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
            September 30, 1998.
                                                         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:  0-19671

                             LASERSIGHT INCORPORATED
                             -----------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                           65-0273162
         --------                                          -----------
(State of Incorporation)                       (IRS Employer Identification No.)



          3300 University Blvd., Suite 140, Winter Park, Florida 32792
          ------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (407) 678-9900
                                 --------------
              (Registrant's telephone 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.


Yes   X            No
    -----            -----


         The Number of shares of the registrant's Common Stock outstanding as of
November 13, 1998 is 13,157,635.


                                       1


<PAGE>


                    LASERSIGHT INCORPORATED AND SUBSIDIARIES

Except for the historical  information  contained herein, the discussion in this
Report contains forward-looking statements (within the meaning of Section 21E of
the Exchange Act) that involve  risks and  uncertainties.  The Company's  actual
results could differ  materially from those  discussed here.  Factors that could
cause or contribute to such differences  include,  but are not limited to, those
discussed  in the sections  entitled  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations - Uncertainties and Other Issues"
in this  report and in the section  entitled  "Risk  Factors"  in the  Company's
Registration  Statement on Form S-3/A (file no.  333-59369)  filed on August 31,
1998.  The Company  undertakes  no  obligation  to update any such factors or to
publicly  announce the results of any  revisions  to any of the  forward-looking
statements contained herein to reflect any future events or developments.

                                      INDEX
                                                                                
PART I. FINANCIAL INFORMATION

                  Item 1. Condensed Consolidated Financial Statements

                          Condensed  Consolidated Balance Sheets as of September
                          30, 1998 and December 31, 1997

                          Condensed  Consolidated  Statements of Operations  for
                          the Three Month  Periods and Nine Month  Periods Ended
                          September 30, 1998 and 1997

                          Condensed  Consolidated  Statements  of Cash Flows for
                          the Nine Month  Periods  Ended  September 30, 1998 and
                          1997

                          Notes to Condensed Consolidated Financial Statements


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

PART II.        OTHER INFORMATION

                Item 1.     Legal Proceedings                                   

                Item 2.     Changes in Securities                               

                Item 3.     Defaults Upon Senior Securities                     

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

                Item 5.     Other Information    
                                
                Item 6.     Exhibits and Reports on Form 8-K    


                                       2



<PAGE>
<TABLE>


                         PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
                    LASERSIGHT INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<CAPTION>

                                                                                     September 30,         December 31,
                                                                     ASSETS               1998                 1997
                                                                                     ---------------    --------------
CURRENT ASSETS                                                                          (Unaudited)
<S>                                                                                    <C>               <C>         
  Cash and cash equivalents                                                            $  9,272,460      $  3,858,400
  Marketable equity securities                                                                   --         7,475,000
  Accounts receivable - trade, net                                                        5,073,299         2,649,202
  Notes receivable - current portion, net                                                 5,364,823         3,762,341
  Inventories                                                                             7,222,769         4,348,235
  Deferred tax assets                                                                       401,379           571,009
  Other current assets                                                                      222,759           219,723
                                                                                     ---------------    --------------
                                                       TOTAL CURRENT ASSETS              27,557,489        22,883,910

Restricted cash                                                                             194,000           200,000
Notes receivable, less current portion, net                                               3,176,357         2,380,193
Property and equipment, net                                                               1,497,316         1,354,168
Patents, net                                                                              4,590,426        11,275,289
Pre-market approval application, net                                                      3,890,734         2,571,682
Goodwill, net                                                                             6,684,020         7,077,491
Other assets, net                                                                         2,006,822         2,718,340
                                                                                     ---------------    --------------
                                                                                       $ 49,597,164      $ 50,461,073
                                                                                     ===============    ==============

                                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                                                     $  2,113,421      $  2,142,979
  Note payable, less discount                                                                    --         1,758,333
  Accrued expenses                                                                        2,504,799         2,782,521
  Accrued commissions                                                                     1,601,095         1,230,474
  Income tax payable                                                                         11,409         1,255,491
  Deferred royalty revenue, current portion                                                 400,000                --
  Other current liabilities                                                               1,057,235           984,412
                                                                                     ---------------    --------------
                                                  TOTAL CURRENT LIABILITIES               7,687,959        10,154,210

