<PAGE>
 
                                  FORM 10-Q/A

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                              AMENDMENT No. 1 TO
                          
(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934
               For the quarterly period ended December 31, 1997

                                      OR

[_]   TRANSITION REPORT UNDER SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from ___________ to ___________

                        Commission file number  0-13966
                                               ---------

                          Premier Laser Systems, Inc.
                          ---------------------------
            (Exact name of registrant as specified in its charter)

              California                           33-0476284
              ----------                           ----------
     (State or other jurisdiction of            (I.R.S. Employer
      incorporation or organization)           Identification No.)

                      3 Morgan, Irvine, California, 92618
                      -----------------------------------
                    (Address of principal executive offices)

                                (714) 859-0656
                                --------------
             (Registrant's telephone number, including area code)


                       ---------------------------------
  (Former name, former address and former fiscal year, if changed since last 
                                    report)

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

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [_]   No [_]

                     APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (February 12, 1998):
 
                Class A Common Stock:        14,814,523 Shares
                                             ----------
                Class E-1 Common Stock:       1,257,499 Shares
                                             ----------
                Class E-2 Common Stock:       1,257,499 Shares
                                             ----------
<PAGE>
 
                        PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
         --------------------

                          PREMIER LASER SYSTEMS, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                    December 31,     March 31,
                                                        1997           1997
                                                     (Restated)     (Restated)
                                                    ------------   ------------
                                                     (Unaudited)
<S>                                                 <C>            <C> 
                    Assets                 
                                                    
Current assets:                                     
  Cash and cash equivalents                         $  7,482,315   $    173,610
  Short-term investments                               9,737,929      3,968,288
  Restricted cash                                      2,150,000      1,050,000
  Accounts receivable, net of allowance for         
    doubtful accounts of $616,275 at December       
    31, 1997 and $613,263 at March 31, 1997            3,829,946      1,052,312
  Inventories                                          8,682,967      3,284,632
  Prepaid expenses and other current assets            3,520,982        774,319
                                                    ------------   ------------
Total current assets                                  35,404,139     10,303,161
Property and equipment, net                            1,282,856        780,945
Intangibles, net                                      16,769,109      9,988,753
Other assets                                           1,152,641          6,477
                                                    ------------   ------------
Total assets                                        $ 54,608,745   $ 21,079,336
                                                    ============   ============
                                                                   
       Liabilities and shareholders' equity    
                                                                   
Current liabilities:                                               
  Accounts payable                                  $  3,239,051   $  1,305,256
  Line of credit                                       1,935,529        800,000
  Accrued compensation and related costs                 496,175        318,000
  Other accrued liabilities                            2,351,796        272,369
  Notes payable and current portion of capital      
    lease obligations                                    204,301         31,920
                                                    ------------   ------------
Total current liabilities                              8,226,852      2,727,545
                                                                   
Capital lease obligations, net of current portion        169,933         49,356
Commitments and contingencies                                      
Minority interest                                      2,053,725      2,053,725
Shareholders' equity:                                              
  Preferred stock, no par value:                                   
     Authorized shares--8,850,000                                  
     Issued and outstanding shares--none                      -              -
  Common stock, Class A, no par value:                             
     Authorized shares--35,600,000                                 
     Issued and outstanding shares--12,627,462      
        at December 30, 1997 and 7,313,841 at       
        March 31, 1997                                69,561,989     27,320,449
  Common stock, Class E-1, no par value:                           
     Authorized shares--2,200,000                                  
     Issued and outstanding shares--1,257,499       
        at December 31, 1997 and 1,257,178 at       
        March 31, 1997                                 4,769,878      4,769,878
  Common stock, Class E-2, no par value:                           
     Authorized shares--2,200,000                                  
     Issued and outstanding shares--1,257,499       
        at December 31, 1997 and 1,257,178 at       
        March 31, 1997                                 4,769,878      4,769,878
  Warrants and options                                 3,979,255      3,978,276
  Accumulated deficit                                (38,922,765)   (24,589,771)
                                                    ------------   ------------
Total shareholders' equity                            44,158,235     16,248,710
                                                    ------------   ------------
Total liabilities and shareholders' equity          $ 54,608,745   $ 21,079,336
                                                    ============   ============
</TABLE> 

           See notes to condensed consolidated financial statements.

