SECURITIES AND EXCHANGE COMMISSION
                          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, 1997

                  [  ] 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   X       No   

   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,
   1997 totaled $9,568,352

   As of January 12, 1998, 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   $1,379,858.

   As of   January 12, 1998, there  were 19,580,879  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                           6

   ITEM 3.        LEGAL PROCEEDINGS                                 6

   ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF
                  SECURITY HOLDERS                                  6

   PART II

   ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED
                  STOCKHOLDERS MATTERS                              7

   ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS     8

   ITEM 7.        FINANCIAL STATEMENTS                              F-1

   ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURE            12

   PART III

   ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                  CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
                  OF THE EXCHANGE ACT                               12

   ITEM 10.       EXECUTIVE COMPENSATION                            14

   ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                  OWNERS AND MANAGEMENT                             16

   ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS    18

   ITEM 13.       EXHIBITS, LISTS AND REPORT ON FORM 8-K            20

<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,  the annual  cost  to
   society of eye disorders, visual impairments and blindness exceeds $5
   billion.  Disorders of the eye  represent one of the most  widespread
   health care conditions  in the world  today.  It  has been  estimated
   that more than 67% of the world's population suffers from one or more
   treatable eye  disorders.   The most  common of  these disorders  are
    cataracts, glaucoma and refractive error. (Source:  U.S.  Ophthalmic
   Diagnostic Instruments & Intraocular Lens Market, Theta  Corporation,
   February 1991.)

        Based upon information provided  by Optometry Today,  publishers
   of an  industry  leading 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 falls);
   (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, 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 microprocessor 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  microprocessor
   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  microprocessor
   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 Representatives.    At  September 30,  1997,  the  Company
   maintained  a   sales  and   service   force  of   approximately   22
   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.     Beginning  in  October,   1996,  the   Company
   reintroduced its use  of direct mailing  of catalogs as  a method  of
   marketing the equipment and services that the Company provides.   The
   Company had ceased using  such a catalog  in approximately May,  1995
   due  to  the  Company's  attention  to  the  reorganization  of   its
   operations and  fiscal constraints.   Since  its reintroduction,  the
   Company  has  mailed  approximately  36,000  catalogs  to   potential
   customers.

        Trade Shows.  The Company attends and exhibits at  approximately
   15 trade  shows  or  conventions  per  year  including  regional  and
   national shows  and conventions  (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.   The Company  has
   also sold product to non-ophthalmic related providers including  ear,
   nose and throat practitioners,  dermatologists and plastic  surgeons.
   Such sales,  however,  comprise  a small  portion  of  the  Company's
   revenues and  the  Company does  not  currently market  its  products
   directly to such providers.
<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").

        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").      Shortly
   thereafter,  the  Company  relocated  its  operations  from  Hayward,
   California to Jacksonville, Florida, where POI was located.  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.

        Pursuant to or in  connection with an  agreement dated April  1,
   1995 among the Company, Robert A.  Davis (the Company's former  chief
   executive  officer,  chief   financial  officer,   president  and   a
   director), and certain  partnerships and a  trust in which  Mr. Davis
   has an interest, and Michael J. Carroll, James J. Urban and Brian  M.
   Carroll (the "Separation Agreement"), Mr. Davis and Mr. Dallas Talley
   (another director of the Company), resigned their positions with  the
   Company and Messrs. Michael Carroll and  James Urban were elected  to
   fill vacancies on  the Company's Board  of Directors  (the "Board  of
   Directors").
<PAGE>
        In January 1995,  the new  management of  the Company  commenced
   its attempt to restructure the Company's  operations around the   MOI
   operations acquired  by the  Company in  July 1994,  and the  Company
   commenced operating under the trade name Franklin.MOI.  Also as  part
   of the restructuring efforts,  the Hayward, California facility,  the
   Lawrenceville,  Georgia  facility   and  the  Jacksonville,   Florida
   facility  were  closed.     Additionally,  the   Company   instituted
   throughout its sales force compensation structures and other policies
   similar to those historically used by  MOI, which included:  (i)  the
   use of sales  quotas and scheduling  requirements; (ii) a  commission
   structure that contained lower base and higher incentive  components;
   (iii) greater  accountability for  expenses and  inventory; and  (iv)
   limits on competitive activities.  As a result of the  aforementioned
   changes,   approximately   50%   of   the   Company's   prior   sales
   representatives terminated  their representation  of the  Company  or
   were dismissed.  Some but not all of these representatives have  been
   replaced and, as a result, the Company lost representation in certain
   geographic areas or with certain accounts previously serviced by it.

        Since the close of the Company's  1996 fiscal year, the  Company
   has completed a restructuring of its bank debt, restructured  certain
   of its  trade  debt  and raised  additional  equity  capital  in  two
   private  placements.  Management  of  the  Company  is  shifting  its
   attention from financial restructuring to more actively seeking sales
   growth through  the distribution  of a  direct mail  catalog and  the
   addition of sales/service personnel.    See "MANAGEMENT'S  DISCUSSION
   AND   ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS  OF OPERATIONS
   --Liquidity and Capital  Resources and Outlook."

   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    has
   historically   been accomplished  by numerous small,   owner-operated
   distributors 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.    Other than  Lombart  Instrument Company  of
   Norfolk, Virginia (the   largest ophthalmic   instrument  distributor
   in the    United States)  and  Essilor   Inc.  of  Greensboro,  North
   Carolina (a  company whose  primary business  is the  fabrication  of
   lenses used in  eyewear), the  Company believes   that there   is  no
   other ophthalmic distributor   with  greater sales  volume than   the
   Company.  Other than Lombart Instrument Company, the Company believes
   that there is  no other  company with  greater geographical  coverage
   than the Company.
    
   Backlog

        The Company previously experienced delays in filling customer 
   Orders as a result of cash flow constraints and reduced credit limits
   from its suppliers.  With the completion of the restructuring, and
   Assuming continuing cooperation from its suppliers, the Company is
   no longer experiencing any significant backlog.
<PAGE>
   Employees

        As of  September 30,  1997, the  Company employed  32  full-time
   employees, including  6  management  personnel,  4  in  accounting  &
   operations, and 22  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 expanded any capital to comply  with
   environmental protection statutes, and does not anticipate that  such
   expenditures will be necessary in the future.

   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
   and which will expire on April 30, 2001.  The Company also  maintains
   a facility in  Jacksonville, Florida which  the Company subleases  to
   tenants.  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 which 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 December 5, 1996, the Company  filed a complaint against  the
   accounting and  auditing firm  of Marinelli  & Scott  (the  Company's
   predecessor accounting  and  auditing  firm)  in  the  United  States
   District  Court  for  the  Northern  District  of  Illinois,  Eastern
   Division   (Docket    No.    96C   7982),    alleging    professional
   malpractice/negligence  arising  in  connection  with  auditing   and
   accounting services performed by Marinelli &  Scott.  The Company  is
   seeking damages in excess of $50,000.

        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, 1997, no matters were placed
   before the stockholders of the Company for consideration.

<PAGE>
   PART II

   ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER 
             MATTERS

        The Company's  Units,  Common Stock  and  Class A  Warrants  are
   quoted on the OTC Electronic Bulletin board and are traded under  the
   symbols FKLNU,  FKLN,  and  FKLNW, respectively.    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 the  Units,
   Common  Stock  and  Class  A Warrants  for  the  fiscal  years  ended
   September 30, 1996, and 1997.   Such quotations reflect  inter-dealer
   prices, without retail mark-up, mark-down or commission, and may  not
   represent actual transactions.

