<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
            FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                 OR

[ ]    TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934
        For the transition period from _____________ to ______________.

                         COMMISSION FILE NUMBER 0-22743


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


         DELAWARE                                         94-3184035
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

                          5451 AVENIDA ENCINAS, SUITE A
                               CARLSBAD, CA 92008
                    (Address of principal executive offices)
                                 (760) 603-9120
                (Registrant's phone number, including area code)

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

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS:

                         (1)   Yes [X]   No [ ]
                         (2)   Yes [X]   No [ ]

As of May 10, 2000 there were 19,522,630 shares of $.01 par value common stock
outstanding.


                                       I


<PAGE>



                        VISTA MEDICAL TECHNOLOGIES, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>                                                                                             <C>
PART 1.   FINANCIAL INFORMATION

Item 1.   Financial Statements

              Consolidated Balance Sheets .......................................................3
              Consolidated Statements of Operations..............................................4
              Consolidated Statements of Cash Flows .............................................5
              Notes to Consolidated Financial Statements ........................................6

Item 2.   Management's Discussion and Analysis
              of Financial Condition and Results of Operations ..................................7

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.............................9

Risks and Uncertainties..........................................................................10

PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K.......................................................21

SIGNATURES.......................................................................................22
</TABLE>

                                       2
<PAGE>

PART 1.  FINANCIAL INFORMATION

Item 1. Financial Statements

                                      Vista Medical Technologies, Inc.
                                        Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                  March 31, 2000        December 31, 1999
                                                                                 ------------------    -------------------
                                                                                   (Unaudited)
<S>                                                                                <C>                  <C>
ASSETS
Current assets:
    Cash and cash equivalents...................................................    $   892,550            $  1,368,910
    Short-term investments & securities available for sale .....................        167,232                 289,189
    Accounts receivable ........................................................      1,318,959               1,177,109
    Inventories ................................................................      1,723,114               2,649,542
    Other current assets .......................................................        246,023                 269,397
                                                                                  --------------           ------------
Total current assets ...........................................................      4,347,878               5,754,147
Property and equipment, net ....................................................      1,187,218               1,320,397
Patents and other assets .......................................................        253,570                 292,178
                                                                                  --------------           ------------
TOTAL ASSETS ...................................................................    $ 5,788,666            $  7,366,722
                                                                                  ==============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ...........................................................    $   344,697            $    985,520
    Accrued compensation .......................................................        196,765                 205,481
    Accrued liabilities ........................................................      1,547,124               1,591,276
                                                                                  --------------           ------------
Total current liabilities ......................................................      2,088,586               2,782,277

Commitments
Stockholders' equity:
    Convertible preferred stock, $01 par value:
      Authorized shares - 5,000,000
      Issued and outstanding shares - no shares outstanding
        on December 31, 1999 or March 31, 2000..................................              -                       -
    Common stock, $01 par value:
      Authorized shares - 35,000,000
      Issued and outstanding shares - 13,795,525 on
        December 31, 1999 and 13,857,075 on March 31, 2000......................        138,571                 137,955
        Additional paid-in capital .............................................     63,067,522              63,042,737
        Notes receivable from stockholders .....................................        (78,375)                (78,375)
        Deferred compensation ..................................................       (489,537)               (576,738)
        Unrealized gain/(loss) on investments ..................................              0                       0
        Accumulated deficit ....................................................    (58,938,101)            (57,941,134)
                                                                                  --------------           ------------
Total stockholders' equity .....................................................      3,700,080               4,584,445
                                                                                  --------------           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .....................................    $ 5,788,666            $  7,366,722
                                                                                  ==============           ============
</TABLE>


Note:  The balance sheet at December 31, 1999 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

                             See accompanying notes



                                       3
<PAGE>


                        Vista Medical Technologies, Inc.
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                             Three Months Ended March 31,
                                                                        ----------------------------------------
                                                                            2000                      1999
                                                                        ---------------          ----------------

<S>                                                                     <C>                       <C>
Sales ................................................................  $  1,796,886              $   862,042
Cost and expenses:
    Cost of sales ....................................................     1,539,846                1,066,344
    Research and development .........................................       431,538                  976,909
    Sales and marketing ..............................................       413,335                1,036,742
    General and aministrative ........................................       427,800                  594,658
                                                                         -----------              -----------
Total cost and expenses ..............................................     2,812,519                3,674,653
                                                                         -----------              -----------

Loss from operations .................................................    (1,015,633)              (2,812,611)
Interest income ......................................................        18,667                   92,655
Other gains/(losses) .................................................             -                   50,625
                                                                         -----------              -----------

Net loss .............................................................  $   (996,966)             $(2,669,331)
                                                                        ============              ===========

Basic and diluted loss per share .....................................  $      (0.07)             $     (0.20)
                                                                        ============              ===========

Shares used in computing basic and
    diluted loss per share ...........................................    13,763,095               13,485,430
                                                                        ============              ===========

