract. In connection therewith, Mr. B.  Carroll
  was issued 200,000 warrants to purchase the Company's common stock  at
  an exercise price of $.23.

       During  October  1998,  Michael  J.  Carroll  resigned  from  his
  position as  President,  Chief  Executive Officer  and  Director,  and
  subsequently  accepted  a  sales  position  with  the  Company.     In
  connection with  his new  position with  the Company,  Mr. M.  Carroll
  signed a new three year employment agreement with the Company.  During
  February of 1999, Mr. M. Carroll resigned from his sales position with
  the Company and in June of 1999, was re-appointed to the positions  of
  President and Chief Executive Officer.

       All of the above agreements may be terminated by the Company  for
  "Just Cause" (as such term is  defined  in  the employment  agreements
  including,  without limitation, violations of  the Company's  policies
  and indictment  or conviction for  criminal acts) or at the  Company's
  sole discretion (in  which case severance  payments  must  be made  by
  the Company  equal   to nine  months of  salary under  the  terminated
  agreement for the agreements related to   James J. Urban and Brian  M.
  Carroll).  Consulting and Other Arrangements
<PAGE>
       In September 1996, the  Company extended a consulting   agreement
  with Marketing and  Acquisition Concepts ("MAC"),  of which Linda   S.
  Zimdars, a director of the Company until May of 1998, is a  principal,
  providing for payment by the  Company to  MAC of  consulting fees   in
  exchange for investor relations and other marketing services.  Through
  mutual agreement,  the consulting  agreement  was terminated  in  June
  1998.   During fiscal  years ended  September 30,  1997 and  1998  the
  Company paid MAC consulting fees plus expenses of $24,250, and $23,750
  respectively.

  Remuneration of Directors

       Since April 1, 1995, directors  have not been compensated  except
  for expenses incurred.

  ITEM 11.  SECURITY  OWNERSHIP  OF   CERTAIN  BENEFICIAL  OWNERS   AND
            MANAGEMENT

  PRINCIPAL SECURITY HOLDERS

       The following table sets forth,  at September 30, 1998,   certain
  information with respect to stock ownership of (i) all persons   known
  by the  Company  to  be  beneficial  owners of  5%  or  more  of   its
  outstanding Common Stock,  (ii) each of  the Company's directors   and
  executive officers, and (iii) all directors and executive officers  as
  a group.  Unless otherwise indicated, the beneficial owners have  sole
  voting and investment  power over   the shares of Common Stock  listed
  below.
<TABLE>
         Name and  Address  of   Number of Shares    % of Shares of
          Beneficial Owner (1)    Beneficially          Common Stock
                                  Owned (2)          Beneficially Owned
          <S>                     <C>                       <C>
          Michael J. Carroll (3)  1,531,710 (7)              7.82%

          James J. Urban (4)      1,551,711 (8)              7.92%

          Brian M. Carroll (3)      237,105 (9)              1.20%

          Prinz-Franklin L.L.C.   3,325,000 (10)            16.51%

          John Prinz (4) (5)      3,355,000 (11)            16.62%

          Mickey Cavuoti (4)      1,665,000 (12)             8.49%

          James F. Forrester (4)(6)  25,000                  0.13%

          Philip Kantz  (4)          25,000                  0.13%

          Silicon Valley Bank     2,133,003 (13)            10.87%

         All Executive
          Officers & Directors
          as a Group (6 Persons)  8,390,526                 42.31%
</TABLE>
<PAGE>
    (1)    Michael J.  Carroll,  James  J. Urban,    Brian  M.  Carroll,
        Michael  Ryan,  Michael J.  Cavuoti,  James  F.  Forrester,  and
        Philip  Kantz may  be contacted  at 1265   Naperville     Drive,
        Romeoville,  Illinois 60446.   Prinz-Franklin L.L.C.  and   John
        Prinz   may be   contacted  at  One   Northfield  Plaza,   Suite
        300, 570   Frontage  Road,   Northfield, Illinois 60093.   James
        Forrester can be reached care of Silicon  Valley Bank.

    (2)    Unless otherwise noted,   the Company believes   that all  of
        such shares  are  owned   of  record   by  each   person   named
        as beneficial  owner and that such person   has sole voting  and
        dispositive  power with   respect  to   the  shares   of  Common
        Stock  owned  by  such  person.    Such    person's   percentage
        ownership   is   determined  by assuming  that the  options   or
        convertible securities that are  held by such  person which  are
        exercisable   within 60  days  from  September 30,   1998   have
        been exercised or converted, as the case may be.