                          Common Stock               Class A Warrants
                        Bid ($)   Asked ($)         Bid ($)      Asked($)
    Period of Quote  High  Low     High  Low    High    Low    High    Low

    Fiscal 1996:
    First Quarter    5/8   1/8      1    7/32   3/100   1/100   3/50   7/200
    Second Quarter   3/4   5/32    7/8   7/32   2/25    1/100   1/10   7/200
    Third Quarter   11/16 15/1    27/32  7/16   9/50    7/200   3/10  11/200
    Fourth Quarter 1-7/25  1/4   1-3/10 11/25  17/100   6/100  23/100  1/10

    Fiscal 1997:
    First Quarter  1-3/8   3/8   1-5/8   7/16    1/5    1/2     13/50   7/100
    Second Quarter   7/8   5/16   1     17/50    9/100  3/100    1/10   7/100
    Third Quarter   11/25  1/4   47/100 27/100   1/20   1/50     7/100  7/200
    Fourth Quarter   1/2   1/4    3/5    7/25    3/100  3/100    2/50   2/50


                                    Units

                                  Bid                     Asked
                            High       Low            High     Low
        Fiscal 1996:
        First Quarter        1/4       1/8            7/8      7/16
        Second Quarter       9/16      1/8          1-1/2      7/16
        Third Quarter        1/2       1/2            5/8      1/2
        Fourth Quarter        1        1/4          1-3/4      3/4

        Fiscal 1997
        First Quarter      1-1/4       1/4         1-15/16     7/8
        Second Quarter      13/16      1/4          1-1/4      7/8
        Third Quarter        1/2       1/4          1-3/16     1/2
        Fourth Quarter       1/2       7/25          22/25    63/100

        At January 12, 1998,  there were  208  holders of  record  of
   Common Stock  and 82  holders  of record  of  Class A  Warrants.  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 and warrant agent for the  Class
   A Warrants.
<PAGE>
        There have been no cash dividends paid in fiscal years 1996  and
   1997.  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 1997, the Company   completed 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.    The
   restructuring was  completed    when  the  Company: (1)  completed  a
   private placement  of 2,400,500  units comprised  of two  shares   of
   Common Stock and   one common stock   purchase warrant entitling  the
   holder  to purchase one share  of Common Stock  at $1.00  per   share
   within   a  specified   period  (collectively,   the 'Warrants'), for
   an aggregate  price of  $1,200,250; (2)  reached agreement  with  its
   primary lender, Silicon, in  which $3,175,104  in  debt owed  by  the
   Company to    Silicon was  converted  into 2,088,884  shares  of  the
   Company's Common Stock;  and (3) reached   agreements   with  certain
   trade  creditors  pursuant  to  which  such  trade   creditors:   (i)
   converted an  aggregate   of approximately  $533,000   owed to   them
   into shares  of Common  Stock at  a price  of $1.52  per share;  (ii)
   forgave trade debt in the amount of approximately $201,000; and (iii)
   accepted certain  promissory notes  (having a  maturity date   up  to
   twenty-four months  from the date thereof and an applicable  interest
   rate of 10%) in payment  of additional trade debt totaling  $335,000.
   See Description of Securities _ Class Band Class C Warrants and Notes
   2, 3 and 5 of the Financial Statements included elsewhere herein.


       In connection with the restructuring, the Company increased sales
   and marketing  efforts  by  increasing its  sales  representation  in
   locations  from  which  the  Company  had  previously  withdrawn  and
   reintroducing the direct mailing of catalogs describing the  products
   and services  provided  by the  Company.  The Company  attributes  an
   increase of 27% and 30% in sales during the third and fourth quarters
   of fiscal  1997,  respectively,  over  the  prior  year's  comparable
   quarters to  the above  referenced increase  in sales  and  marketing
   efforts.

        In addition, subsequent to fiscal 1997, the Company was able  to
   replace its former  credit facility with  Silicon with  a new  credit
   facility with  Harris  Trust and  Savings  Bank which  increased  the
   Company's credit  line from  $1.8 million  to  $2.5 million  and  the
   extended of the  term of the  Company's line of  credit to March  31,
   2000.    See  Notes 2  and 3  to the  Financial Statements  contained
   elsewhere herein.
<PAGE>
   Results of Operations

        Sales increased by $1,098,358 or  13% from $8,469,994 in  fiscal
   1996 to  $9,568,352 for  the  year ended  September  30, 1997.    The
   previously discussed completion of the financial restructuring during
   the first  quarter of  fiscal 1997  enabled the  Company to  increase
   marketing efforts  and expand  its  sales/service which  resulted  in
   sales increases of   $513,386 (a  27% increase) and  $623,942 (a  30%
   increase) during  the  third  and fourth  quarters  of  fiscal  1997,
   respectively versus the prior year's  third and fourth quarters  were
   the dominant reasons for the overall increase in sales.

        The Company's gross  margin on sales  increased from  $2,102,251
   for fiscal 1996 to $2,675,269 for the fiscal year ended September 30,
   1997 primarily as a result of the increase in sales.  Gross margin as
   a  percentage of sales increased from 24.8% in fiscal 1996 to 28%  in
   fiscal 1997.  The increase in  gross margin as a percentage of  sales
   for  the  fiscal   year  ended  September   30,  1997  is   primarily
   attributable to the rebate programs the  Company was able to  achieve
   as a result of  increases in sales during  the latter part of  fiscal
   1997, the  Company's continued  dependence  on service  revenue,  the
   Company's sales of private  labeled products which have  historically
   provided for greater  margins, and  the completion  of the  Company's
   financial restructuring  which  provided  the  Company  with  greater
   financial ability to purchase greater quantities at lower costs.

        Selling, general and administrative ("SG&A") expenses  decreased
   from  $3,147,600  in  fiscal  1996  to  $2,572,419  in  fiscal  1997.
   Although salaries  for  sales/service  representatives  increased  by
   approximately 70% from  $90,903 during the  fourth quarter of  fiscal
   1996 to $154,637 during the fourth quarter of fiscal 1997 as a result
   of the addition of new sales/service representatives, the Company was
   able to reduce SG&A primarily due to the completion of the  Company's
   financial restructuring which  among other  things, reduced  expenses
   attributed to professional fees.

        Amortization and depreciation expense  decreased  from  $427,955
   for the fiscal  year ended  September 30,  1996 to  $307,797 for  the
   fiscal year  ended September  30, 1997.   The  decrease is  primarily
   attributable to the  elimination   of amortization  expense that  the
   Company incurred during fiscal 1996 pertaining to the acquisition  of
   certain software rights.

        Interest Expense  decreased from  $737,942  for fiscal  1996  to
   $150,612 for  fiscal 1997.   The  decrease in  interest is  primarily
   attributable to the conversion of: i) approximately $3.2 million owed
   to Silicon; ii) the conversions to  equity and/or write-offs of  over
   $735,000  of  trade  debt;  and  iii)  conversions  of  approximately
   $300,000 in certain 9% notes and notes to related parties.   
   In  connection with the above conversion of debt  to equity by 
   Silicon, the  Company recorded an  accrued  restructuring  charge of
   $145,125 which also served to reduce the interest expense reported
   from November 1996 through July of 1997.                          
<PAGE>
        As a  result  of the  foregoing  factors, the  Company  reported
   positive  earnings   before   interest,   taxes,   depreciation   and
   amortization ("EBITDA") and extraordinary  items for the fiscal  year
   ended September 30, 1997 of $102,850 versus a loss of $1,043,302  for
   the prior fiscal year.   Although the Company does not represent that
   the EBITDA is  a substitute for  GAAP based  financials, the  Company
   believes that  it is  a good  measurement of  the Company's  progress
   given the amount  of income that  is offset  by amortization  expense
   primarily   associated with  the  acquisition of  Midwest  Ophthalmic
   Instruments Co., Inc which  took place during  the fourth quarter  of
   fiscal 1994.    With interest,  taxes, depreciation and  amortization
   included, and a  gain from restructuring  of $2,871,513, the  Company
   reported net  earnings  of  $2,515,954  for  the  fiscal  year  ended
   September 30, 1997  versus a  net loss  of $1,977,939  for the  prior
   fiscal year.  As a  result of the above,  the Company reported a  net
   earnings per share of  $.15 for the fiscal  year ended September  30,
   1997 versus a net loss per share of $.25 for the prior fiscal year.