</TABLE>

                             See accompanying notes

                                       4

<PAGE>

                        Vista Medical Technologies, Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                         Three Months Ended March 31,
                                                                                      -----------------------------------
                                                                                           2000               1999
                                                                                      ------------       ----------------
<S>                                                                                   <C>                 <C>
OPERATING ACTIVITIES
Net loss ...........................................................................  $ (996,966)         $(2,669,331)
Adjustments to reconcile net loss to net cash used for
    operating activities:
        Depreciation and amortization ..............................................     157,186              259,540
        Amortization of premium on short term investments...........................           -                 (301)
        Amortization of deferred compensation ......................................      87,201              126,339
        Changes in operating assets and liabilities,
            net of effect of acquisitions:
                Accounts receivable ................................................    (141,851)            (245,710)
                Inventories ........................................................     926,428             (340,925)
                Other current assets ...............................................      53,375               70,148
                Accounts payable ...................................................    (640,823)             132,209
                Accrued compensation ...............................................      (8,716)              43,704
                Accrued liabilities ................................................     (44,152)            (118,708)
                                                                                      ----------          -----------
Net cash flows used for operating activities .......................................    (608,318)          (2,743,035)

INVESTING ACTIVITIES
Purchases of short-term investments .................................................    121,957             (341,241)
Maturities of short-term investments ................................................          -            1,000,000
Purchase of property and equipment ..................................................    (15,399)            (110,348)
                                                                                      ----------          -----------
Net cash flows provided by (used for) investing activities ..........................    106,558              548,411

FINANCING ACTIVITIES
Issuance of common stock ............................................................     25,400               64,339
                                                                                      ----------          -----------
Net cash flows provided by financing activities .....................................     25,400               64,339
Net (decrease) increase in cash and cash equivalents ................................   (476,360)          (2,130,285)
Cash and cash equivalents at beginning of period ....................................  1,368,910            7,625,804
                                                                                      ----------          -----------
Cash and cash equivalents at end of period .......................................... $  892,550          $ 5,495,519
                                                                                      ==========          ===========
</TABLE>

                             See accompanying notes

                                       5
<PAGE>

                        VISTA MEDICAL TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   Basis of Presentation

     The Audited Financial Statements of Vista Medical Technologies, Inc. (the
"Company") and the notes thereto for the year ended December 31, 1999 included
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission, contain additional information about the Company, its
operations, and its financial statements and accounting practices, and should be
read in conjunction with this quarterly report on Form 10-Q. These unaudited
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles and with the instructions on Form 10-Q
except that certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.

     The accompanying unaudited consolidated financial statements of the Company
reflect all adjustments of a normal recurring nature which are, in the opinion
of management, necessary for a fair presentation of the financial position,
results of operations and cash flows for all periods presented. The interim
financial information contained herein is not necessarily indicative of results
for any future interim periods or for the full fiscal year ending December 31,
2000.

2.   Inventories

<TABLE>
<CAPTION>

                                                                      March 31, 2000   December 31, 1999
                                                                      --------------   -----------------
                                                                       (Unaudited)

       <S>                                                              <C>               <C>
       Parts and materials .........................................   $ 2,563,241       $ 3,574,107
       Work in process .............................................     1,112,547           334,437
       Finished goods ..............................................     1,372,269         1,360,068
                                                                       -----------       -----------
                                                                         5,048,057         5,268,612
              Less: reserves .......................................    (3,324,943)       (2,619,070)
                                                                       -----------       -----------
                                                                       $ 1,723,114       $ 2,649,542
                                                                       ===========       ===========
</TABLE>

                                       6
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

     THIS QUARTERLY REPORT MAY CONTAIN PREDICTIONS, ESTIMATES AND OTHER
FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED BELOW AT "RISKS AND UNCERTAINTIES." WHILE THIS OUTLOOK
REPRESENTS OUR CURRENT JUDGMENT ON THE FUTURE DIRECTION OF OUR BUSINESS, SUCH
RISKS AND UNCERTAINTIES COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
FUTURE PERFORMANCE SUGGESTED BELOW. WE UNDERTAKE NO OBLIGATION TO RELEASE
PUBLICLY THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES ARISING AFTER THE DATE OF THIS QUARTERLY REPORT.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED IN ITEM 1 OF THIS QUARTERLY
REPORT ON FORM 10-Q AND OUR 1999 ANNUAL REPORT ON FORM 10-K, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW OF OUR BUSINESS

     We develop, manufacture and market products that provide information to
doctors performing minimally invasive general surgical, heart, head, neck and
spine and other selected microsurgical procedures. Our products combine a head
mounted display with video cameras to provide surgeons with critical visual
information during these microsurgical procedures. Our product lines include the
ORPC Visualization and Information System for general surgery and other complex
endoscopic procedures, the Series 8000 Advanced Visualization and Information
System, for use in heart surgery and the StereoSite System, for use in
microscopic and endoscopic procedures in head, neck and spine surgery. In
general terms, endoscopic surgery involves a telescopic viewing device which is
inserted into an incision in the body and which allows the surgeon to better
view the internal part of the body being repaired. We expect to continue to
incur substantial losses for at least the next 9 - 12 months. As of March 31,
2000, our accumulated deficit was approximately $58,938,000. There can be no
assurance that our development efforts will result in commercially available
products, that we will be successful in introducing the products under
development, or that required regulatory approval of products will continue to
be obtained in a timely manner, if at all.