    (3)    The named securityholder is an officer of the Company.

    (4)    The named securityholder is a director of the Company..

    (5)    The named security holder is sole manager of Prinz Franklin
        L.L.C.

    (6)    The named securityholder is Executive Vice President of
        Silicon Valley Bank

    (7)   Includes:   (a)   51,710  shares of   Common Stock  issued  by
         the Company  in connection with  the  acquisition  of MOI;  (b)
         125,000  shares  of  Common Stock  issued  by  the  Company  in
         connection   with  the  Company's execution  of  a  forbearance
         agreement with Silicon;  (c) 1,100,000 shares of Common   Stock
         issued upon  conversion   of $550,000  in debt   owed  to   the
         noted     stockholder  in     connection  with  the   Company's
         acquisition of  MOI; and (d)   255,000 shares  of Common  Stock
         issued  to  the  noted  stockholder  in  connection  with   the
         conversion  of  certain  promissory notes.

    (8)   Includes:  (a)  71,711  shares of  Common Stock issued by  the
         Company  in  connection  with the    acquisition  of  MOI;  (b)
         125,000  shares  of  Common Stock  issued  by  the  Company  in
         connection   with  the  Company's execution  of  a  forbearance
         agreement with Silicon;  (c) 1,100,000 shares of Common   Stock
         issued upon  conversion  of   $550,000 in  debt  owed  to   the
         noted     stockholder  in     connection  with  the   Company's
         acquisition  of   MOI;  and(d)255,000 shares  of  Common  Stock
         issued  to  the  noted  stockholder  in  connection  with   the
         conversion of  certain  promissory notes.

    (9)   Includes:   (a) 17,105  shares of Common  Stock issued to  the
         noted stockholder  in  connection   with   the acquisition   of
         MOI; (b)20,000 shares  of  Common  Stock; (c) 200,000  warrants
         to purchase shares of Common at an exercise price of $.25.
<PAGE>
   (10)   Includes:   2,900,000  shares of    Common Stock  and  400,000
         warrants  to  purchase Common  Stock  owned  by  Prinz-Franklin
         L.L.C.  over  which    Mr.  Prinz  has  voting  control.

   (11)   Includes: (a)  2,900,000 shares of  Common Stock; (b)  400,000
         warrants  to purchase  Common Stock  at  an exercise  price  of
         $1.00   per share; and (c)  25,000 warrants to purchase  common
         stock at an exercise price of $.19.

   (12)   Includes:  (a) 1,640,000  shares  of  Common  Stock  issued in
         connection with  a private   placement of  securities; and  (b)
         25,000 warrants to  purchase Common Stock at an exercise  price
         of $.19 per share.

   (13)   Includes: 25,000  warrants to purchase Common Stock  at
         an exercise price of $.19 per share.

   (14)   Includes:  25,000  warrants to  purchase  Common Stock  at  an
         exercise price of $.19 per share.

   (15)   Includes:  (a)  2,088,884  shares   of  Common  Stock   issued
         in conversion  of   debt  and    (b)  44,119  shares   issuable
         upon conversion of  common stock purchase warrants  exercisable
         at a purchase price of $0.50 per share.


  ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       During August  of  1996,  the  Company  borrowed  $215,188   from
  Michael Cavuoti under  a 30-day promissory  note bearing interest   at
  10% per annum and a note  origination fee of $6,450.  In  October, the
  note  was converted   to 860,752   shares of   common stock   in   the
  Company as participation in the Company's Private Placement   offering
  which  commenced  on  October  1,   1996.    Warrants exercisable  for
  $1.00 were  also  issued    as  part of  the    participation  in  the
  aforementioned  private  placement  offering,  however  the   warrants
  expired unexercisable during the fourth quarter of fiscal 1998.

       In April 1997, the Company entered into an agreement with  Prinz-
  Franklin L.L.C. pursuant to which the Company sold to Prinz shares  of
  Common Stock and warrants to purchase Common Stock.  See Note 7 to the
  Financial Statements contained elsewhere herein.

       The Company will not permit  loans or other transactions  between
  the Company and the  officers, directors, principal shareholders,   or
  affiliates for other  than bona fide  business purposes  or on   terms
  less favorable than could   be obtained   from third  parties,  unless
  approved by  a  majority  of  the  disinterested  directors  and   the
  independent directors, if any, of the Company.