   Liquidity and Capital Resources

        Cash flow  from  operations  was a  negative  $1,039,368  and  a
   positive  $51,980  in  fiscal  1997  and  1996  respectively.     The
   $1,091,348 decrease was primarily attributed to increases in accounts
   receivable, inventory and prepaid  expenses to support the  Company's
   growth, and  a reduction of  customer deposits and accounts  payable.
   The Company financed  the negative cash  flows with  the proceeds  of
   private placements of securities  during the quarters ended  December
   31, 1996 and  June 30,  1997.  See  Notes 3  and 5  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.   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, 1995.  See  Note 3 to the Financial Statements
   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
   Trust and Savings  Bank ("Harris Bank")  of Chicago,  Illinois 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  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.

   Outlook

        The Company intends to grow in  the future through the  addition
   of  outside  sales/service  representatives,  particularly  in   more
   heavily-populated  markets  in  which  it  currently  does  not  have
   representation,  and  the  continued  distribution  of  its  recently
   reintroduced direct mail catalog.  Based on the Company's  experience
   in distributing catalogs for over 10 years (including the  experience
   of an acquired company), the Company believes that the catalog  will:
   (i)  supplement  the  direct  sales/service  representative(s);  (ii)
   provide sales in  territories not geographically  represented by  the
   Company; (iii) educate the marketplace  as to the latest  technology;
   (iv)  enhance  the  Company's  name-recognition  in  the   ophthalmic
   marketplace; and (v) provide an overall source of advertising for the
   Company.

        The Company believes that certain growth opportunities exist for
   the Company due  to the  aging of  the population  and the  continued
   development of automated/computerized equipment (see "DESCRIPTION  OF
   THE BUSINESS--The Industry")  as well as  the increase  in the  large
   health care organizations versus individual or small group practices.
   The  number  of  Americans  covered  by  health  care   organizations
   increased to 63.3 million people in  mid-1996, from 47.3 million   in
   mid-1994, representing  an  increase from  18%  to 24%  of  the  U.S.
   population.   (Source:   November 1997  issue  of Vision  Council  of
   America).  As  a result, the  Company believes that  there will be  a
   greater need  for ophthalmic  instrument companies  that can  provide
   sales and service  on a national  basis. Given  the Company's  recent
   increase in geographical  coverage, the Company  believes that it  is
   one of  only a  few companies  in the  industry that  would be  in  a
   position to fulfill  the expanded sales  and service requirements  of
   such organizations.

         The Company is  currently unable to  raise capital through  the
   issuance of additional shares of Common Stock or warrants, options or
   other securities exercisable for or convertible into shares of Common
   Stock because of an insufficiency in the number of authorized  shares
   of  Common   Stock.     See   "CERTAIN  RELATIONSHIPS   AND   RELATED
   TRANSACTIONS."  The Company  intends to fund  its operations and  the
   expansion of its business through the retention of earnings, if  any,
   and funds from the Harris Line of Credit.
<PAGE>
   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  redcution 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 February  1997,  the  Financial  Accounting  Standards  Board
   issued SFAS  No.  128,  "Earnings  per  Share."    The  new  standard
   simplifies  the  standards  for  computing  earnings  per  share  and
   requires presentation of two new amounts: basic and diluted  earnings
   per share.  The Company will adopt this standard when it reports  its
   operating results  for the  first quarter ending December  31,  1997.
   When the  Company adopts  SFAS  No. 128,  it  expects to  report  the
   following restated eanrings (loss) per share for  the  fiscal   years
   ended  September  31,  as  follows:

                                 1997            1996
        Basic                    $.15           ($.25)
        Diluted                  $.15           ($.25)


        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.

<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 (Deficit) Equity             F-7

   Notes to the Financial Statements                       F-8

<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 Co.,  Inc. as  of  September 30,  1996  and 1997  and  the
   related statements of operations, stockholders' (deficit) equity, 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, 1996  and
   1997, and the results  of their operations and  their cash flows  for
   the years then ended in conformity with generally accepted accounting
   principles.

   /s/  BDO Seidman, LLP

   Chicago, Illinois
   January 9, 1998
<PAGE>
<TABLE>
                    FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                              BALANCE SHEETS
                                  ASSETS

                                       September 30,    September 30,
                                            1996             1997
                                       -------------    -------------
   <S>                                   <C>           <C>
   Current Assets:
      Cash and cash equivalents           $        -      $        -
      Accounts receivable, less
        allowance for doubtful
        accounts of $40,135 and
        $23,438, respectively                720,277         851,574
      Inventory, less valuation
        allowance of $100,000
        and $60,000, respectively          1,356,057       1,583,510
      Prepaid expenses                        19,027         170,787
                                           ---------       ---------
         Total current assets              2,095,361       2,605,871
                                           ---------       ---------

   Property and equipment, at cost:
      Furniture and equipment                 605,638         638,938
      Automobiles and trucks                  119,193         119,193
      Leasehold improvements                  109,408         121,915
                                            ---------       ---------
                                              834,239         880,046
      Less: Accumulated depreciation
      and amortization                        618,394         707,837
                                            ---------       ---------
         Total property and equipment         215,845         172,209
                                            ---------       ---------
   Other assets:
      Deposits                                 13,935          13,903
      Intangible assets, net of
      accumulated amortization of
      $706,623 and $924,978, respectively   2,272,271       2,053,916
                                            ---------       ---------
         Total other assets                 2,286,206       2,067,819
                                            ---------       ---------
         Total assets                      $4,597,412      $4,845,899
                                           ==========      ========== 

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                    PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
                 FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                             BALANCE SHEETS
                                (CONTINUED)
              LIABILITIES AND STOCKHOLDERS'  (DEFICIT) EQUITY

                                        September 30,  September 30,                                  
                                            1996          1997
                                        -------------  -------------
   <S>                                  <C>            <C>
   Current liabilities:
      Bank overdrafts                     $   55,597     $   95,309
      Current portion of long-term debt      567,395        157,127
      Accounts payable                     1,180,475      1,075,382
      Notes payable to bank                4,375,304              -
      Current portion of capitalized
      lease obligations                       16,125         18,314
      Deposits                               429,844        114,839
      Accrued liabilities                    859,279        259,089
      Notes payable to related parties       215,188              -
                                           ---------      ---------
         Total current liabilities         7,699,207      1,720,060
                                           ---------      ---------
   Long-term debt:
      Notes payable to bank, long term             -      1,659,314
      Long-term debt, less current portion    93,722              -
      Capitalized lease obligations,
      less current portion                    30,695         12,382
                                           -------        ---------
         Total long-term debt                124,417      1,671,696
                                           ---------      ---------
         Total liabilities                 7,823,624      3,391,756
                                           ---------      ---------
   Stockholders' (deficit) equity:
      Common stock: $0.001 par value;
      authorized 25,000,000 shares;
      9,544,810 issued and outstanding
      at September 30, 1996 and 19,583,378
      issued and outstanding at
      September 30, 1997                       9,545         19,583
      Additional paid-in capital           8,868,577     11,022,940
      Accumulated deficit                (12,104,334)    (9,588,380)
                                         ------------    -----------
         Total stockholders' (deficit)
         equity                           (3,226,212)     1,454,143
                                         ------------    -----------
         Total liabilities and            
         stockholders' (deficit) equity   $4,597,412     $4,845,899
                                         ============    ===========