Refundable deposits                                                                         194,000           200,000
Accrued expenses, less current portion                                                      636,965           518,730
Deferred royalty revenue, less current portion                                              533,333                --
Deferred income taxes                                                                       401,379           571,009
Long-term obligations                                                                       500,000           500,000
Commitments and contingencies

Redeemable convertible preferred stock:
 Series B - par value $.001 per share; authorized 1,600 shares: 0 and 1,295
   issued and outstanding at September 30, 1998 and December 31, 1997,                           --        11,477,184
respectively

Stockholders' equity:
Convertible preferred stock:
Series C - par value $.001 per share; authorized 2,000,000 shares; 2,000,000 and
   zero issued and  outstanding at September 30, 1998 and December 31, 1997,  
   respectively                                                                               2,000
Series D - par value $.001 per share; authorized 2,000,000 shares; 2,000,000 and
zero issued and  outstanding at September 30, 1998 and December 31, 1997, 
   respectively                                                                               2,000
Common stock - par value $.001 per share; authorized 40,000,000 shares;
   13,312,835 and 10,149,872 shares issued at September 30, 1998 and                         13,313            10,150
   December 31, 1997, respectively
Additional paid-in capital                                                               59,073,323        40,045,564
Stock subscription receivable                                                           (1,140,000)       (1,140,000)
Accumulated deficit                                                                    (17,730,224)      (11,865,914)
Accumulated other comprehensive income - unrealized gain                                         --           604,500
Less treasury stock, at cost;  155,200 and 165,200 common shares at
September 30, 1998 and December 31, 1997, respectively                                    (576,884)         (614,360)
                                                                                     ---------------    --------------
                                                                                         39,643,528        27,039,940
                                                                                     ---------------    --------------
                                                                                       $ 49,597,164      $ 50,461,073
                                                                                     ===============    ==============


      See accompanying notes to the condensed consolidated financial statements.


                                       3
</TABLE>
<PAGE>


                    LASERSIGHT INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
<TABLE>
<CAPTION>

                                                   Three Months Ended                        Nine Months Ended
                                                     September 30,                             September 30,
                                          -------------------------------------     ------------------------------------
                                               1998                 1997                 1998                1997
                                          ---------------      ----------------     ----------------    ----------------

REVENUES:
<S>                                          <C>                   <C>                  <C>                 <C>        
    PRODUCTS                                 $ 5,121,834           $ 2,677,831          $13,947,836         $ 8,362,374
    SERVICES                                     138,780             3,478,528              504,977           9,720,699
                                          ---------------      ----------------     ----------------    ----------------
                                               5,260,614             6,156,359           14,452,813          18,083,073

COST OF REVENUE:
    PRODUCT COST                               1,444,653             1,068,498            4,334,274           2,934,001
    COST OF SERVICES                              61,063             2,421,783              222,190           6,725,488
                                          ---------------      ----------------     ----------------    ----------------

GROSS PROFIT                                   3,754,898             2,666,078            9,896,349           8,423,584

RESEARCH, DEVELOPMENT AND REGULATORY
  EXPENSES                                       923,850               816,522            2,485,194           1,729,153

SELLING RELATED EXPENSES                       1,421,818               623,060            3,385,971           1,982,269
OTHER GENERAL AND ADMINISTRATIVE
  EXPENSES                                     3,239,836             2,746,800            8,073,145           8,324,327
AMORTIZATION                                     542,577               499,181            1,677,598             987,151
                                          ---------------      ----------------     ----------------    ----------------
                                               5,204,231             3,869,041           13,136,714          11,293,747
                                          ---------------      ----------------     ----------------    ----------------

LOSS FROM OPERATIONS                         (2,373,183)           (2,019,485)          (5,725,559)         (4,599,316)