       For a discussion of the employment and consulting agreements   to
  which the Company  is a party  and payments of  consulting and   other
  fees  to   executive  officers   of  the   Company,  see    "EXECUTIVE
  COMPENSATION"  and  Note  3  to  the  Financial  Statements  contained
  elsewhere herein.

<PAGE>

  ITEM 27.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

  Exhibit Number         Title of Exhibit

  2.1   Asset Purchase Agreement, dated January 27, 1994, by and between
    Franklin   Ophthalmic   Instruments  Co.,   Inc.   and   Progressive
    Ophthalmic Instruments,  Inc.  filed   with   the   Securities   and
    Exchange Commission   (the 'Commission') on February  14,  1994(File
    No. 0-21852)  as an exhibit   to the  Company's   Current Report  on
    Form  8-K, dated    January 27,  1994,  and incorporated  herein  by
    reference.

  2.2  Stock Purchase  Agreement,  dated  June 24, 1994,  by  and  among
    Franklin   Ophthalmic Instruments   Co.,   Inc., Midwest  Ophthalmic
    Instruments, Inc.,  Michael J.  Carroll and  James   J. Urban  filed
    with the Securities and  Exchange  Commission as  an exhibit to  the
    Company's Current Report  on  8-K, dated July  1, 1994 (File No.  0-
    21852), and incorporated herein by reference.

  2.3  Letter Agreement,  dated  June  29, 1994,by  and  among  Franklin
    Ophthalmic  Instruments Co,  Inc., Midwest  Ophthalmic  Instruments,
    Inc.,  Michael  J. Carroll  and  James  J. Urban  filed  with    the
    Securities and  Exchange Commission  on July 15, 1994 as an  exhibit
    to the Company's   Current  Report on Form  8-K (File  No.  0-21852)
    and incorporated herein by reference.

  3.1  Articles of  Incorporation of  Franklin  Ophthalmic   Instruments
    Co., Inc.,  Delaware (Registrant)   filed with the  Securities   and
    Exchange Commission   on March  10, 1993   as  an  exhibit  to   the
    Company's Registration   Statement on   Form  SB-2 (File   No.   33-
    59340) and incorporated herein by reference.

  3.2  Articles of Incorporation of Franklin Ophthalmic Instruments  Co,
    Inc. (California) filed with the Securities and Exchange  Commission
    on  March 10,  1993  as  an exhibit  to the  Company's  Registration
    Statement on Form  SB-2 (File No. 33-59340) and incorporated  herein
    by reference.

  3.3  Agreement  and  Plan of   Merger  Certificate  between   Franklin
    Ophthalmic Instruments  Co., Inc.(Delaware) and Franklin  Ophthalmic
    Instruments  Co., Inc. (California) filed  with  the Securities  and
    Exchange Commission  on  March   10,  1993 as   an exhibit  to   the
    Company's  Registration Statement  on Form  SB-2(File No.  33-59340)
    and incorporated herein by reference.

  3.4  Bylaws   of   Franklin    Ophthalmic   Instruments   Co.,    Inc.
    (Registrant)filed with  the Securities and   Exchange Commission  on
    March  10,  1993  as  an  exhibit  to  the  Company's   Registration
    Statement  on Form  SB-2   (File  No.  33-59340)  and   incorporated
    herein  by reference.

  3.5  Certificate of Stock Designation, Franklin Ophthalmic Instruments
    Co.,  Inc. (Delaware)    filed with  the  Securities   and  Exchange
    Commission  on March   10, 1993  as   an exhibit  to  the  Company's
    Registration   Statement on  Form   SB-2 (File   No.  33-59340)  and
    incorporated herein by reference.
<PAGE>
  4.1  Specimen Common Stock Certificate filed with the Securities   and
    Exchange  Commission on  June 16,  1993 as  an   exhibit   to    the
    Company's Registration Statement  on Form SB-2(File No  33-59340)and
    incorporated herein by reference.

  4.2 Form of Class  A Warrant filed  with the  Securities and  Exchange
    Commission on   June 16,  1993 as   an  exhibit  to  the   Company's
    Registration  Statement  on  Form  SB-2(File    No    33-59340)  and
    incorporated herein by reference.

  4.3  Form   of   Unit Purchase  Option Certificate  filed   with   the
    Securities  and Exchange  on March  10, 1993  as an  exhibit to  the
    Company's Registration   Statement on   Form  SB-2 (File   No.   33-
    59340) and incorporated herein by reference.