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                    PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
                 FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                         STATEMENTS OF OPERATIONS

                                         For the year ended
                                            September 30,


                                        1996              1997
                                        ----              ----

   <S>                              <C>             <C>
   Sales                               $8,469,994      $9,568,352

   Less:
     Cost of Sales                      6,367,743       6,893,083
     Selling, general and
     administrative expenses            3,147,600       2,572,419
     Amortization and depreciation        427,955         307,797
                                       -----------     -----------
   Loss from operations                (1,473,304)       (204,947)
                                       -----------     -----------

   Other income (expenses):
      Interest income                          54               -
      Interest expense                   (737,942)       (150,612)

      Other  expense                        1,993               -
                                       -----------     -----------

         Other expense, net              (735,895)       (150,612)
                                       -----------     -----------

   Loss before extraordinary item      (2,209,199)       (355,559)
                                       
   Extraordinary item, gain
   from debt restructuring                231,260       2,871,513
                                      ------------    ------------
   Net (loss) income                  $(1,977,939)     $2,515,954
                                      ============    ============
   Loss (income) per common share:

     Loss before extraordinary             $(0.28)         $(0.02)
   item
                                      ============    ============
      Net ( loss) income                   $(0.25)          $0.15
                                      ============    ============
      Weighted average number
   of common shares outstanding         7,854,393      16,719,389
                                      ============    ============

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                    PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
                 FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
                          STATEMENT OF CASH FLOWS

                                            For the year ended
                                               September 30,
                                            1996         1997
   <S>                                   <C>           <C>
   Cash flows from operating
   activities:
      Net (loss) income                  $(1,977,939)  $ 2,515,954
      Adjustments to reconcile net
      (loss) income to net cash used
      in operating activities:
         Depreciation                        103,351        89,443
         Amortization                        324,604       218,354
         Gain from debt restructuring       (231,260)   (2,871,513)
         Professional service performed
         in exchange for common stock        312,374             -
         Changes in current assets and
         liabilities:
            Accounts receivable              610,907      (131,297)
            Inventory                      1,189,883      (227,453)
            Prepaid expenses                   9,269      (151,759)
            Other assets                      14,363            32
            Deposits                          70,083      (315,005)
            Accounts payable, trade and
            accrued liabilities             (373,655)     (166,124)
         Net cash provided by (used in)
         operating activities                 51,980    (1,039,368)
                                           ---------    -----------
   Cash flows from investing activities:
     Acquisition of equipment                (6,331)       (45,807)
                                           ---------    -----------
      Net cash used in investing activities  (6,331)       (45,807)
                                           ---------    -----------
   Cash flows from financing activities:
      (Decrease) increase in bank
      overdrafts                           (195,481)        39,712
      Payments on capital leases            (21,053)       (16,124)
      (Decrease) in borrowings under
      line of credit                        (20,822)      (142,686)
      Net proceeds from issuance of
      common stock                             -         1,365,263
      Increase (decrease) in long-term debt   4,198       (160,990)
      Repayment of debt                     (27,679)             -
      Proceeds from issuance of
      Promissory notes-related party        215,188              -
                                          ---------      ---------
        Net cash (used in) provided by     
         financing activities               (45,649)     1,085,175
                                          ---------      ---------
   Net change in cash                             -              -
                                          ---------      ---------
   Cash and cash equivalents at
    beginning of year                             -              -
                                          ---------      ---------
   Cash and cash equivalents  
    end of year                           $       -      $       -
                                          =========      =========
   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
                 FRANKLIN OPHTHALMIC INSTRUMENTS CO., INC.
               STATEMENTS OF STOCKHOLDER'S (DEFICIT) EQUITY

                              Common stock                          Total
                    par value $0.001    Additional              Stockholder's
                      Number of          paid-in                    Equity
                       shares    Amount  capital     Deficit      (deficit)
<S>                  <C>       <C>     <C>         <C>           <C>
BALANCE,
September 30, 1995   7,656,025 $ 7,656 $ 8,240,020 $(10,126,395) $(1,878,719)


Issuance of stock for                
  services              16,500      17     12,358            -        12,375
Issuance of stock for
  services (Note 6)    600,000     600    299,400                    300,000
Conversion of
  accounts payable
  (Note 5)             102,285     102     25,469                     25,571

Conversion of
  shareholder notes    720,000     720    179,280                    180,000
  payable (Note 4)
Conversion of 9%
  notes (Note 5)       450,000     450    112,050                    112,500
   Net loss                                         (1,977,939)   (1,977,939)

BALANCE,             ---------   -----  ---------   -----------   -----------
September 30, 1996   9,544,810   9,545  8,868,577  (12,104,334)   (3,226,212)
                     
Private placements-
  quarter ended
  12/31/96 (Note 6)  4,801,000   4,801  1,195,449                  1,200,250
Conversion of notes        
  payable (Note 5)     248,684     248     61,923                     62,171
Silicon conversion
 of bank debt
 (Note 2,3,6)        2,088,884   2,089    520,132                    522,221
Private placement-
  quarter ended
  6/30/97 (Note 6)   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,
 September 30, 1997 19,583,378  19,583  11,022,940  (9,588,380)    1,454,143
                    ==========  ======  ==========  ===========    =========                              
                  THE ACCOMPANYING NOTES ARE AN INTEGRAL
                    PART OF THESE FINANCIAL STATEMENTS.
</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 military 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.
<PAGE>
        (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.

        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.

        Amortization expense related to  intangible assets was  $324,604
   for the year ended September 30, 1996 and $218,354 for the year ended
   September 30, 1997.

        (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

        Net income/(loss) per common share  is computed by dividing  net
   income/(loss)  by  the  weighted  average  number  of  common  shares
   outstanding.  Outstanding common  stock options, warrants and  shares
   of  common  stock  issuable   upon  the  conversion  of   outstanding
   convertible debentures have been excluded from the computation of net
   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, 1997 reasonably approximate the
   fair values for accounts receivable and payable.

        (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  $44,000 in fiscal  1996 and  approximately
   $57,000 in fiscal 1997.
<PAGE>
        (L)  Reclassifications

        Certain reclassifications  have  been  made to  prior  year  for
        consistency purposes.

        (M)  Recent Accounting Pronouncements

   In February  1997, the  Financial Accounting  Standards Board  issued
   SFAS No. 128, "Earnings per Share."  The new standard simplifies  the
   standards for computing earnings per share and requires  presentation
   of two  new amounts:  basic  and diluted  earnings  per share.    The
   Company will  adopt  this  standard when  it  reports  its  operating
   results for the  first quarter  ending December  31, 1997.  When  the
   Company adopts  SFAS No.  128, it  expects  to report  the  following
   restated earnings (loss) per share for the fiscal years ended
   September 31, as follows:
                                 1997           1996
        Basic                    $.15           ($.25)
        Diluted                  $.15           ($.25)
          

        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.   RESTRUCTURING

        During the first quarter of fiscal 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, its  primary
   trade  creditors  and  certain   of  its  debtholders  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.
<PAGE>
             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 extraordinary
   gains of $231,260 and $2,871,513 for the fiscal years ended 1996  and
   1997, respectively. 


        3.   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, 1995. 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
   Trust and Savings  Bank ("Harris Bank")  of Chicago,  Illinois 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  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 agreement  with Harris  Bank, the  Company's
   notes payable  to bank  have been  classified  as long-term  debt  at
   September 30, 1997.