OUR RESULTS OF OPERATIONS

     Sales. We had revenue from product sales of $1,797,000 for the three-months
ended March 31, 2000, compared to revenues from product sales of $862,000 for
the same period in 1999. The increase in revenue during the first quarter of
2000 compared to the corresponding period in 1999 was due to increased sales of
our OEM products, sales of our 3-D technology to

                                       7

<PAGE>

our new strategic partner, Richard Wolf GmbH, for the general surgery market,
and revenues derived from our Laparoscopic Bariatric Surgery Program launched
during the first quarter of 2000. These were partially offset by no sales to OEC
Medical for the medical imaging market during the first quarter of 2000 as
compared to the first quarter of 1999.

     Cost of Sales. Our cost of sales were $1,540,000 and $1,066,000 for the
three- months ended March 31, 2000 and 1999, respectively, an increase of
$474,000. The increase was primarily due to higher product sales levels during
the 2000 period partially offset by reduced manufacturing expenses during the
2000 period as compared to 1999.

     Research and Development Expenses. Our research and development expenses
decreased to $432,000 for the three-months ended March 31, 2000, from $977,000
for the corresponding period in 1999. The decrease in research and development
expenses was primarily attributable to decreases in staffing and related supply
and occupancy costs and a decrease in contract services related to development
efforts. We expect our research and development expenses to remain at or near
current levels in the next several quarters as we finalize our product for the
general surgery market.

     Sales and Marketing Expenses. Sales and marketing expenses were $413,000
and $1,037,000 for the three-months ended March 31, 2000 and 1999, respectively.
The decrease in sales and marketing expense reflects a reduction in staffing and
related expenses as a result of a recently completed restructuring in the second
half of 1999. We expect our sales and marketing expenses to increase
sequentially during the next several quarters as we launch a national campaign
to inform patients of surgical options and participating hospitals for our
Laparoscopic Bariatric Surgery Program.

     General and Administrative Expenses. Our general and administrative
expenses decreased to $428,000 for the three-months ended March 31, 2000, from
$595,000 for the corresponding period in 1999. This decrease was primarily due
to a reduction in staffing and related expenses following a restructuring during
the second half of 1999, a reduction in deferred compensation expense and lower
professional, legal and consulting service fees. We expect our general and
administrative expenses to remain at or near current levels for the next several
quarters.

     Interest Income. Our net interest income was $19,000 for the three-month
period ended March 31, 2000 compared to $93,000 for the corresponding period in
1999. This decrease was due primarily to decreasing average investment balances
of our excess cash.

     Other Gains. We had no other gains for the three-month period ended March
31, 2000 and had other gains of $51,000 for the corresponding period in 1999.
The gains for the 1999 period relate to sale of securities we received in
connection with an earlier license agreement signed in 1996 with Imagyn Medical
Technologies, Inc. (formerly Urohealth Systems, Inc.).


                                       8

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     On April 7, 2000, we entered into a Securities Purchase Agreement with
three of our stockholders. Under the terms of this agreement, we sold 5,654,411
shares of our common stock to these stockholders. After deducting estimated
offering expenses, we realized net proceeds of approximately $4,591,000 from the
offering. We anticipate that these proceeds, together with our existing cash,
cash equivalents and short-term investments, and product revenues, will be
sufficient to fund our operations through the next 12-15 months. Additional
capital resources may be required to fund continuing expenditures related to our
research, development, manufacturing and commercialization of new products
beyond that point. There can be no assurance that the requisite fundings will be
consummated in the necessary time frame or on terms acceptable to us. Should we
be unable to raise sufficient funds if and when needed, we may be required to
curtail our operating plans and possibly relinquish rights to portions of our
technology or products.

     Net cash used for operating activities for the three-months ended March 31,
2000 was $608,000 compared to net cash used of $2,743,000 for the corresponding
three-month period in 1999. The decrease in net cash used in operating
activities was primarily attributable to decreasing net losses and lower
inventory purchases during the 2000 period partially offset by lower non-cash
expense for depreciation and amortization and increasing payments on accounts
payable in 2000 compared to 1999.

     Net cash provided by investing activities was $107,000 for the three-months
ended March 31, 2000 compared to $548,000 of net cash provided in the same
period in 1999. The decrease in net cash provided by investing activities in
2000 was primarily attributable to declining balances of short term investments
reaching maturity partially offset by decreasing purchases of property and
equipment.

     Net cash provided by financing activities was $25,000 for the three-months
ended March 31, 2000 compared to $64,000 for the same period in 1999. The
decrease in net cash provided by financing activities during the 2000 period was
primarily attributable to a reduction in purchases of stock by employees through
our employee stock purchase plan and a lower level of stock option exercises.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

         At March 31,  2000,  our  investment  portfolio  included  fixed-income
securities of $1.0 million.  These  securities are subject to interest rate risk
and will decline in value if interest rates increase.  Due to the short duration
of our investment portfolio,  an immediate 10 percent increase in interest rates
would  have  no  material  impact  on our  financial  condition  or  results  of
operations.

We generally conduct  business,  including sales to foreign  customers,  in U.S.
dollars and as a result have limited  foreign  currency  exchange rate risk. The
effect of an immediate  10 percent  change in foreign  exchange  rates would not
have a material impact on our financial condition or results of operations.