<PAGE>
 
                          PREMIER LASER SYSTEMS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                  Three Months Ended          Nine Months Ended
                                                      December 31,               December 31,
                                                -----------------------   --------------------------
                                                   1997         1996          1997          1996
                                                (Restated)                 (Restated)
                                               -----------   ----------   ------------   -----------
<S>                                            <C>           <C>          <C>            <C>
Net sales                                      $ 3,568,956   $1,472,880   $  8,726,170   $ 3,887,018
Cost of sales                                    2,305,366      934,552      5,390,809     2,708,838
                                               -----------   ----------   ------------   -----------
                                                                                         
Gross profit                                     1,263,590      538,328      3,335,361     1,178,180
                                                                                         
Selling and marketing expenses                   1,474,385      582,132      3,183,717     1,534,006
Research and development expenses                  832,835      435,807      2,015,907       784,724
General and administrative expenses                843,923      501,021      1,848,165     1,108,639
In-process research and development related to                                             
   EyeSys Technologies, Inc. acquisition                -            -       9,200,000            -
Merger related and integration costs                    -            -       2,146,912            -
Settlement of joint marketing agreement                 -            -              -        331,740
                                               -----------   ----------   ------------   -----------
                                                                                         
Loss from operations                            (1,887,553)    (980,632)   (15,059,340)   (2,580,929)
                                                                                         
Interest income (expense), net                     224,824        1,290        726,346       (68,661)
                                               -----------   ----------   ------------   -----------
                                                                                         
Net Loss                                       $(1,662,729)  $ (979,342)  $(14,332,994)  $(2,649,590)
                                               ===========   ==========   ============   ===========
                                                                                         
Loss per share                                 $     (0.14)  $    (0.15)  $      (1.34)  $     (0.46)
                                               ===========   ==========   ============   ===========
                                                                                          
Shares used in the computation of
    loss per share                              12,219,786    6,663,765     10,725,769     5,716,333
                                               ===========   ==========   ============   ===========
</TABLE> 

           See notes to condensed consolidated financial statements.

<PAGE>
 
                          PREMIER LASER SYSTEMS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE> 
<CAPTION> 
                                                         Nine Months Ended
                                                            December 31,
                                                     --------------------------
                                                         1997          1996
                                                      (Restated)
                                                     ------------   -----------
<S>                                                  <C>            <C> 
Operating Activities
Net loss                                             $(14,332,994)  $(2,649,590)
Adjustments to reconcile net loss to net cash    
 used in operating activities:
   Depreciation and amortization                          955,095       623,755
   Purchased research and development                   9,200,000            -
   Stock options issued to advisors and others          1,010,200
   Settlement of joint marketing agreement                     -        125,000
   Changes in operating assets and liabilities net
    of effects from purchase of EyeSys
    Technologies, Inc.  
      Accounts receivable                              (2,185,517)     (724,238)
      Inventories                                      (4,499,442)     (310,870)
      Prepaid expenses and other current assets        (4,897,036)     (250,538)
      Accounts payable                                    598,295      (928,361)
      Accrued liabilities                                 486,282       326,295
                                                     ------------   -----------
Net cash used in operating activities                 (13,665,117)   (3,788,547)

Investing activities
Purchases of short-term investments                    (4,886,999)   (3,033,153)
Investment in Ophthalmic Imaging Systems                 (882,642)
Patent expenditures                                      (103,305)     (128,458)
Purchase of property and equipment                       (249,880)      (42,985)
Cash acquired in purchase of EyeSys
 Technologies, Inc.                                        51,355            -
                                                     ------------   -----------
Net cash used in investing activities                  (6,071,471)   (3,204,596)

Financing activities
Net borrowings (payments) under line of credit           (811,195)      300,000
Restricted cash for credit line                        (1,100,000)           -
Proceeds from exercise of stock options and
 warrants                                              28,724,819       300,774
Proceeds from equity offering                                  -     10,449,512
Retirement of note payable                                     -       (481,195)
Proceeds on notes payable and capital
 lease obligations                                        231,669        77,145
                                                     ------------   -----------
Net cash provided by financing activities              27,045,293    10,646,236
                                                     ------------   -----------
Net increase in cash and cash equivalents               7,308,705     3,653,093
Cash and cash equivalents at beginning of period          173,610        35,463
                                                     ------------   -----------
Cash and cash equivalents at end of period           $  7,482,315   $ 3,688,556
                                                     ============   ===========
Supplemental schedule of non cash activities:
Details of EyeSys Technologies, Inc.:
      Fair value of assets                           $  9,154,500            -
      Purchased research and development                9,200,000            -
      Liabilities                                      (5,869,500)           -
      Stock issued                                    (12,015,000)           -
                                                     ------------   -----------
      Cash paid                                      $    470,000   $         0
                                                     ============   ===========
</TABLE> 
See condensed notes to unaudited financial statements.
<PAGE>
 
                          PREMIER LASER SYSTEMS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   UNAUDITED


NOTE 1:   General

     On April 15, 1998, the Company announced that its relationship with Henry 
Schein Inc. (Schein) had reached an impasse. The dispute involved an order 
shipped during the Company's third quarter and included in reported revenues 
for that period. Because this dispute has not been resolved, previously reported
operating results for the third quarter have been restated to eliminate and/or 
reserve as bad debts the Schein billings and certain other sales returns that 
came to light after the initial filing of the third quarter Form 10-Q.