  4.4  Form of Bridge  Lenders' Unit  Purchase Warrant  filed with  the
    Securities and   Exchange  Commission on   March  10,  1993  as   an
    exhibit to   the Company's   Registration Statement   on Form   SB-2
    (File No. 33-59340) and incorporated herein by reference.

  4.5  Form of  Warrant Agreement  among the  Company, J.  Gregory   and
    Company, Inc.  and Continental   Stock Transfer and  Trust   Company
    filed with  the  Securities and  Exchange  Commission  on June   16,
    1993 as  an  exhibit to  the  Company's  Registration Statement   on
    Form  SB-2   (File  No.   33-59340)  and   incorporated  herein   by
    reference.

  4.6  Warrant issued by  the Company,  to Silicon  Valley Bank,   filed
    with the Securities and Exchange Commission  on May 10, 1993  as  an
    exhibit to the Company's Registration Statement on Form SB  2  (File
    No. 33-59340) and incorporated herein by reference.

  4.7  Warrant, dated  January  21,  1994, issued  by  the  Company   to
    Silicon Valley   Bank, filed   with  the Securities   and   Exchange
    Commission as an  exhibit to the Company's  Current Report  on  Form
    8-K, dated  January 27, 1994  (File No.  0-21852), and  incorporated
    herein by reference.

  4.8  Warrant, dated March  31, 1994, issued by the Company  to Silicon
    Valley  Bank,  and   corresponding  Registration  Rights  Agreement,
    filed with the Securities and Exchange Commission  as an exhibit  to
    the  Company's Current Report on Form 8-K, dated July 1, 1994  (File
    No. 0-21852),  and incorporated  herein  by reference.

  4.9  Franklin Ophthalmic Instruments  Co, Inc. 1994  Stock Option  and
    Appreciation Rights  Plan, filed  with the  Securities and  Exchange
    Commission as an exhibit to the Company's Registration Statement  on
    Form S-8 (File No. 0-21852) and incorporated herein  by reference.

  4.10 Franklin Ophthalmic Instruments Co.,  Inc. 1993 Stock Option  and
    Appreciation Rights  Plan filed with the   Securities  and  Exchange
    Commission  on  March  10, 1993   as an   exhibit to  the  Company's
    Registration  Statement  on  Form  SB-2 (File   No.  33- 59340)  and
    incorporated herein by reference.
<PAGE>
  4.11 Promissory  Note,   dated   January   20,   1994,   executed   by
    Franklin Ophthalmic  Instruments  Co.,  Inc. in   favor of   Silicon
    Valley Bank  filed with the  Securities and  Exchange Commission  on
    February 14,   1994  (File No.  0-21852)   as an   exhibit  to   the
    Company's Current  Report  on Form  8-K,  dated  January 27,   1994,
    and incorporated herein by reference.

  4.12 Warrant to Purchase Common Stock, dated January 21,  1994, issued
    by Franklin Ophthalmic Instruments, Inc. to Silicon Valley Bank  and
    corresponding   Antidilution  Agreement   and  Registration   Rights
    Agreement,  filed with  the Securities  and Exchange  Commission  on
    February  14,   1994  (File No.  0-21852)    as an  exhibit  to  the
    Company's Current  Report  on Form  8-K, dated    January 27,  1994,
    and incorporated herein by reference.

  4.13 Form of Non-Negotiable 5% Convertible Promissory Note filed  with
    the Securities  and Exchange   Commission on August  12, 1994 as  an
    exhibit  to the  Company's Post-Effective  Amendment  No. 1  to  the
    Registration  Statement  on  Form  SB-2  (File  No.  33-59340)   and
    incorporated herein by reference.

  4.14 Form  of  Non-Negotiable  9%  Promissory  Note  filed  with   the
    Securities and Exchange Commission on August 12, 1994 as an  exhibit
    to the Company's Post-Effective Amendment No. 1 to the  Registration
    Statement on Form  SB-2 (File No. 33-59340) and incorporated  herein
    by reference.

  4.15 Common   Stock Purchase  Warrants issued  by Franklin  Ophthalmic
    Instruments  Co., Inc.  in   December 1994   to  each   of Linda  S.
    Zimdars,  an  officer  and  director  of  the  Company,  and  Dwayne
    Podgurski, an  employee of the   Company filed  with the  Securities
    and  Exchange Commission  as  an  exhibit to  the  Company's  Annual
    Report on Form 10-KSB for  the fiscal year ended September 30,  1994
    (File No. 0-21852) and incorporated herein by reference.