                                       9

<PAGE>


RISKS AND UNCERTAINTIES

     You should consider the following factors carefully in evaluating an
investment in our common stock in addition to the other information in this
report. You are cautioned that the statements in this quarterly report that are
not descriptions of historical facts may be forward-looking statements that are
subject to risks and uncertainties. Our actual results could differ materially
from those currently anticipated due to a number of factors, including those
identified in this section and elsewhere in this quarterly report. We undertake
no obligation to release publicly the results of any revisions to these
forward-looking statements to reflect events or circumstances arising after the
date of this quarterly report. The following discussion should be read in
conjunction with our consolidated financial statements and notes thereto.

WE MAY NOT BE ABLE TO MAINTAIN THE LISTING OF OUR COMMON STOCK ON THE NASDAQ
SMALLCAP MARKET.

     On February 10, 2000, our common stock ceased to be quoted on the Nasdaq
National Market and began to be quoted on the Nasdaq SmallCap Market as a result
of Nasdaq's concern about our ability to maintain continued compliance with some
of the Nasdaq National Market requirements for continued quotation. We presented
Nasdaq with a compliance plan to address this and other concerns in an effort to
ensure that our common stock would continue to be quoted on the Nasdaq SmallCap
Market. The compliance plan consisted of obtaining additional capital and
effecting a reverse split of our common stock, if necessary. On April 4, 2000,
we obtained approval for both of these proposals from a majority of stockholders
at a special meeting of the stockholders' of our company. On April 7, 2000 we
completed our financing with the raising of an additional $4.8 million in equity
capital.

     On April 19, 2000 we were advised by Nasdaq that we were not in compliance
with the $1.00 minimum bid price requirement and that we would be given until
July 19, 2000 to comply with this requirement by evidencing a closing bid price
of at least $1.00 for a minimum of ten consecutive days before this date.
Currently, we are trading on the Nasdaq SmallCap Market under an exception with
a fifth character "C" appended to our regular trading symbol "VMTI".

     We cannot assure you that we will be successful in complying with the $1.00
minimum bid price requirement, or that even if successful, Nasdaq will continue
to allow our common stock to be quoted on the Nasdaq SmallCap Market. If we are
unable to maintain our status on the Nasdaq SmallCap Market, we may be listed on
the OTC Bulletin Board and there may not continue to be an active trading market
for our common stock. If this occurs, you may not be able to sell your shares
quickly or at the market price if trading in our stock is not active.


WE HAVE A HISTORY OF LOSSES AND MAY NOT BECOME PROFITABLE.

     Since our formation in July 1993, and as of March 31, 2000, we had incurred
cumulative net losses of $58.9 million. We expect to incur substantial losses
for at least the next 9-12

                                       10

<PAGE>

months. We may never achieve or sustain profitability in the future. Even if we
achieve profitability, we may not be able to sustain it on an ongoing basis.

WE ARE, TO A SIGNIFICANT EXTENT, DEPENDENT ON DISTRIBUTION PARTNERS TO SELL
OUR PRODUCTS.

     We do not have a sales force and, in the past, have been primarily
dependent on our agreements with Medtronic and Sofamor Danek for sales of the
majority of products derived from our core three-dimensional technology. Both of
these agreements have recently been terminated. We are in discussion with and
have agreed on terms, subject to a definitive agreement, with an international
cardiac products company to transition distribution in heart surgery and to
continue support to our heart customer base. However, this transition may not be
achieved without operational disruption and unplanned cost, or at all. If we are
unable to make this transition, we may be unsuccessful in distributing our heart
surgery products and may lose significant revenues as a result thereof.

     In addition, we have changed recently our strategic emphasis for our core
three-dimensional technology to general surgery, gynecology and urology.
Although we have signed an exclusive agreement for international distribution in
those market segments and a non-exclusive co-marketing arrangement in the United
States with Richard Wolf, GmbH, we cannot assure you that we will be successful
in these areas of sales. Even if we are successful, we cannot assure you that
the revenue achieved in these areas of emphasis will be sufficient to compensate
for the loss of sales revenue from the termination of our agreements with
Medtronic and Sofamor Danek. Either of these results could have an adverse
affect on our financial condition and results of operations.

OUR PROFITABILITY IS DEPENDENT UPON THE SUCCESSFUL DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCTS BASED ON OUR CORE THREE-DIMENSIONAL
TECHNOLOGY.

     Products derived from our core technology - the ORPC for general surgery,
the Series 8000 for minimally invasive heart surgery and StereoSite systems for
head, neck and spine microsurgery - are expected to account for the majority of
our revenues over the next several years. The demand for these products may not
be sufficient to allow us to achieve profitable operations.

     Our development efforts for improvements to these products may not be
successful. In addition, other products under development may not be shown to be
safe or effective, capable of being manufactured in commercial quantities at
acceptable costs, acquire appropriate regulatory clearances or be successfully
marketed.

                                       11

<PAGE>

OUR SUCCESS IS DEPENDENT UPON ACCEPTANCE OF MINIMALLY INVASIVE MICROSURGICAL
PROCEDURES BY THE MEDICAL COMMUNITY AS A RELIABLE, SAFE AND COST EFFECTIVE
ALTERNATIVE TO EXISTING TREATMENTS.

     To date, minimally invasive microsurgical procedures have only been
performed on a very limited basis by a small number of highly skilled surgeons.
We are unable to predict how quickly, if at all, minimally invasive
microsurgical procedures will be adopted by the medical community or, if they
are adopted, the number of procedures that will be performed.