     The Company's independent auditors unexpectedly resigned during May 1998 
and withdrew their opinion on the Company's fiscal year 1997 financial 
statements. Because of the extended period of time that had passed since the 
initial report was issued, a number of matters were identified of which the 
Company was not aware when it initially issued the 1997 financial statements. 
Although the Company believes the initially issued fiscal 1997 financial 
statements were not materially misstated in terms of net loss, total assets and 
shareholders' equity, the statements have nonetheless been restated in the 
interest of full disclosure. No significant portion of the fiscal 1997 
restatement related to the first three quarters of that year; accordingly, the 
condensed consolidated statements of operations for the three and nine month 
periods ended December 31, 1996 have not been restated.

     The effects on the Company's previously issued quarterly report for the 
quarterly period ended December 31, 1997 are summarized as follows:

<TABLE> 
<CAPTION> 
                                                       Previously                            
                                                        Reported      March 31,     December 31,     Restated   
                                                      December 31,      1997            1997        December 31,
                                                          1997       Restatement    Restatement         1997    
                                                      -----------    -----------    ------------    ----------- 
<S>                                                   <C>            <C>            <C>             <C>         
Consolidated balance sheet as of December 31, 1997:                                                             
  Current assets                                      $37,874,133    $  (355,000)   $ (2,114,994)   $35,404,139 
  Other assets                                         17,090,881      2,113,725                     19,204,606 
                                                      -----------    -----------    ------------    ----------- 
  Total assets                                        $54,965,014    $ 1,758,725    $ (2,114,994)   $54,608,745 
                                                      ===========    ===========    ============    =========== 
                                                                                                                
  Current liabilities                                 $ 8,138,852    $    88,000                    $ 8,226,852 
  Capital lease obligations, net of current portion       169,933                                       169,933 
  Minority interest                                                    2,053,725                      2,053,725  
  Net shareholders' equity                             46,656,229       (383,000)     (2,114,994)    44,158,235
                                                      -----------    -----------    ------------    ----------- 
  Total liabilities and shareholders' equity          $54,965,014    $ 1,758,725    $ (2,114,994)   $54,608,745  
                                                      ===========    ===========    ============    =========== 
</TABLE> 

<TABLE> 
<CAPTION> 

                                       Three Months Ended December 31, 1997      Nine Months Ended December 31, 1997
                                       ------------------------------------     ---------------------------------------
                                       Previously   Increase                     Previously    Increase
                                        Reported   (Decrease)    Restated         Reported    (Decrease)     Restated
                                       ---------- ------------  -----------     ------------  -----------  ------------
<S>                                    <C>         <C>          <C>             <C>           <C>          <C> 
Consolidated Statement of Operations     
  
  Net sales                            $7,163,360  $(3,594,404) $ 3,568,956     $ 12,320,574  $(3,594,404) $  8,726,170
  Cost of sales                         3,850,353   (1,544,987)   2,305,366        6,935,796   (1,544,987)    5,390,809
                                       ---------- ------------  -----------     ------------  -----------  ------------
  Gross profit                          3,313,007   (2,049,417)   1,263,590        5,384,778   (2,049,417)    3,335,361
  Selling and marketing expenses        1,474,385                 1,474,385        3,183,717                  3,183,717
  General and administrative expenses     778,346       65,577      843,923        1,782,588       65,577     1,848,165
  All other expenses                      832,835                   832,835       13,362,819                 13,362,819
                                       ---------- ------------  -----------     ------------  -----------  ------------
  Loss from operations                    227,441   (2,114,994)  (1,887,553)     (12,944,346)  (2,114,994)  (15,059,340)
  Interest income, net                    224,824                   224,824          726,346                    726,346
                                       ---------- ------------  -----------     ------------  -----------  ------------
  Net loss                             $  452,265 $ (2,114,994) $(1,662,729)    $(12,218,000) $(2,114,994) $(14,332,994)
                                       ========== ============  ===========     ============  ===========  ============

  Net loss per share                   $     0.04 $      (0.17) $     (0.14)    $      (1.14) $     (0.20) $      (1.34)
                                       ========== ============  ===========     ============  ===========  ============
</TABLE> 

     In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements include all adjustments (which
include only normal recurring adjustments) necessary for a fair presentation of
the financial position of the Company at December 31, 1997 and the results of
operations and cash flows for the nine months ended December 31, 1997 and 1996.
Although the Company believes the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for interim periods are not necessarily
indicative of results of operations to be expected for the full year.