        4.   SHORT TERM DEBT - RELATED PARTY

        In September 1995, Michael  J. Carroll and  James J. Urban,  the
   Company's  President/Chief   Executive   Officer  and   Senior   Vice
   President/Chief Operating Officer, respectively, loaned an  aggregate
   of $100,000 to the Company in  exchange for 90-day promissory  notes.
   In addition,  Linda  Zimdars, a  member  of the  Company's  board  of
   directors, loaned  $100,000 to  the Company  in exchange  for  90-day
   promissory notes. The notes to Ms. Zimdars were personally guaranteed
   by Messrs. M.  Carroll and  Urban.  The  interest rate  on the  above
   notes was 15% per annum.  In December 1995, a payment of $10,000  was
   made on  the note  to Messrs.  Carroll  and Urban  and a  payment  of
   $10,000 was made  on the note  to Ms. Zimdars.   In  April 1996,  the
   notes were amended to extend their  maturity to July 1, 1996, and  in
   September 1996,  the notes  were converted  to  Common Stock  in  the
   Company at the conversion rate of $.25 per share.

        In December 1995,  the Company borrowed  an additional  $280,000
   under 60-day promissory notes  bearing interest at  6% per annum  and
   note origination fees of $17,000 (6%).  Of the aggregate of $280,000:
   (i) $50,000  was borrowed  from each  of  Michael Carroll  and  James
   Urban; (ii) $80,000 was borrowed from Ms. Zimdars; and (iii) $100,000
   was borrowed from Tiger Eye  Capital , L.L. C.  ("Tiger Eye").    The
   notes were  repaid  in  February 1996.    Tiger  Eye  had  consulting
   agreements with  the  Company  which provided  for  the  issuance  of
   600,000 shares of common  stock in connection  with the rendering  of
   investor and public relations services.

        In February  1996, the  Company borrowed  $150,000 from  Messrs.
   Carroll and  Urban, and  Ms. Zimdars  under 24-day  promissory  notes
   bearing interest at the rate of 1% per annum above the prime  lending
   rate in effect from time to time.   A loan origination fee of 3%  was
   also paid.  Of the aggregate  of $150,000, $50,000 was borrowed  from
   each of Messrs. Carroll and Urban, and Ms. Zimdars.  In March 1996, a
   payment of $12,500 was made to each of Messrs. Carroll and Urban, and
   in May 1996, the  balance of the notes  to Messrs. Carroll and  Urban
   were repaid.  The note to Ms. Zimdars was repaid in May 1996.
<PAGE>
        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.  In addition, warrants exercisable  for
   $1.00  were  also  issued  as  part  of  the  participation  in   the
   aforementioned Private Placement offering.


        5.   LONG-TERM DEBT

        Long-term debt consists of the following:
                                                      September 30,
                                                  1996            1997
    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                                 $16,161       $ 4,668

   9% notes payable                                 25,000             -

   10% trade creditor promissory note payable
    monthly through October 1998                   540,000        97,421

   10% trade creditor promissory note payable
    monthly from December 1996 through
    November 1998 of which $14,567
    represents amounts for deferred interest.      79,956         55,038
                                                ---------        -------
   Total long-term debt                           661,117        157,127

   Less current portion                           567,395        157,127
                                                ---------      ---------
   Long-term debt, less current portion         $  93,722      $       -
                                                =========      =========

        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 6 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.
<PAGE>
        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.

        6.   STOCKHOLDERS' EQUITY

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

        In addition to the securities transactions described in Notes 2,
   3, 4 and 5 above, the following occurred during fiscal 1996 and 1997:

        In  December  1995,  the  Company  entered  into  a   consulting
   agreement with Tiger Eye which provides for the rendering of investor
   and public relations services.  Pursuant to such agreement, Tiger Eye
   was  entitled to receive 300,000 shares  of Common stock: 100,000  of
   which were issuable  upon execution of  the agreement  and 33,333  of
   which were issuable each month through  June 1996.  The initial  term
   of the  agreement commenced  January 1,  1996.   Such  agreement  was
   amended to provide  for performance thereunder  at such  time as  the
   Company became current  in its  public reporting  under the  Exchange
   Act.

        In July 1996, pursuant to the  terms of a consulting  agreement,
   as amended, between  the Company and  Tiger Eye,  the Company  issued
   600,000 shares of  the Company's  common stock to  Tiger Eye.   As  a
   result of  the above,  the Company  recorded an  expense of  $300,000
   during the fourth quarter of fiscal 1996.

        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.
<PAGE>
        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 has been  reduced
   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  has been  increased  from
   2,062,500 to 4,487,740.   As  a consequence  of the  increase in  the
   number of shares issuable upon the exercise of the Class A  Warrants,
   the  Company  no  longer  has  sufficient  shares  of  Common   Stock
   authorized to  provide for  the exercise  of all  of the  outstanding
   common stock purchase warrants and options. To remedy this situation,
   Michael J. Carroll and James J. Urban, the Company's chief  executive
   officer and  chief operating  officer  respectively, have  agreed  to
   surrender to  the Company  for redemption  that number  of shares  of
   Common Stock equal to  any such Stock Deficiency  up to an  aggregate
   amount of 2,450,000 shares. In the  event that an amount of  warrants
   is exercised such that a Stock Deficiency is created,the Company will
   use the proceeds from such exercise of warrants to fund the buy  back
   of stock from Messrs. M. Carroll and Urban.  The price per share paid
   to Messrs. Carroll and Urban will equal the exercise price per  share
   under the common stock purchase warrants  or options the exercise  of
   which results in such  deficiency, with the  result that the  Company
   will receive no  net benefit  from the  exercise of  the warrants  or
   options.  Until such shares are redeemed, if at all, they will remain
   the property  of Messrs.  Carroll  and Urban,  although  certificates
   representing the shares will be held  in the custody of the  Company.
   The agreement  terminates  upon  the earlier  to  occur  of  (i)  the
   effectiveness of  any  amendment  to  the  Company's  certificate  of
   incorporation  increasing  the  authorized  shares  of  Common  Stock
   sufficient to eliminate  any potential Stock  Deficiency or (ii)  the
   expiration of a sufficient number  of common stock purchase  warrants
   and/or options in  an amount  sufficient to  eliminate any  potential
   Stock Deficiency.
<PAGE>
        (B)  Outstanding Stock Purchase Warrants

   Class A  Warrants.   A total  of 2,062,500   Class A  Warrants   were
   issued and outstanding atSeptember  30, 1997.   The Class A  Warrants
   were issued as part of   the Units in  the  Company's Initial  Public
   Offering.  Each  Class  A  Warrant  originally  entitled  the  holder
   thereof to purchase one share of Common Stock at a price of $5.00 per
   share until July 23, 1998.  However, the warrant agreement pertaining
   to the Class  A Warrants (the  "Warrant Agreement") contains  certain
   anti-dilution provisions,  which have  been triggered  by  subsequent
   sales by the  Company of shares  of Common Stock  at less than  "fair
   market value"  as defined  in the  Warrant  Agreement.   These  anti-
   dilution provisions both  reduce the exercise  price of  the Class  A
   Warrants and increase the number of  shares of Common Stock that  may
   be purchased  on  the exercise of the  Class A Warrants.   As of  the
   date hereof, the exercise price of the Class A Warrants is $2.30  per
   share, and the  total number of  shares of Common  Stock that may  be
   purchased upon the  exercise of all  Class A  Warrants is  4,487,740.
   Each  Class A Warrant is  redeemable by   the
   Company, at its  option, for   $0.10 per  warrant, at  any time  upon
   delivery  by the  Company of 30  days  prior  written notice, if  the
   last  sale price, or the  average of  the bid  and asked prices,  per
   share  of Common Stock,  as  reported by  the  principal exchange  on
   which the    Common Stock    is then    traded,  NASDAQ,   the    OTC
   Electronic   Bulletin  Board   or  the   National  Quotation   Bureau
   Incorporated, as the case may be,  equals or exceeds $6.00 per  share
   for 20 consecutive trading days ending  within 15  days prior to  the
   date of the notice  of redemption.  Upon delivery by the  Company  of
   30 days written notice  to all holders of the  Class A Warrants,  the
   Company will have the  right,  subject to compliance with Rule  13e-4
   under the Securities Exchange  actof 1934, as  amended (the 'Exchange
   Act'), and the   filing of   Schedule 13E-4,  to reduce the  exercise
   price and/or extend the term of the  Class A Warrants.