     Most patients with heart disease first consult with a cardiologist, who
then may treat the patient with drugs or non-surgical interventions, such as
angioplasty, the insertion of a balloon-type device in a heart vessel, and
intravascular stents, or refer the patient to a heart surgeon for open-chest
coronary artery bypass surgery. Cardiologists may not recommend minimally
invasive procedures until such time, if at all, as such procedures can
successfully be demonstrated to be as safe and cost-effective as other accepted
treatments. In addition, heart surgeons may choose not to recommend minimally
invasive procedures until such time, if at all, as such procedures are proven to
be as safe, effective and technically viable as conventional, open-chest surgery
methods, which have become widely adopted by heart surgeons since the initial
use of such surgery in the mid-1950s.

     Even if the clinical safety and effectiveness of minimally invasive
procedures is established in heart and other specialties, surgeons, specialists
and other physicians may choose not to recommend the procedures for any number
of other reasons. Adoption of these procedures by doctors will depend, for
example, upon our ability to facilitate training of surgeons to perform
minimally invasive microsurgery and the willingness of such surgeons to perform
such procedures. Doctors may also elect not to recommend the minimally invasive
procedures based on possible unavailability of acceptable reimbursement from
health care payors. Health care payor acceptance may require evidence of the
cost effectiveness of minimally invasive procedures as compared to other
currently available treatments. We believe that physician endorsements will be
essential for clinical adoption of minimally invasive procedures. To date, these
endorsements have not been obtained and they may not be obtained in the near
future, if at all. Patient acceptance of the procedure will depend upon doctor
recommendations, as well as other factors, including the effectiveness of, and
the rate and severity of complications associated with, the procedure as
compared to other treatments.

WIDESPREAD USE OF OUR PRODUCTS WILL REQUIRE TRAINING OF A LARGE NUMBER OF
SURGEONS, AND THE TIME REQUIRED TO INSTITUTE A TRAINING PROGRAM AND TO TRAIN
SUCH SURGEONS COULD ADVERSELY AFFECT NEAR TERM MARKET ACCEPTANCE.

     Evaluations of visualization technology such as ours conducted to date have
shown that there is a learning process involved for surgeons and other members
of the surgery team to become proficient with the use of the systems. Based on
the clinical and laboratory procedures performed to date, we cannot assure you
that visualization and information system enhancements incorporated, or to be
incorporated, in our products will prove suitable for use by a substantial

                                       12
<PAGE>


number of surgeons. If they prove unsuitable for a large number of surgeons to
use, the potential markets and applications for our products would be
significantly limited.

WE LACK COMMERCIAL MANUFACTURING EXPERIENCE AND THERE ARE SIGNIFICANT RISKS
ASSOCIATED WITH OUR SCALE-UP OF MANUFACTURING.

     We lack long term experience in manufacturing our products in the
quantities that are necessary for us to achieve significant commercial sales. We
may not be able to establish or maintain reliable, high-volume manufacturing at
commercially reasonable costs. We may also require additional manufacturing
facilities if production volumes increase; acquisition of new manufacturing
facilities will likely involve relocation. The manufacture of our products
primarily involves the assembly of a number of sub-assemblies and components.
Companies such as ours often encounter difficulties in scaling up manufacturing
of products, which difficulties could include problems involving:


          -    quality control and assurance,
          -    component and service availability,
          -    adequacy of control policies and procedures,
          -    lack of qualified personnel,
          -    compliance with FDA regulations and the need for further FDA
               approval of new manufacturing processes and facilities and
          -    other production constraints.

     We have considered and will continue to consider as appropriate, the
internal manufacture of sub-assemblies currently provided by third-party
subcontractors, as well as the implementation of new production processes. Our
manufacturing yields or costs may increase as a result of the transition to
in-house production or to new production processes when such efforts are
undertaken. In addition, costs in complying with FDA good manufacturing
practices or changes in such practices may exceed our expectations.

WE MAY FACE COMPONENT SHORTAGES AND ARE DEPENDENT IN SOME INSTANCES ON SINGLE
SOURCES OF SUPPLY.

     Any significant supply interruption, or inventory shortage or overage,
would negatively impact our ability to manufacture our products. We use and rely
on specific components and services used in our systems for which we have only a
single source of supply. The manufacture of our products in larger commercial
quantities will require a substantial increase in component supplies and will
likely necessitate the replacement of current suppliers or the addition of new
suppliers. The qualification of additional or replacement vendors for specified
components or services is a lengthy process. In addition, the substitution of
replacement vendors may entail re-engineering time and cost and could delay the
supply of our products.

     We expect to manufacture our products based on forecasted product orders
and intend to purchase subassemblies and components prior to receipt of purchase
orders from customers.

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<PAGE>

Lead times for ordered materials and components vary significantly and depend on
factors such as the business practices of the specific supplier, contract terms
and general demand for a component at a given time. Some components used in our
products have long lead times. As a result, there is a risk of excess or
inadequate inventory if orders do not match forecasts.

WE ARE SUBJECT TO SIGNIFICANT DOMESTIC AND INTERNATIONAL REGULATION AND MAY NOT
BE ABLE TO OBTAIN NECESSARY REGULATORY CLEARANCES TO SELL OUR PRODUCTS.