     The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its wholly and majority-owned
subsidiaries. All intercompany transactions and balances have been eliminated.

     The investment in a company in which the Company owns greater than 20%, but
less than 50%, is accounted for under the equity method (see also Note 4: Recent
Developments).

     The financial information in this quarterly report should be read in
conjunction with the March 31, 1997 consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K/A (as amended) for
the fiscal year ending March 31, 1997.

     The Company has suffered recurring losses from operations and may continue
to incur losses for the foreseeable future due to the significant costs
anticipated to be incurred in connection with manufacturing, marketing and
distributing its laser products. In addition, the Company intends to conduct
continuing research and development activities, including regulatory submittals
and clinical trials to develop additional applications for its laser technology.
The Company operates in a highly competitive environment and is subject to all
of the risks inherent in new business enterprises. The Company believes the
proceeds from the exercise of its outstanding warrants and options will be
sufficient to meet its working capital requirements through at least fiscal
1999.

   
NOTE 2:   Acquisitions

     On September 30, 1997, the Company acquired all of the equity interests of
EyeSys Technologies, Inc. ("EyeSys"), a manufacturer and distributor of a
specialized line of diagnostic ophthalmic equipment, for approximately $12.5
million in the form of approximately 1,236,668 shares of the Company's common
stock and $470,000 in cash. The acquisition was accounted for as a purchase. As
a result of the EyeSys acquisition, the Company recorded a one-time, non-cash
charge of $9.2 million for purchased research and development in its fiscal year
1998 second quarter results of operations.

<PAGE>
 
The following unaudited pro forma consolidated results of operations give effect
to the EyeSys acquisition as though it had occurred at the beginning of the
periods presented.

<TABLE>
<CAPTION>
 
                                    Six-months Ended
                                      September 30,
                                  1997            1996
                              ------------    ------------  
<S>                           <C>             <C>  
Net sales                     $  6,244,249    $  6,988,563
Net loss                       (14,456,068)    (14,581,729)
Net loss per share                   (1.48)          (1.49)
</TABLE>

     The unaudited pro forma information is not necessarily indicative either of
results of operations that would have occurred had the purchase been made on
April 1, 1996, or future results of operations of the Company.


NOTE 3:   Inventories

Inventories are summarized as follows:

<TABLE> 
<CAPTION> 

                                December 31, 1997     March 31, 1997
                                -----------------     --------------
<S>                             <C>                   <C>
     Raw Materials                     $4,225,867         $1,583,460
     Work-in-progress                   1,194,028            101,802
     Finished goods                     3,263,072          1,599,370
                                       ----------         ----------
 
                                       $8,682,967         $3,284,632
                                       ----------         ----------
</TABLE>

NOTE 4:   Recent Developments

     The Company recently acquired on the open market 30% of the outstanding
common stock of Ophthalmic Imaging Systems Inc. ("OISI"), a company engaged in
the business of designing, developing, manufacturing and marketing digital
imaging systems and image enhancement and analysis software for use by
practitioners in the ocular health field. The Company's investment of $883,000 
is included in other assets on the accompanying balance sheet.

     On February 13, 1998, the Company entered into an agreement with OISI
whereby the companies will negotiate towards the possible friendly acquisition
of OISI by Premier. This "standstill" agreement, which expires March 6, 1998,
limits Premier's ability to engage in certain acquisition-related activities and
restricts OISI's ability to solicit other acquisition proposals while the
agreement is in effect.

     In addition, the Company recently completed the redemption of all of the
outstanding publicly traded Class A Warrants. In connection with such
redemption, 2,200,043 or approximately 99% of the outstanding Class A Warrants
were exercised by the holders thereof
<PAGE>
 
and the Company received aggregate cash proceeds of $14,300,279 including
proceeds from the exercise of warrants associated with unit purchase options
granted in connection with prior offerings and exercised during the warrant call
period.

NOTE 5:   Litigation

     The Company entered into an agreement with Infrared Fiber Systems, Inc.
(IFS), as a supplier of certain fiber optics that expires in the fiscal year
ending March 31, 2002. The agreement requires the supplier to sell exclusively
to the Company fiber optics for medical and dental applications as long as the
Company purchases defined minimum amounts.