OTHER INCOME AND EXPENSES
  Interest and dividend income                   224,525                94,401              450,823             292,272
  Interest expense                               (1,272)             (483,794)            (721,813)           (911,966)
  Gain on sale of investments and
  subsidiaries
      and other                                       --                    --              364,452           (280,400)
                                          ---------------      ----------------     ----------------    ----------------

NET LOSS BEFORE INCOME TAXES                 (2,149,930)           (2,408,878)          (5,632,097)         (5,499,410)

INCOME TAX PROVISION                                  --                    --              232,213                  --
                                          ---------------      ----------------     ----------------    ----------------

NET LOSS                                     (2,149,930)           (2,408,878)          (5,864,310)         (5,499,410)


CONVERSION DISCOUNT ON
    PREFERRED STOCK                                   --              (41,573)            (858,872)            (41,573)

PREFERRED STOCK ACCRETION
    AND DIVIDEND REQUIREMENTS                         --                    --          (2,751,953)            (13,350)
                                          ---------------      ----------------     ----------------    ----------------


LOSS ATTRIBUTABLE TO COMMON
   SHAREHOLDERS                             $(2,149,930)          $(2,450,451)         $(9,475,135)        $(5,554,333)
                                          ===============      ================     ================    ================

LOSS PER COMMON SHARE
  Basic and Diluted:                             ($0.17)               ($0.25)              ($0.79)             ($0.59)
                                          ===============      ================     ================    ================

WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING
  Basic and Diluted:                          12,935,000             9,812,000           11,969,000           9,342,000
                                          ===============      ================     ================    ================



          See accompanying notes to condensed consolidated financial statements.

</TABLE>


                                       4

<PAGE>



                    LASERSIGHT INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    1998                 1997
                                                                              -----------------    ------------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                              <C>                   <C>          
  Net loss                                                                       $ (5,864,310)         $ (5,499,410)
  Adjustments to reconcile net loss to net cash used in operating
    activities:
  Depreciation and amortization                                                      2,559,904             1,814,587
  Gain on sale of investments and subsidiaries                                       (364,452)                    --
  Decrease (increase) in accounts and notes receivable                             (4,676,783)               292,828
  Increase in inventories                                                          (1,647,853)             (879,348)
  Increase (decrease) in accounts payable                                             (95,132)               308,885
  Increase (decrease) in accrued expenses                                             (88,520)               724,447
  Income taxes                                                                       (873,582)               780,750
  Deferred royalties                                                                   933,333                    --
  Other                                                                                466,003             (498,467)
                                                                              -----------------    ------------------

NET CASH USED IN OPERATING ACTIVITIES                                              (9,651,392)           (2,955,728)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment, net                                           (459,753)             (517,206)
  Acquisition of other intangible assets                                             (989,874)          (15,379,988)
  Net proceeds from exclusive and non-exclusive license of patents                   6,170,000            4,000,000                 
  Proceeds from sale of investments                                                  6,527,452                   --
  Transfer to restricted cash account                                              (4,200,000)           (3,200,000)
  Proceeds from restricted cash account                                              4,228,000                   --
  Purchase of managed care contract                                                         --             (150,000)
                                                                              -----------------    ------------------

NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES                                11,275,825           (15,247,194)                

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of stock options and warrants                                 482,072                98,363
  Repurchase of preferred stock                                                   (10,512,000)                    --
  Proceeds from issuance of notes payable, net                                              --             3,414,142
  Repayments of notes payable                                                      (2,000,000)           (1,000,000)
  Repayments of capital lease obligation                                                    --             (152,195)
  Proceeds from issuance of preferred stock, net                                    15,819,555            15,003,269
                                                                              -----------------    ------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                            3,789,627            17,363,579
                                                                              -----------------    ------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     5,414,060              (839,343)
                                                                                                  

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                                                3,858,400             2,003,501
                                                                              -----------------    ------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $  9,272,460          $  1,164,158

                                                                              =================    ==================

</TABLE>

      See accompanying notes to the condensed consolidated financial statements.