     The manufacture and sale of medical devices intended for commercial
distribution are subject to extensive governmental regulation. Our failure to
comply with regulatory requirements would jeopardize our ability to market our
products. Noncompliance with applicable requirements can result in failure of
the regulatory agency to grant pre-market clearance or approval for devices,
withdrawal or suspension of approval, total or partial suspension of production,
fines, injunctions, civil penalties, refunds, recall or seizure of products and
criminal prosecution.

     Medical devices are regulated in the United States primarily by the FDA
and, to a lesser extent, by state agencies. Sales of medical device products
outside the United States are subject to foreign regulatory requirements that
vary from country to country. Generally, medical devices require pre-market
clearance or pre-market approval prior to commercial distribution. A
determination that information available on the medical device is not sufficient
to grant the needed clearance or approval will delay market introduction of the
product. In addition, material changes or modifications to, and changes in
intended use of, medical devices also are subject to FDA review and clearance or
approval. The FDA regulates the research, testing, manufacture, safety,
effectiveness, labeling, storage, record keeping, promotion and distribution of
medical devices in the United States and the export of unapproved medical
devices from the United States to other countries. The time required to obtain
approvals required by foreign countries may be longer or shorter than that
required for FDA clearance, and requirements for licensing may differ from FDA
requirements. The current regulatory environment in Europe for medical devices
differs significantly from that in the United States.

WE EXPECT TO ENCOUNTER RAPID TECHNOLOGICAL CHANGE AND SIGNIFICANT COMPETITION.

     The medical device market in which we compete is characterized by intensive
development efforts and rapidly advancing technology. Our future success will
depend, in large part, upon our ability to anticipate and keep pace with
advancing technology and competing innovations. We may not be successful in
identifying, developing and marketing new products or enhancing our existing
products.

     We believe that a number of large companies, with significantly greater
financial, manufacturing, marketing, distribution and technical resources and
experience than ours, are focusing on the development of visualization products
for minimally invasive microsurgery. Several companies are currently developing
and marketing visualization products for minimally

                                       14

<PAGE>

invasive microsurgery which could be applied to heart surgery, to general
surgery or to head, neck and spine microsurgery.

     Technological advances with other therapies such as drugs, interventional
procedures or future innovations in surgical techniques could make such other
therapies more effective or lower in cost than minimally invasive microsurgery
procedures and could render minimally invasive microsurgery obsolete.


WE EXPECT FLUCTUATIONS IN OUR OPERATING RESULTS.

     Our results of operations may vary significantly from quarter to quarter
depending upon numerous factors, including the following:


          -    timing and results of product evaluations,

          -    delays associated with the FDA and other regulatory approval
               processes,

          -    demand for and utilization of our products,

          -    changes in our pricing policies or those of our competitors,

          -    changes in third-party payment guidelines,

          -    the number, timing and significance of product enhancements and
               new product announcements by us or our competitors,

          -    our ability to develop, introduce and market new and enhanced
               versions of our products on a timely basis,

          -    customer order deferrals in anticipation of enhancements or of
               new product introductions by us or our competitors,

          -    product quality problems,

          -    personnel changes and

          -    the level of international sales.

OUR PROFITABILITY IS DIRECTLY RELATED TO THE LEVEL OF REIMBURSEMENTS FOR
SURGICAL PROCEDURES USING OUR PRODUCTS.

     Our profitability is directly related to the level of payments for the
surgical procedures in which our products are involved, either by Medicare or
private insurance companies. We could be adversely affected by changes in
payment policies of government or private health care payors, particularly to
the extent any such changes affect payment for the procedure in which our
products are intended to be used. It is a continuing trend in U.S. health care
for such payments to be under continual scrutiny and downward pressure. We
believe that reimbursement in the future will be subject to increased
restrictions, both in the United States and in foreign markets and that the
overall escalating cost of medical products and services has led to and will
continue to lead to increased pressures on the health care industry, both
foreign and domestic, to reduce the cost of products and services, including
products which we offer.

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<PAGE>

     We expect that our products typically will be used by hospitals and
surgical centers, which bill various third-party payors, such as governmental
programs and private insurance plans, for the health care services provided to
their patients. Third-party payors carefully review and increasingly challenge
the prices charged for medical products and services or negotiate a flat rate
fee in advance. Payment rates from private companies also vary depending on the
procedure performed, the third-party payor, the insurance plan and other
factors. Medicare compensates hospitals at a pre determined fixed amount for the
costs associated with an in-patient hospitalization based on the patient's
discharge diagnosis and compensates physicians at a pre determined fixed amount
based on the procedure performed, regardless of the actual costs incurred by the
hospital or physician in furnishing the care and unrelated to the specific
devices or systems used in that procedure. Medicare and other third-party payors
are increasingly scrutinizing whether to cover new products and the level of
payment for new procedures. The flat fee reimbursement trend is causing
hospitals to control costs strictly in the context of a managed care system in
which health care providers contract to provide comprehensive health care for a
fixed cost per person. We are unable to predict what changes will be made in the
reimbursement methods utilized by such third-party payors.

     If we obtain the necessary foreign regulatory registrations or approvals,
market acceptance of our products in international markets would be dependent,
in part, upon the acceptance by the prevailing health care financing system in
each country. Health care financing systems in international markets vary
significantly by country and include both government sponsored health care
programs and private insurance. There can be no assurance that these financing
systems will endorse the use of our products.