  10.1 Loan documents   evidencing   loans  and/or   lines   of   credit
    extended to  the Company by Silicon   Valley Bank,  filed with   the
    Securities and   Exchange  Commission on   March  10,  1993  as   an
    exhibit to   the Company's   Registration Statement   on Form   SB-2
    (File No. 33-59340) and incorporated herein by reference.

  10.2 Loan  Modification Agreement, dated   January  20, 1994,  between
    Franklin Ophthalmic Instruments  Co., Inc. and  Silicon Valley  Bank
    filed as an  exhibit to the Company's Current   Report on Form  8-K,
    dated January  27, 1994, filed with  the Commission on February  14,
    1994 (File No. 0-21852) and incorporated herein by reference.

  10.3 Loan  Modification  Agreement,  dated  March  31,  1994   between
    Franklin Ophthalmic Instruments Co., Inc. and  Silicon  Valley  Bank
    filed with the Securities and Exchange Commission on  July 15,  1994
    as an  exhibit to the  Company's  Form  8-K (File  No. 0-21852)  and
    incorporated herein by reference.
<PAGE>
  10.4 Form of Employment between Franklin Ophthalmic  Instruments  Co.,
    Inc. and each of Michael J. Carroll and James J. Urban included   as
    an exhibit to the Stock Purchase Agreement identified in exhibit  to
    the  Stock Purchase  Agreement  identified  in   Exhibit  2.2  above
    which was  filed  with  the Securities and  Exchange Commission   as
    an   exhibit to  the   Company's Current Report  on Form 8 K,  dated
    July  1,  1994  (File  No.  0-21852),  and  incorporated  herein  by
    reference.

  10.5 Consulting  Agreement, dated December 1,  1994, between  Franklin
    Ophthalmic Instruments,  Co., Inc. and   Marketing  and  Acquisition
    Concepts,  a Wisconsin    sole proprietorship  of   which  Linda  S.
    Zimdars,  an  officer and  director  of  the Company,  is  the  sole
    proprietor, filed with the Securities and Exchange Commission as  an
    exhibit  to the  Company's  Annual Report  on  Form 10-KSB  for  the
    fiscal   year  ended   September  30,   1994(File  No.0-21852)   and
    incorporated herein by reference.

  10.6 Separation Agreement,  dated  April 1, 1995,  by  and  among  the
    Company, Robert  A. Davis, certain partnerships  in which Mr.  Davis
    is a partner, Michael J. Carroll,  and  James J. Urban, filed as  an
    exhibit to  the Company's  Current Report on  Form   8-K(File No.  0
    21852) which was filed  with the Securities and Exchange  Commission
    on May 3, 1995 and incorporated herein  by reference.

  10.7 Forms of  Letters  of  Notice to  Securityholders  relating    to
    modification of the terms  of  certain of the Company's  securities,
    filed as an  exhibit to the Company's Current   Report on Form   8-K
    (File  No.   0-21852)  which  was   filed  with  the Securities  and
    Exchange  Commission   on May  3, 1995  and incorporated  herein  by
    reference.

  10.8 Amended Loan  and   Forbearance Agreement,  dated April 1,  1995,
    between the Company and Silicon Valley Bank, filed as an exhibit  to
    the Company's  Current Report on Form  8-K (File No. 0-21852)  which
    was filed  with the   Securities and Exchange  Commission on May  3,
    1995 and incorporated herein by reference.

  10.9 Agreement, dated  April 20,  1995, by  and  among the    Company,
    Michael J. Carroll  and James J. Urban, filed  as an exhibit to  the
    Company's Current Report on Form   8-K (File No. 0-21852) which  was
    filed with the  Securities and  Exchange Commission  on May 3,  1995
    and incorporated herein by reference.

  10.10     Letter of Intent, dated April 27, 1995, between the  Company
    and Diversified  Ophthalmics, Inc.,  filed as   an exhibit  to   the
    Company's Current  Report on Form  8-K (File  No. 0-21852)which  was
    filed with the  Securities and Exchange Commission  on May  3,  1995
    and incorporated herein by reference.