     In March 1994, the Company initiated litigation against IFS.  The Company's
complaint alleges that IFS and two of its officers misrepresented IFS' ability
to supply optical fibers, and that IFS breached its supply agreement and certain
warranties. In April 1994, IFS filed a cross-complaint alleging breach of
contract and intentional interference with prospective economic advantage,
seeking declaratory relief that the contract has been terminated and that IFS is
free to market its fiber optics to others. In July 1994, Coherent, Inc. a major
shareholder of IFS and a manufacturer of medical lasers which employ IFS optical
fibers, joined the lawsuit for the express purpose of defending their rights to
the IFS optical fibers. In May 1995, the Company instituted litigation
concerning this dispute in Orange County, California Superior Court against
Coherent, Westinghouse Electric Corporation ("Westinghouse") and an individual
employee of Westinghouse who was an officer of IFS from 1986 to 1993, when the
events involved in the federal action against IFS took place and while
Westinghouse owned a substantial minority interest in IFS. The complaint charges
that Coherent conspired with IFS in the wrongful conduct which is the subject of
the federal lawsuit and interfered with the Company's contracts and relations
with IFS and with prospective contracts and advantageous economic relations with
third parties. The complaint asserts that Westinghouse is liable for its
employee's wrongful acts as an IFS executive while acting within the scope of
his employment at Westinghouse. The lawsuit seeks injunctive relief and
compensatory damages. In October 1995, the federal action was stayed by order of
the court in favor of the California state court action, in which the pleadings
have been amended to include all claims asserted by the Company in the federal
action. 

     In July 1996, the court in the California state court action granted 
demurrers by Westinghouse and the employee of Westinghouse to all causes of 
action against them, as well as all but one of the Company's claims against 
Coherent. As a result, the claims that were the subject of the granted demurrers
have been dismissed, subject to the Company's right to appeal. The Company has 
filed an appeal of these decisions as they relate to Westinghouse and the 
Westinghouse employee, and briefs have been submitted. No date has been set for 
a hearing of this appeal. No trial date has been set as to the remaining 
outstanding causes of action.

     The Company and certain of the officers and directors have been named in a 
number of securities class action lawsuits which allege violations of the 
Securities Exchange Act or the California Corporations Code. The plaintiffs seek
damages on behalf of classes of investors who purchased the Company's stock 
between May 7, 1997 and April 15, 1998. The complaints allege that the Company 
misled investors by failing to disclose material information and making material
misrepresentations regarding the Company's business operations and projections. 
The Company has also been named in a shareholder derivative action purportedly 
filed on its behalf against certain officers and directors arising out of the 
same alleged acts. Although the Company intends to vigorously defend itself in 
the actions, the ultimate outcome is uncertain and no provision for any 
settlement has been reflected in the accompanying financial statements. Any 
significant adverse resolution of the actions would seriously impact the 
Company's financial condition. The Company maintains insurance coverage for 
these types of actions and has filed claims with the carrier. The policy has a 
limit of $5 million and a $250,000 deductible amount.

     The Company is involved in various other disputes and lawsuits arising from
its normal operations. The litigation process in inherently uncertain and it is 
possible that the resolution of these disputes and other lawsuits may adversely 
affect the Company, however, it is the opinion of management, that the outcome 
of such other matters will not have a material adverse impact on the Company's 
financial position, results of operations or cash flows.


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

     This Quarterly Report contains forward-looking statements.  The Company's
actual results may differ significantly from the results discussed in these
forward-looking statements. Factors that may cause such differences include
market acceptance of the Company's products, prices charged by the Company's
suppliers, future changes in the Company's technology and the effects of the
introduction of new products by the Company's competitors, among others.


Results of Operations

     Net sales by the Company for the quarter ended December 31, 1997 (the "1997
<PAGE>
 
Quarter") increased approximately 142% to $3,569,000 as compared to $1,473,000
for the quarter ended December 31, 1996 (the "1996 Quarter"). Sales of both
ophthalmic and dental lasers increased significantly. Sales to two distributors,
Sullivan Schein and Marco Technologies, Inc., were initiated during the quarter
(see Note 1 for discussion of Sullivan Schein sales). Net sales for the nine
month period ended December 31, 1997 (the "1997 Nine Month Period") increased
approximately 124% to $8,726,000 from $3,887,000 from the nine month period
ended December 31, 1996 (the "1996 Nine Month Period").

     The Company's gross profit for the 1997 Quarter and 1997 Nine Month Period
were $1,264,000 and $3,335,000 respectively, as compared to a gross profit of
$538,000 and $1,178,000 in the 1996 Quarter and the 1996 Nine Month Period,
respectively. The decrease in gross profit to 35% in the 1997 Quarter is due
primarily to costs associated with inefficiencies of training new service
personnel and expenses associated with rapidly expanding production capabilities
to meet the demand for hard tissue lasers, partially offset by decreased
material costs resulting from volume ordering and increased manufacturing
volume. In addition, margins were negatively affected by distribution discounts
to Sullivan Schein and Marco Technologies.