WE HAVE LIMITED EXPERIENCE MARKETING OUR PRODUCTS OVERSEAS AND MAY NOT BE
SUCCESSFUL IN EXPANDING INTO INTERNATIONAL MARKETS.

     We have limited experience in marketing our products overseas. Changes in
overseas economic conditions, currency exchange rates, foreign tax laws or
tariffs or other trade regulations could negatively impact our business. The
anticipated international nature of our business is also expected to subject our
representatives, agents and distributors to laws and regulations of the foreign
jurisdictions in which they operate or in which our products are sold, including
laws regulating manufacture and sale of medical devices. In addition, the laws
of some foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States.


WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS AND HAVE LIMITED INSURANCE
COVERAGE.

     We face an inherent and significant business risk of exposure to product
liability claims in the event that the use of our products results in personal
injury or death. Also, in the event that any of our products proves to be
defective, we may be required to recall or redesign such products. Our current
product liability insurance coverage limit is $10.0 million per occurrence and
in the aggregate. Our coverage limits may not be adequate to protect us from any
liabilities we might incur in connection with the development, manufacture and
sale of our products.

                                       16

<PAGE>

In addition, increased product liability coverage may be required if
additional products are used in clinical evaluations or successfully
commercialized. Product liability insurance is expensive and in the future
may not be available to us on acceptable terms, if at all. A successful
product liability claim or series of claims brought against us in excess of
our insurance coverage or a product recall would negatively impact our
business.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY BE UNABLE TO
PREVENT OTHER COMPANIES FROM USING OUR TECHNOLOGY IN COMPETITIVE PRODUCTS.

     Our future success will depend, in part, on our ability to continue to
develop patentable products, enforce our patents and obtain patent protection
for our products both in the United States and in other countries. The patent
positions of medical device companies, however, are generally uncertain and
involve complex legal and factual questions. Patents may never issue from any
patent applications owned by or licensed to us. Even if patents do issue, the
claims allowed may not be sufficiently broad to protect our technology. In
addition, issued patents owned by or licensed to us may be challenged,
invalidated or circumvented, or the rights granted thereunder may not provide us
with competitive advantages.

     The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Litigation, which
would result in substantial expense, may be necessary to enforce any patents
issued or licensed to us and/or to determine the scope and validity of
proprietary rights of third parties or whether our products, processes or
procedures infringe any such third-party proprietary rights. We may also have to
participate in interference proceedings declared by the United States Patent and
Trademark Office, which could result in substantial expense, to determine the
priority of inventions covered by our issued United States patents or pending
patent applications. Furthermore, we may have to participate at substantial cost
in International Trade Commission proceedings to enjoin importation of products
which would compete unfairly with our products. Any adverse outcome of any
patent litigation, including interference proceedings, could subject us to
significant liabilities to third parties, require disputed rights to be licensed
from or to third parties or require us to cease using the technology in dispute.
Any such licenses may not be available on acceptable terms, if at all.
Furthermore, parties making such claims may be able to obtain injunctive or
other equitable relief that could effectively block our ability to make, use,
sell or otherwise practice our intellectual property, whether or not patented or
described in pending patent applications, or to further develop or commercialize
our products in the United States and abroad and could result in the award of
substantial damages. Defense of any lawsuit or failure to obtain any such
license could damage our business.

     We rely on unpatented trade secrets to protect our proprietary
technology. Others may independently develop or otherwise acquire the same or
substantially equivalent technologies or otherwise gain access to our
proprietary technology or disclose such technology. It is difficult to
protect rights to such unpatented proprietary technology. Third parties may
obtain patent rights to such unpatented trade secrets, which patent rights
could be used to assert infringement claims against us.

                                       17

<PAGE>

We also rely on confidentiality agreements with our collaborators, employees,
advisors, vendors and consultants to protect our proprietary technology.
These agreements may be breached, we may not have adequate remedies for any
breach and our trade secrets may otherwise become known or be independently
developed by competitors. In addition, our agreements with employees and
consultants require disclosure of ideas, developments, discoveries or
inventions conceived during employment or consulting, as the case may be, and
assignment to us of proprietary rights to such matters related to our
business and technology. The extent to which efforts by others will result in
patents and the effect on us of the issuance of such patents is unknown.

WE HAVE LICENSED SOME ASPECTS OF OUR PRODUCTS FROM THIRD PARTIES AND MAY LOSE
THE RIGHTS TO THESE ESSENTIAL ASPECTS UNDER THE AGREEMENTS WHICH GOVERN THOSE
RELATIONSHIPS.

     We have licensed some aspects of our technology from third parties. The
rights under the governing agreements may be terminated if we breach our
obligations or in other circumstances. Our failure to retain rights to these
licensed rights could negatively impact our business.


IF WE ARE NOT ABLE TO ATTRACT AND RETAIN KEY TECHNICAL AND SENIOR MANAGEMENT
PERSONNEL AND DOCTORS TO PARTICIPATE IN OUR ADVISORY BOARDS, IT MAY ADVERSELY
AFFECT OUR ABILITY TO OBTAIN FINANCING OR DEVELOP OUR PRODUCTS.