        Class B  and Class  C Warrants.   A  total of  2,156,500   Class
   B Warrants  and 244,000  Class   C were  issued   and outstanding  at
   September 30, 1997.  The Class   B Warrants were issued  on  November
   25, 1996,  and the Class C Warrants were issued on December 30, 1996,
   each as part of a unit offered in a private placement  consisting  of
   two shares of   Common  Stock   and   one   common   stock   purchase
   warrant Each   Class  B Warrant  and Class  C   Warrant entitles  the
   holder thereof to purchase  one share of Common Stock at  a price  of
   $1.00 per   share between   6   months and   18  months   after   the
   issuance date.    Each  Class B    Warrant  and Class  C  Warrant  is
   redeemable by the Company, at its  option, for $0.10 per warrant,  at
   any time  after September 30, 1997 upon delivery by the Company of 30
   days prior written  notice, if  the closing  bid price  per share  of
   Common Stock, as  reported by the  principal  exchange on  which  the
   Common Stock  is then  traded, NASDAQ, the  OTC Electronic   Bulletin
   Board  or the  National  Quotation Bureau Incorporated, as  the  case
   may  be,  equals or   exceeds  $3.00   per share  for 20  consecutive
   trading days ending within 15 days prior to the date of the notice of
   redemption.
<PAGE>
        Other Warrants.   In  addition to  the Class  A Warrants,  Class
   B Warrants and Class  C  Warrants, there  are  also outstanding:  (a)
   44,119 warrants issued   to  Silicon   in connection   with   certain
   renewals    or  modifications  of  the  Company's  lines  of  credit,
   exercisable on or before March 31,  2000 at   a price  of $0.50   per
   share;   (b) 400,000  warrants  issued to  Prinz-Franklin, L.L.C.  in
   connection with  a  private placement  during  the third  quarter  of
   fiscal, 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,  (c)  a warrant  to purchase 25,000   shares  of Common  Stock
   issued to  Linda   S. Zimdars,  a director  of the   Company,  and  a
   warrant to purchase 25,000  shares of Common  Stock issued to  Dwayne
   Podgurski, a former employee  of the Company,  both exercisable at  a
   price of  $1.00  per share  until  December   1997  and  (d)  125,000
   warrants  issued to  the underwriter in  connection with the  initial
   public offering by the  Company exercisable at a  price of $5.00  per
   share until July 23, 1998.


        The following  sets forth  the  common stock  purchase  warrants
   outstanding which were exercisable as of September 30, 1997:

        Shares Obtainable        Per Share                Exerciseable
        on Exercise              Exercise Price           Through

        44,119                   $.50                     March 2000

        50,000                   $1.00                    December 1997

        2,156,500                $1.00                    May 1998

        244,000                  $1.00                    June 1998

        4,487,740                $2.30                    July 1998

        200,000                  $1.00                    April 2001

        200,000                  $1.00                    May 2001


        (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.
<PAGE>
        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.  The options to be granted
   under the 1993  Plan included options  to purchase  shares of  Common
   Stock pursuant to a  formula by which  each non-employee director  is
   granted non-qualified  options to  purchase 15,000  shares of  Common
   Stock each year.

        In March  of 1997,  the Company's  Board of  Directors voted  to
   eliminate the annual  automatic granting of  options to  non-employee
   directors that was established under the 1993 Stock Option Rights and
   Appreciation Plan.

        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  1994  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.
<PAGE>
         The following sets forth the activity for the 1993 Plan and the
   1994 Plan for fiscal 1996 and 1997:

                             1993 Plan                      1994 Plan
                        Shares      Exercise Price    Shares    Exercise Price
   Outstanding at
    September 30, 1995  90,000    $  .75-4.625       96,000     $2.625-3.19

   Fiscal 1996
        Granted         30,000    $     .50                -               -
        Forfeited            -            -           28,500     $2.625-3.19
   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

   All outstanding options reflected above are currently exercisable.

        Options issued subsequent to January 1, 1996 have been issued to
   non-employee directors and are not  material under the provisions  of
   SFAS No. 123.

        7.   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:

                                                   September 30,
                                                1996           1997
        Deductible temporary differences
        Net operating loss carryforwards      $3,700,000      $2,874,000
        Allowance for doubtful accounts           16,000          10,000
        Valuation reserve for inventory
         obsolescence                             40,000          24,000
        Valuation allowance for deferred
          tax assets                          (3,756,000)     (2,908,000)
                                              -----------     -----------
             Net deferred tax asset           $        -      $        -
                                              -----------     -----------
        The valuation allowance was revised during 1997 as net operating
   loss carryforwards were utilized to offset taxable income.

        As of September  30, 1997, the  Company has  net operating  loss
   carryforwards of $7,100,000 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 2007  to  fiscal 2009.
<PAGE>
        8.   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  $157,411  for the  year  ended September  30,  1996  and
   $112,696 for the year ended September 30, 1997.

         Future obligations  under the  non-cancelable operating  leases
   with initial remaining terms in excess  of one year at September  30,
   1997 are as follows:


        Year Ending         Minimum               Minimum 
        September 30,    Rental Payments      Sublease Income      Net

        1998                  185,955              55,464        130,491
        1999                  185,955              56,907        129,048
        2000                  126,522               4,833        121,689
        2001                   70,653                  -          70,653
                             --------            --------       --------
        Total                $569,085            $117,204       $451,881


        The Company  leases  equipment  under  capital  lease  financing
   arrangements.   Amortization expense  associated with  the  equipment
   leases for the years  ended September 30, 1996  and 1997 was  $15,974
   and $15,794, respectively.


        Future minimum capital lease payments are as follows:

         Year ending September 30,                   Amount
         -------------------------                   -------
                  1998                               $21,109
                  1999                               $13,013
                                                     -------
             Total before interest deduction         $34,122
             Less amount representing interest       $ 3,397
             Capital lease obligations               $30,725
                                                     =======
<PAGE>
        9.   STATEMENT OF CASH FLOWS

                                                For the year
                                             ended September 30,
                                               1996        1997
                                               ----        ----
   Supplemental disclosure of cash flow information:
   Cash paid during the period for
        Interest                           $400,846       $331,569
        Income taxes                       $  3,000       $      -

   Supplemental schedule of non-cash
    investing and financing activities:

       Note payable issued to vendor for 
       trade debt from inventory purchases $  66,631      $      -

       Common stock issued in connection 
       with the conversion of debt           318,071       799,138
        Common stock for services            312,374             -
                                           -----------    ---------
        Total non-cash investing and
             financing activities           $697,076      $799,138
                                           =========      ==========

        10.  RELATED PARTY TRANSACTIONS

         The Company has an agreement  with a sole proprietorship  owned
   by a member of the board of directors, to provide consulting services.
   Fees  paid to this sole  proprietorship during fiscal 1996  and  1997
   were $21,000 and $24,250 respectively.