  10.11 Forms  of notice  dismissing  the firm of Marinelli and   Scott
    as the  Company's  independent  public  accountants  and   Company's
    retaining  the   firm  of    BDO   Seidman,  LLP  to  serve  as  its
    independent  public  accountants,   filed  as  an  exhibit  to   the
    Company's Amended  and Restated Current  Report on Form  8-K/A   #1,
    dated November  27, 1995, which  was filed by  the Company with  the
    Securities and Exchange Commission on December 6, 1995 (File No.  0-
    21852) and is incorporated herein by reference.
<PAGE>
  10.12 Form  of  notice dated September 4,  1996 relating to  agreement
    between the Company and Silicon Valley Bank, filed as an exhibit  to
    the Company's  Current Report on Form  8-K (File No. 0-21852)  which
    was filed with  the Securities and Exchange Commission on  September
    6, 1996 and incorporated  herein  by reference.

  10.13 Form of notice dated September  4, 1996 relating  to  agreements
    between the Company and  certain trade vendors, filed as an  exhibit
    to the  Company's   Current Report on  Form 8-K  (File No.  0-21852)
    which  was filed  with the  Securities  and Exchange  Commission  on
    September 12, 1996  and incorporated herein  by reference.

  10.14 Agreement, dated August 20,1996, between the Company and Silicon
    Valley Bank.

  10.15 Investment Agreement, dated May 8, 1997 between the Company  and
    Prinz-Franklin L.L.C.,  filed as an exhibit  to the  Company's  Form
    10-QSB which was  filed with the Securities and Exchange  Commission
    on May 15, 1997 and incorporated herein by reference.

  10.16 Amendment  to  Investment  Agreement, dated May 8, 1997  between
    the Company  and  Prinz-Franklin  L.L.C.,  filed  as  an exhibit  to
    the Company's   Form 10-QSB which   was filed  with  the  Securities
    and Exchange Commission on  May 15, 1997 and incorporated herein  by
    reference.

  10.17 Form of Class B Warrant dated November 25, 1996

  10.18 Form of Class C Warrant dated December 30, 1996

  10.19 Amendment to Investment Agreement, dated  May  11, 1997  between
    the  Company and  Prinz-Franklin   L.L.C. Second  Loan  Modification
    Agreement., dated August   14, 1997 between the Company and  Silicon
    Valley Bank.

  10.20 Second Loan Modification Agreement, dated August 14, between the
    Company and Silicon Valley Bank.

  10.21 Letter from Silicon Valley Bank dated August  13, 1997  defining
    default provision.

  10.22 Agreement, dated September 30, 1997, among the Company,  Michael
    J. Carroll and James J. Urban.

  10.23 Agreement dated  July 1,  1992 by  and between  the Company  and
    Marco Equipment Co.

  10.24 Agreement dated January 16, 1995 by and between the Company  and
    Haag-Streit Services,  Inc. and  Reliance Medical  Products, Inc.

  10.25 Agreement dated December 30, 1997 between the Company and Harris
    Trust and Savings Bank.

  10.26 Modified Employment  Agreement dated  May 15,  1998 between  the
     Company and Brian M. Carroll.
<PAGE>
  10.27 Employment Agreement Between the Company and Michael J. Carroll.

  27*  Financial Data Schedule for fiscal year ended September 30, 1997

     *Filed herewith.

     (b)  REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by the Company during the  fiscal
  year ended September 30, 1998.

<PAGE>
     SIGNATURES

           In accordance with Section 13 or  15(d) of the Exchange  Act,
  the Registrant caused  this report to be signed on  its behalf by  the
  undersigned, thereunto duly authorized, on July 27, 1999.

                                Franklin Ophthalmic Instruments Co.,Inc.

                                By:/s/  Michael J. Carroll
                                   --------------------------

                                Michael J. Carroll, President and
                                Chief Executive Officer


          In accordance  with the  Exchange Act,  this report  has  been
  signed by the following  persons  on behalf of the Registrant, in  the
  capacities and on the dates indicated.


          SIGNATURE                  TITLE                DATE

     /s/ Michael J. Carroll     President, Chief      July 27, 1999
     ----------------------     Executive Officer
     Michael J. Carroll


     /s/ James J. Urban         Executive Vice        July 27, 1999
     ----------------------     President, Chief
     James J. Urban             Operating Officer
                                and Director

     /s/ Brian M. Carroll       Vice President,       July 27, 1999
     ----------------------     Chief Financial
     Brian M. Carroll           Officer and Director

     /s/ Michael J. Cavuoti     Secretary and         July 27, 1999
     ----------------------     Director
     Michael J. Cavuoti

     /s/ James Forrester        Director              July 27, 1999
     ----------------------
     James Forrester

     /s/                        Director              July 27, 1999
     -------------------
     Philip Kantz
     /s/                        Director              July 27, 1999
     -------------------
     John Prinz