     Our future business and operating results depend in significant part upon
the continued contributions of our key technical and senior management
personnel, many of whom would be difficult to replace and some of whom perform
important functions beyond those suggested by their job titles or descriptions.
Our business and future operating results also depend in significant part upon
our ability to attract and retain qualified management, manufacturing,
technical, marketing and sales and support personnel for our operations.
Competition for such personnel is intense, and we may not be successful in
attracting or retaining such personnel.

     Members of our clinical advisory boards consult with us exclusively in the
field of visualization, but are free to consult with other non-competing
instrumentation companies and are employed elsewhere on a full-time basis. As a
result, they only spend a limited amount of time on our business. Although we
have entered into consulting agreements, with terms ranging from 12 months to
two years, including confidentiality provisions with each of the members of our
clinical advisory boards, the consulting and confidentiality agreements between
us and each of the members of our clinical advisory boards may be terminated or
breached. In addition, such agreements may not be renewed upon termination.


OUR STOCK PRICE COULD CONTINUE TO BE VOLATILE AND YOUR INVESTMENT IN OUR COMMON
STOCK COULD SUFFER A DECLINE IN VALUE, ADVERSELY AFFECTING OUR ABILITY TO RAISE
ADDITIONAL CAPITAL.

     The market prices and trading volumes for securities of emerging companies,
like ours, have historically been highly volatile and have experienced
significant fluctuations unrelated to the operating performance. The market
price of our common stock has historically been highly volatile and may be
significantly affected by factors such as:

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<PAGE>

          -    actual or anticipated fluctuations in our operating results,
          -    changes in financial estimates by securities analysts,
          -    announcements of technological innovations,
          -    new products or new contracts by us or our competitors,
          -    regulatory announcements,
          -    developments with respect to patents or proprietary
               rights,
          -    conditions and trends in the medical device and other
               technology industries,
          -    adoption of new accounting standards affecting the
               medical device industry, and
          -    general market conditions.

     In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market prices
for shares of early stage companies. These broad market fluctuations may
adversely affect the market price of our common stock. In the past, following
periods of volatility in the market price of a particular company's securities,
securities class action litigation has often been brought against that company.
Such litigation, if brought against us, could result in substantial costs and a
diversion of management's attention and resources.


OUR USE OF HAZARDOUS MATERIALS MAY RESULT IN UNEXPECTED AND SUBSTANTIAL CLAIMS
AGAINST US FOR WHICH WE DO NOT HAVE SUFFICIENT FINANCIAL RESOURCES.

     Our research and development activities may involve the controlled use of
hazardous materials and chemicals. The risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, we could be held liable for any resultant damages, and any
such liability could exceed our resources. We may incur substantial cost to
comply with environmental regulations.


WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS AND ANY GAINS FROM YOUR INVESTMENT IN
OUR STOCK WILL HAVE TO COME FROM INCREASES IN THE PRICE OF SUCH STOCK.

     We currently intend to retain any future earnings for use in our business
and do not anticipate paying any cash dividends in the foreseeable future.


OUR CHARTER DOCUMENTS MAY PREVENT US FROM PARTICIPATING IN TRANSACTIONS THAT
COULD BE BENEFICIAL TO YOU.

     Our charter documents contain provisions that may make it more difficult or
discourage a change in control. This may adversely affect the market price of
our common stock.


FUTURE OFFERINGS COULD DILUTE YOUR INTEREST IN YOUR STOCK.

     If the net proceeds of the offering we completed in April 2000, together
with available

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<PAGE>

funds and cash generated from operations, are insufficient to satisfy our cash
needs, we may be required to sell additional equity or convertible debt
securities. The sale of additional equity or convertible debt securities could
result in additional dilution to our stockholders.

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<PAGE>


PART II.  OTHER INFORMATION

Item 1.   Not Applicable

Item 2.   Not Applicable

Item 3.   Not Applicable

Item 4.   Not Applicable

Item 5.   Not Applicable

Item 6.   Exhibits and Reports on Form 8-K

A)        Exhibits

          10.1  Termination Agreement Between Vista Medical Technologies, Inc.
                and Medtronic, Inc. dated March 27, 2000

          10.2* Transition Agreement Between Vista Medical Technologies, Inc.
                and Medtronic, Inc. dated March 27, 2000

          11.1  Statement Regarding Computation of Per Share Earnings

          27.1 Financial Data Schedule

*        Certain confidential portions of this exhibit were omitted by means of
         redacting a portion of the text (the "Mark"). This exhibit has been
         filed separately with the Secretary of the Securities and Exchange
         Commission without the Mark pursuant to our application requesting
         confidential treatment under Rule 406 under the Securities Act.

B)       Reports on Form 8-K

         No reports on Form 8-K were filed by the Company during the three
         months ended March 31, 2000.

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<PAGE>


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       VISTA MEDICAL TECHNOLOGIES,INC.


Date:    May 12, 2000                   /s/ John R. Lyon
----------------------                  ----------------------
                                        John R. Lyon
                                        President, Chief Executive Officer
                                        and Director

Date:    May 12, 2000                   /s/ Robert J. De Vaere
----------------------                  ----------------------
                                        Robert J. De Vaere
                                        Vice President of Finance &
                                        Administration, Chief Financial Officer
                                        and Secretary (Principal financial and
                                        accounting officer)


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