        11.   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 year ended September 30, 1997.  The year
   end for the plan is based on a calendar year.



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

        None.
<PAGE>
   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, 1997:

        Name                    Age   Position with the Company

        Michael J. Carroll       58   President, Chief Executive
                                      Officer and Director

        James J. Urban           60   Senior Vice President, Chief
                                      Operating Officer and Director

        Brian M. Carroll         34   Vice-President and Chief
                                      Financial Officer

        Philip G. Winters        48   Director

        Linda S. Zimdars         35   Secretary and Director

        John Prinz               35   Director


        Michael J.  Carroll  was  appointed  President  of  the  Company
   effective January  1, 1995.   In  April 1995,  Mr. Carroll  was  also
   appointed Chief Executive Officer and a director of the Company  upon
   the resignation of Robert A. Davis, the Company's previous  President
   and Chief  Executive Officer.   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).

        James J. Urban  was appointed  Senior Vice  President and  Chief
   Operating Officer effective January 1, 1995 and Chairman of the Board
   of Directors upon the resignation of Dallas Talley on April 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.
<PAGE>
        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.

        Philip G.  Winters has  been a  director  of the  Company  since
   October 1992.  Dr.  Winters is a dentist  and has owned and  operated
   his own general  dentistry practice  in San  Mateo, California  since
   1976.

        Linda S.  Zimdars  has been  a  director and  Secretary  of  the
   Company  since  June  1992.    Currently,  Ms.  Zimdars  operates   a
   management   consulting    practice    specializing    in    business
   reorganization and  sales  and  marketing management.    Ms.  Zimdars
   serves as a  consultant to the  Company.  See  "Consulting and  Other
   Arrangements" below.  Prior to 1995,  Ms. Zimdars was Vice  President
   and Branch  Manager of  Redwood Bank,  with whom  the Company  had  a
   banking relationship from 1984 until approximately April 1995.

        John Prinz became a director of  the Company in May, 1997.   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 (Linda  S.
   Zimdars and Philip G. Winters). 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.  Class  I directors were expected  to
   stand for re-election at the annual meeting of shareholders in  1995,
   and Class  II directors  were expected  to stand  for re-election  in
   1996.   However,  given the  demands on management's time imposed  by
   the Recapitalization, no annual meetings were held in 1995 and  1996,
   and none is scheduled for 1997.   The Company plans to hold its  next
   annual meeting shortly after the end  of fiscal 1997.  When the  next
   annual meeting is scheduled, appropriate arrangements will need to be
   made for the election of the various classes of directors.
<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,  an
   Executive Compensation Committee and a  Stock Option Committee.   Mr.
   Winters and Ms. Zimdars are the only members of the above  referenced
   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 key employees.  The  Stock
   Option 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>
        Based solely  upon a  review of  the Section 16(a) forms
   furnished to the Company  pursuant to Rule  16a-3  the  Exchange
   Act, it is the Company's belief that for the fiscal year ending
   September 30, 1997, the following persons did not timely file
   Section 16(a) ownership forms.  Michael J. Carroll, James J. Urban,
   Brian M. Carroll, Michael Cavuoti and Silicon Valley Bank each filed
   one late report which reported one transaction.  Linda S. Zimdars
   filed one late report which reported three transactions.  Prinz-
   Franklin L.L.C. filed two reports which reported three transactions.


   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.

   Annual Compensation           Long  Term Compensation

Name and Position  Year  Salary Bonus Compensation Awards SARS(#) Compensation

Michael J. Carroll 1997 $72,000   -   $6,000         -     -            -
President & Chief  1996 $66,000   -   $6,000         -     -            -
Executive Officer  1995 $78,445   -   $6,000         -     -            -

   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. As of the date hereof, there are two
   employee directors  (Messrs.  M.  Carroll and  J.  Urban),  two  non-
   employee directors (Dr.  Winters and  Ms. Zimdars)  and 2  additional
   employees that are  eligible participants  in the  1994 Stock  Option
   Plan.   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 Committee  comprised of Linda  S.
   Zimdars and Philip G. Winters.

        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 1993 Stock  Option Plan includes  a formula  granting (on  a
   non-discretionary basis) each director in office, who is not also  an
   employee, on the third Monday in June of each year in which the  1993
   Stock Option Plan  is in  effect, non-qualified  options to  purchase
   15,000 shares of  Common Stock  at price  per share  determined by  a
   formula set forth  in the provisions  of the 1993  Stock Option  Plan
   based on the trading price of the  Common Stock on the date of  grant
   of such  options.   The 1994  Stock Option  Plan does  not provide  a
   formula for non-discretionary grants of options.

        Pursuant to the formula contained in the 1993 Stock Option Plan,
   non-qualified options to purchase an  aggregate of 120,000 shares  of
   Common Stock had  been issued  as of  June 1996  to two  non-employee
   directors (Dr. Winters and Ms. Zimdars) at exercise prices of  $4.00,
   $4.625, $.75  and $.50 per share.    In March of 1997, the  Company's
   Board of Directors voted to  eliminate the annual automatic  granting
   of options to non-employee directors  that was established under  the
   1993 Stock Option Rights and Appreciation Plan.  Except as set  forth
   above, no other options or rights were granted prior to the close  of
   fiscal 1997 under the Stock Option Plans.
<PAGE>
        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.

   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 may  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.  Michael Carroll and James  Urban
   voluntarily reduced  their salaries  in fiscal  1996 such  that  each
   received an  annual  salary of  $66,000  for such  year.    Effective
   October 1, 1996, their  salaries were adjusted to  $72,000.  Each  of
   the employment agreements provides for  bonuses at the discretion  of
   the Company and  reimbursement of  business expenses,  and each  such
   agreement contains a non-compete and confidentiality provision.  Such
   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).
<PAGE>
   Consulting and Other Arrangements

        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,  is a  principal, providing  for
   payment by the  Company to  MAC of  consulting fees  in exchange  for
   investor relations  and  other  marketing services.    The  agreement
   expires on  or  before September  1998   During  fiscal  years  ended
   September 30, 1996 and 1997 the Company paid MAC consulting fees plus
   expenses of  $21,000, and  $24,250, respectively.


   Remuneration of Directors

        Until March 31,  1995, directors who  are not  employees of  the
   Company received compensation  of $750 per  meeting attended.   Since
   April 1, 1995, all meetings  attended by non-employee directors  have
   not been compensated except for expenses incurred.
<PAGE>
   ITEM 11.  SECURITY  OWNERSHIP  OF   CERTAIN  BENEFICIAL  OWNERS   AND
   MANAGEMENT

   PRINCIPAL SECURITY HOLDERS

        The following table sets forth,  at September 30, 1997,  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.