     Selling and marketing expenses totaled $1,474,000 for the 1997 Quarter and
$3,184,000 for the 1997 Nine Month Period, as compared to $582,000 for the 1996
Quarter and $1,534,000 for the 1996 Nine Month Period. The increase was
primarily attributable to marketing and sales efforts related to the Company's
dental and ophthalmic products, including increased commissions and related
selling expenses, expenses of sales and marketing personnel, trade show
attendance and advertising expenses.

     Research and development expenses increased to $833,000 and $2,016,000 for
the 1997 Quarter and 1997 Nine Month Period, as compared to $436,000 and
$785,000 for the 1996 Quarter and 1996 Nine Month Period, respectively.
Reimbursements from the Small Business Innovative Research grant awarded to the
Company of $448,000 reduced research and development expenses in the 1996 Nine
Month Period. Increased expenses in the 1997 Quarter were the result of the
development of new products in the ophthalmic and dental business and include
expenses from Premier's recently acquired subsidiaries.

     Settlement of joint marketing agreement expenses in the 1996 Nine Month
Period included a one time writedown associated with the settlement and
termination of the Company's marketing agreement with IBC. As part of this
settlement, the Company guaranteed approximately $201,000 of indebtedness to a
third party, in exchange for exclusive rights to the MOD argon laser technology.
The Company has fully reserved for the guarantee and a note receivable from IBC.

     General and administrative expenses increased to $844,000 in the 1997
Quarter and $1,848,000 in the 1997 Nine Month Period from $501,000 and
$1,109,000 in the 1996 Quarter and 1996 Nine Month Period, respectively. This
increase was primarily attributable to expenses associated with the Company's
recently acquired subsidiaries.

     Net interest income amounted to $225,000 in the 1997 Quarter and $726,000
in the 1997 Nine Month Period compared to net interest income of $1,000 in the
1996 Quarter and net interest expense of $69,000 in the 1996 Nine Month Period.
These increases reflected the increased cash available for the
<PAGE>
 
Company to invest following the exercise of warrants in the 1997 Nine Month
Period offset by interest expense associated with the Silicon Valley Bank credit
line.

     The Company expensed $9,200,000 of in-process research and development in
connection with the EyeSys Technologies, Inc. acquisition in the 1997 Nine Month
Period. The acquisition also resulted in merger related and integration costs of
$2,147,000 in the 1997 Nine Month Period as a result of the acquisition.

     The Company recognized a net loss of $1,663,000 in the 1997 Quarter
compared to a net loss of $979,000 in the 1996 Quarter. The Company's net loss
increased to $14,333,000 in the 1997 Nine Month Period compared to $2,650,000 in
the 1996 Nine Month Period. The higher loss in 1997 Quarter was primarily
attributable to the increase in sales and marketing expenses, research and
development expenses, and general and administrative expenses, offset by a
higher gross profit and interest income. The increased loss in the 1997 Nine
Month Period was primarily attributable to charges incurred in connection with
the EyeSys acquisition.


Liquidity and Capital Resources

     The Company's operations have been financed primarily by the proceeds from
sales of the Company's equity securities, including an initial public
offering in December 1994, a secondary public offering in October 1996, a
warrant call in December 1997, and the voluntary exercise of publicly traded
warrants and stock options. In addition, net sales and proceeds from a SBIR
grant have contributed to the Company's operating cash requirement. The
Company's principal capital requirements include the financing of inventory,
accounts receivable, research and development activities, the development of an
ophthalmic and a surgical sales force, the development of marketing programs and
the acquisition and/or licensing of patents.

     At December 31, 1997, the Company had unrestricted cash and short-term
investments of $17,220,000, restricted cash of $2,150,000 and working capital
was $27,177,000. The increase in cash and short-term investments was primarily
the result of proceeds received upon the exercise of Class A and Class B
Warrants and stock options. For the period May 12, 1997 to December 31, 1997,
the Company received gross proceeds of approximately $25,859,000 from the
exercise of approximately 2,380,000 Class A Warrants and approximately 1,299,000
Class B Warrants. As a result of such exercises, the Company issued
approximately 2,380,000 Class B Warrants and 3,679,000 shares of Class A Common
Stock.

     The Company's subsidiary, EyeSys Technologies, Inc., maintains a credit
facility with Silicon Valley Bank which permits borrowings of up to $2,100,000.
Borrowings under the credit facility are secured by a certificate of deposit
pledged to Silicon Valley Bank by the Company pursuant to a Pledge Agreement and
bear interest at prime. The line expires in September 1998. As of December 1997,
total borrowings outstanding under this agreement amounted to $1,936,000.