        Name and  Address  of   Number  of Shares    %  of   Shares  of
        Beneficial Owner (1)    Beneficially            Common Stock
                                Owned (2)            Beneficially Owned


        Michael  J.   Carroll   1,551,711 (6)        7.98%
        (3)(4)

        James J. Urban (3)(4)   1,561,710 (7)        7.98%

        Brian M. Carroll (3)    52,105  (8)          0.27%

        Philip G. Winters (4)   660,000 (9)          3.37%

        Linda S. Zimdars (4)    682,359 (10)         3.48%

        Prinz-Franklin L.L.C.   3,300,000 (11)       16.85%

        John Prinz (4) (5)      3,300,000 (12)       16.85%

        Mickey Cavuoti          2,460,000 (13)       12.56%

        Silicon Valley Bank     2,133,003 (14)       10.89%

        All Executive
        Officers & Directors    7,817,885            39.92%
        as a Group (6 Persons)


   (1)  Michael J. Carroll, James J. Urban,  Brian M. Carroll and  Linda
        S.  Zimdars  may   be  contacted  at   1265  Naperville   Drive,
        Romeoville, Illinois 60446.  Philip G. Winters may be  contacted
        at 324  North  San Mateo  Drive,  San Mateo,  California  94401.
        Prinz-Franklin L.L.C. and  John Prinz  may be  contacted at  One
        Northfield Plaza,  Suite  300, 570  Frontage  Road,  Northfield,
        Illinois 60093.
<PAGE>
   (2)  Unless otherwise noted,  the Company believes  that all of  such
        shares  are  owned  of  record  by  each  individual  named   as
        beneficial owner and  that such individual  has sole voting  and
        dispositive power with  respect to  the shares  of Common  Stock
        owned by each of  them.  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  July 17,  1997  have  been  exercised  or
        converted, as the case may be.   It does not give effect to  the
        exercise  of:  (i)   an  outstanding  option   granted  to   the
        underwriter of the  Initial Public Offering  (or the  securities
        underlying the same); or (ii) outstanding Class A Warrants.

   (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)  Includes:   (a)  61,711  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; (d)  255,000 shares  of
        Common Stock issued to the noted stockholder in connection  with
        the conversion  of  certain  promissory notes;  and  (e)  10,000
        shares of Common Stock issuable upon exercise of stock options.

   (7)  Includes:   (a) 71,710  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; (d)  255,000 shares  of
        Common Stock issued to the noted stockholder in connection  with
        the conversion  of  certain  promissory notes;  and  (e)  10,000
        shares of Common Stock issuable upon exercise of stock options.

   (8)  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 and  10,000  Class  B  Warrants
        purchased in a private placement; and (c) 5,000 shares of Common
        Stock issuable upon exercise of stock options.

   (9)  Includes:   (a)  60,000 shares  of  Common Stock  issuable  upon
        exercise of stock options held by  Dr. Winters; and (b)  600,000
        shares of Common Stock issued to Dr. Winters in connection  with
        the conversion of a certain convertible promissory note.
<PAGE>
   (10) Includes:  (a)  597,359  shares   of  Common  Stock  issued   in
        connection with the conversion  of certain promissory notes  and
        otherwise; (b)  60,000  shares  of Common  Stock  issuable  upon
        exercise of stock options; and (c) 25,000 shares of Common Stock
        issuable upon exercise of a warrant.

   (11) Includes 2,900,000 shares of  Common Stock and 400,000  warrants
        to purchase  Common Stock  at an  exercise  price of  $1.00  per
        share.

   (12) Includes 2,900,000 shares of  Common Stock and 400,000  warrants
        to purchase Common Stock owned by Prinz-Franklin over which  Mr.
        Prinz has voting control.

   (13) Includes:  (a)  1,640,000  shares  of  Common  Stock  issued  in
        connection with  the private  placement of  securities; and  (b)
        820,000 shares of Common Stock issuable upon exercise of certain
        Class B Warrants.

   (14) 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 September 1995, Michael Carroll and James Urban loaned an
   aggregate of  $100,000  to  the Company  in  exchange  for  a  demand
   promissory  note.  In addition, Linda S. Zimdars loaned an  aggregate
   of $100,000 to the Company in exchange for a demand promissory  note.
   During September  of 1996,  the balance  due  of $90,000  to  Messrs.
   Carroll and Urban and the balance due of $90,000 to Ms. Zimdars  were
   converted to Common  Stock in  the Company at  the rate  of $.25  per
   share (the same price per share  as offered in the Company's  private
   placement of equity that was commenced on October 1, 1996).

        In February  1996, the  Company borrowed  $150,000 from  Messrs.
   Carroll and  Urban, and  Ms. Zimdars  under 24-day  promissory  notes
   bearing interest at the rate of 1% per annum above the prime  lending
   rate in effect from time to time.   A loan origination fee of 3%  was
   also paid.  Of the aggregate  of $150,000, $50,000 was borrowed  from
   each of Messrs. Carroll and Urban, and Ms. Zimdars.  In March 1996, a
   payment of $12,500 was made to each of Messrs. Carroll and Urban, and
   in May 1996, the  balance of the notes  to Messrs. Carroll and  Urban
   were repaid.  The note to Ms. Zimdars was also repaid in May 1996.

        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 $6,450.00.  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.    In  addition,   warrants
   exercisable for $1.00 were also issued  as part of the  participation
   in the aforementioned private placement offering.

        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 6  to
   the Financial Statements contained elsewhere herein.
<PAGE>
        As a result  of the increase  in the number  of shares  issuable
   upon the exercise of the Class A Warrants in accordance with  certain
   anti-dilution rights, the Company no longer has sufficient authorized
   shares of Common  Stock to  provide for the  exercise of  all of  the
   outstanding  common  stock  purchase  warrants  and  options  ("Stock
   Deficiency").   See  Note  6  to  the  Financial  Statement  included
   elsewhere herein.  To remedy this  situation, Michael J. Carroll  and
   James J.  Urban,  the Company's  chief  executive officer  and  chief
   operating officer  respectively,  have  agreed to  surrender  to  the
   Company for redemption that number of shares of Common Stock equal to
   any such  Stock Deficiency  up to  an aggregate  amount of  2,450,000
   shares. In the event  that an amount of  warrants are exercised  such
   that a Stock Deficiency  would be created, the  Company will use  the
   proceeds from such exercise of warrants to fund the buy back of stock
   from Messrs.  M. Carroll  and Urban.   The  price per  share paid  to
   Messrs. Carroll and  Urban will equal  the exercise  price per  share
   under the common stock purchase warrants  or options the exercise  of
   which results in such  deficiency, with the  result that the  Company
   will receive no  net benefit  from the  exercise of  the warrants  or
   options.  Until such shares are redeemed, if at all, they will remain
   the property  of Messrs.  Carroll  and Urban,  although  certificates
   representing the shares will be held  in the custody of the  Company.
   The agreement  terminates  upon  the earlier  to  occur  of  (i)  the
   effectiveness of  any  amendment  to  the  Company's  certificate  of
   incorporation  increasing  the  authorized  shares  of  Common  Stock
   sufficient to eliminate  any potential Stock  Deficiency or (ii)  the
   expiration of a sufficient number  of common stock purchase  warrants
   and/or options in  an amount  sufficient to  eliminate any  potential
   Stock Deficiency.

         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  Notes  4(B) and  12  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.
<PAGE>
    10.25* Agreement dated  December  30, 1997  between the  Company  and
        Harris Trust and Savings Bank 

    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, 1997.

   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 January 13, 1998.

                                 Franklin Opthalmic Instruments Co.,Inc.



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

                                 Michael J. Carroll, President and
                                 Chief Executive Officer

<PAGE>
        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. President, Chief      January 13, 1998
   Carroll             Executive Officer
   ------------------- and Director
   -------------------
   Michael J. Carroll


   /s/ James J. Urban  Executive Vice        January 13, 1998
   ------------------- President, Chief
   ------------------- Operating Officer
   James J. Urban      and Director


   /s/    Brian     M. Vice President and    January 13, 1998
   Carroll             Chief Financial
   ------------------- Officer
   -------------------
   Brian M. Carroll


   /s/    Philip    G. Director              January 13, 1998
   Winters
   -------------------
   -------------------
   Philip G. Winters


   /s/    Linda     S. Secretary and         January 13, 1998
   Zimdars             Director
   -------------------
   -------------------
   Linda S. Zimdars


   /s/ John Prinz      Director              January 13, 1998
   -------------------
   -------------------
   John Prinz