     At March 31, 1997, the Company had net operating loss carryforwards for
federal income tax purposes totaling approximately $18,400,000 which will begin
to expire in the Company's fiscal year
<PAGE>
 
2006.  The Tax Reform Act of 1986 includes provisions which may limit the net
operating loss carryforwards available for use in any given year if certain
events occur, including significant changes in stock ownership.  Utilization of
the Company's net operating loss carryforwards to offset future income may be
limited.

     The Company's future capital requirements will depend on many factors,
including the progress of the Company's research and development activities, the
scope and results of preclinical studies and clinical trials, the costs and
timing of regulatory approvals, inventory requirements, the rate of technology
advances by the Company, competitive conditions within the medical laser
industry, the establishment of manufacturing capacity and the establishment of
collaborative marketing and other relationships which may either involve cash
infusions to the Company, or require additional cash from the Company. The
Company's ability to meet its working capital needs will be dependent on its
ability to achieve a positive cash flow from operations and sustain profitable
operations. No assurance can be given that the Company will be able to achieve a
positive cash flow or maintain profitable operations.


Seasonality of Business

     To date, the Company's revenues have typically been higher in the second
and fourth calendar quarters. This seasonality reflects the timing of major
medical and dental industry trade shows in these quarters, significantly reduced
sales during the summer and the effect of year end tax planning influencing the
purchasing of capital equipment for depreciation during the fourth calendar
quarter. Although revenues during the summer of 1997 did not follow this
historical pattern, the Company expects this seasonality will continue.



Government Grants

     The Company has been awarded a SBIR grant for approximately $750,000 for
the study of laser cataract emulsification. Approximately $697,634 of this
amount was drawn at March 31, 1997. There have been no draws in the 1997 Period.
The remainder of the grant can be drawn over the next six months upon the
achievement of specified criteria.
<PAGE>
 
 
Item 3.   Quantitative and Qualitative Disclosures about Market Risk.
          ---------------------------------------------------------- 

No disclosure required.

                                     -11-
<PAGE>
 
                          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.
          ----------------- 

     The Company's Quarterly Report on Form 10-Q for the quarter ended December
31, 1997 provides information concerning certain pending litigation to which the
Company is a party.

Securities Class Action

     On May 1, 1998, a class action suit (the "Valenti Litigation") was 
commenced in the United States District of Court for the Central District of 
California pursuant to federal securities laws on behalf of purchasers of the 
Company's securities during the period from February 12, 1998 through April 15, 
1998. The Complaint alleges that the Company and certain of its officers and 
directors violated the federal securities laws by issuing false and misleading 
statements and omitting material facts regarding the Company's financial results
and operations during such period. Among other things, the complaint alleges 
that the defendants materially misstated the Company's financial results for the
fiscal quarter ended December 31, 1997 and that as a result of such
misstatements the plaintiff suffered damages as a result of a decrease in the
market price of the Company's publicly traded securities.

     After the filing of such complaint, a number of similar complaints have 
also been filed in the United States District Court for the Central District of 
California, seeking certification as class actions, and covering class periods 
commencing as early as May 7, 1997. Such complaints alleged facts similar to 
those described above with respect to the Valenti Litigation, as well as 
allegations that the Company artificially inflated the price of its outstanding 
publicly traded securities as a result of misrepresentations relating to the 
market and prospects for sale of its Centauri Er:YAG laser. All of the above 
described complaints seek monetary damages in unspecified amounts, together 
with attorneys' fees, interest, costs and related remedies.

     The Company presently intends to seek to have all of such securities class 
action lawsuits consolidated into a single action.

     The Company has also been named as a nominal defendant in a shareholder 
derivative lawsuit filed in the Orange County, California Superior court, in a 
case captioned Eskeland vs. Cozean, et al. The complaint was filed by a 
shareholder of the Company, on behalf of the Company, against certain of the 
Company's officers and directors, including Colette Cozean, Michael Hiebert, 
Richard Roemer, Ronald Higgins, Patrick Day, Grace Chin-Hsin Lin, G. Lynn 
Powell, and E. Donald Shapiro. The complaint alleges, among other things, that 
such persons violated their fiduciary duty to the Company by exposing the 
Company to liability under the securities laws, failing to ensure that the 
Company maintained adequate accounting controls, and related alleged actions and
omissions. Although the Company is a named defendant, the lawsuit seeks to 
recover damages from the individual defendants on behalf of the Company. 
Accordingly, it is not clear whether the Company will have any liability or 
incur any material loss as a result of being named as a defendant in this 
matter.

Investigations and Other Matters

     The Company has been notified that the Securities and Exchange Commission 
("SEC") and the Nasdaq Stock Market have instituted investigations concerning 
matters pertaining to the Company's revenue reporting practices, and related 
management issues. The Company is cooperating with both the SEC and the Nasdaq 
Stock Market in connection with these investigations. These investigations, the 
Company believes, generally relate to whether the Company, in SEC filings and
press releases issued prior to the end of the 1998 fiscal year, properly
recognized revenues for transactions occurring during fiscal 1997, and at 
interim periods in fiscal 1998. To date, the SEC has not indicated that it is 
seeking to impose any penalties on the Company or that it is made any specific 
findings with respect to the Company's accounting practices. However, the Nasdaq
Stock Market has notified the Company that it proposes to delist the Company's 
securities from the Nasdaq Stock Market. The Company has filed an appeal of this
proposed action, and a hearing on the matter is presently scheduled for 
September 17, 1998. If this appeal is denied, the delisting of the Company's 
securities would materially and adversely affect the liquidity, and consequently
the value, of such securities.

Item 2.   Changes in Securities.
          --------------------- 

     During the quarter ended December 31, 1997, the Company made the following
issuances of its securities (not including sales that were registered under the
Securities Act of 1933, as amended (the "Act")):

     (a) On November 24, 1997 the Company issued options to purchase an
aggregate of 150,000 shares of its Class A Common Stock to two persons in
connection with the hiring of such persons as employees of the Company.  The
options: (i) have terms of 10 years, (ii) have an exercise price of $9.625 per
share; and (iii) vest in three equal installments over a period of three years,
commencing March 31, 1999. No cash consideration was paid in connection with the
issuance of these options. There were no underwriters for these issuances. These
issuances did not constitute "sales" for purposes of the Act, and had they
constituted sales would have been exempt from registration under the Section
4(2) of the Act.

     (b) On October 1, 1997 the Company issued options to purchase an aggregate
of 51,000 shares of its Class A Common Stock to three persons in connection
with services performed by those individuals on behalf of the Company.  The
options: (i) have terms of 10 years, (ii) have an exercise price of $9.625 per
share; and (iii) vest in four equal installments over a period of four years,
commencing October 1, 1998. No cash consideration was paid in connection with
the issuance of these options. There were no underwriters for these issuances.
These issuances were exempt from registration under the Section 4(2) of the Act,
insofar as they were made to a small number of issuees who are financially
sophisticated, in privately negotiated transactions and were not accompanied by
any advertising or general solicitation.

Item 3.   Defaults Upon Senior Securities.
          ------------------------------- 

     Not Applicable.

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

     Not Applicable.

                                     -12-
<PAGE>
 
Item 5.   Other Information.
          ----------------- 

     None.

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

     (a)  Exhibits:

          27  Financial Data Schedule (filed herewith)

     (b)  Reports on Form 8-K:  During the quarter ended December 31, 1997, the
Company filed with the Securities and Exchange Commission the following Current
Reports on Form 8-K:

          (1)  Current Report on Form 8-K dated October 14, 1997, reporting,
          under Item 2, the acquisition by the Company of EyeSys Technologies,
          Inc. (as amended under Form 8-K/A dated November 14, 1997), including
          the following financial statements:

               (i)   Balance Sheet of EyeSys Technologies, Inc., as of June 30,
               1997.

               (ii)  Statements of Operation of EyeSys Technologies, Inc., for
               the six months ended June 30, 1997 and 1996.

               (iii) Statements of Cash Flow of EyeSys Technologies, Inc., for
               the six months ended June 30, 1997 and 1996.

               (iv)  Unaudited Pro Forma Condensed Consolidated Balance Sheet as
               of June 30, 1997.

               (v)   Unaudited Pro Forma Condensed Consolidated Statement of
               Operations for the year ended March 31, 1997.

               (vi)  Unaudited Pro Forma Condensed Consolidated Statement of
               Operations for three months ended June 30, 1997.

               (vii) Notes to Unaudited Pro Forma Condensed Combined Financial
               Statements.

          (2)  Current Report on Form 8-K dated December 5, 1997, reporting,
          under Item 5, the commencement of the redemption by the Company of its
          outstanding Class A Warrants.

          (3)  Current Report on Form 8-K dated December 30, 1997, reporting,
          under Item 5, the acquisition of outstanding shares of Common Stock of
          Ophthalmic Imaging Systems, Inc.

                                     -13-
<PAGE>
 
     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.


                                  PREMIER LASER SYSTEMS, INC.

                                    
Dated:  August 31, 1998         By: /s/ COLETTE COZEAN
                                    -------------------------------------
                                    Colette Cozean, Ph.D.
                                    Chief Executive Officer and President

                                     -14-