                                       5
<PAGE>

                    LASERSIGHT INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              Nine Month Periods Ended September 30, 1998 and 1997


NOTE 1   BASIS OF PRESENTATION

         The accompanying unaudited, condensed consolidated financial statements
         of  LaserSight  Incorporated  and  subsidiaries  (the  Company)  as  of
         September  30,  1998,  and for the three and nine month  periods  ended
         September  30,  1998 and 1997 have been  prepared  in  accordance  with
         generally   accepted   accounting   principles  for  interim  financial
         information  and with the  instructions  to Form 10-Q and Rule 10-01 of
         Regulation S-X. Accordingly, they do not include all of the information
         and  note  disclosures   required  by  generally  accepted   accounting
         principles  for  complete   financial   statements.   These   condensed
         consolidated  financial  statements  should be read in conjunction with
         the consolidated financial statements and notes thereto included in the
         Company's  annual  report on Form 10-K for the year ended  December 31,
         1997.  In  the  opinion  of  management,   the  condensed  consolidated
         financial  statements  include  all  adjustments  necessary  for a fair
         presentation  of  consolidated  financial  position  and the results of
         operations  and cash flows for the  periods  presented.  The results of
         operations  for the three and nine month  periods  ended  September 30,
         1998 are not  necessarily  indicative of the operating  results for the
         full year.

NOTE 2   PER SHARE INFORMATION

         Basic loss per common  share is  computed  using the  weighted  average
         number of common shares and contingently issuable shares (to the extent
         that all necessary contingencies have been satisfied). Diluted loss per
         common share is computed  using the weighted  average  number of common
         shares,  contingently  issuable  shares,  and common share  equivalents
         outstanding  during  each  period.  Common  share  equivalents  include
         options,  warrants to purchase Common Stock, and convertible  Preferred
         Stock and are  included in the  computation  using the  treasury  stock
         method if they would have a dilutive effect.

NOTE 3   ADOPTION OF NEW ACCOUNTING STANDARD

         The Company  adopted  the  provisions  of the  Statement  of  Financial
         Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income" on
         January 1, 1998.  SFAS No. 130  requires  companies  to classify  items
         defined as "other comprehensive  income" by their nature in a financial
         statement and to display the accumulated balance of other comprehensive
         income separately from retained earnings and additional paid-in capital
         in the equity section of the balance  sheet.  The Company has presented
         information for all periods reported below to conform to this standard.


                                       6

<PAGE>


                                      

<TABLE>
<CAPTION>


                                                           Three Months Ended                   Nine Months Ended
                                                   September 30,     September 30,        September 30,     September 30,
                                                        1998              1997                1998               1997
                                                        ----              ----                ----               ----

<S>                                                   <C>                <C>                  <C>              <C>         
                    Net loss                          $(2,149,930)       $(2,408,878)         $(5,864,310)     $(5,489,410)

                    Other comprehensive loss:

                         Reversal of unrealized
                         gain on marketable
                         securities  (net  of tax
                         of $353,675)                          --                 --             (577,048)              --

                         Reclassification
                         adjustment for
                         gains included in net
                         loss (net of tax of
                         $16,825)
                                                              --                  --              (27,452)              --         
                                                      ------------       ------------         ------------    -------------
                                                                                                                      

                    Comprehensive loss                $(2,149,930)       $(2,408,878)         $(6,468,810)     $(5,489,410)
                                                      ============       ============         ============     ============
</TABLE>

NOTE 4   INVENTORIES

           Inventories,  which  consist  primarily  of excimer and erbium  laser
           systems and related parts and components,  are stated at the lower of
           cost or market.  Cost is  determined  using the  first-in,  first-out
           method.  The  components  of  inventories  at September  30, 1998 and
           December 31, 1997 are summarized as follows:

<TABLE>
                                                             September 30, 1998        December 31, 1997
                                                             ------------------        -----------------

<S>                                                                   <C>                       <C>       
                    Raw materials - excimer related                   $4,391,985                $3,058,782
                    Raw materials - erbium related                       816,114                        --
                    Work-in-process - excimer related                    292,426                   263,353
                    Work-in-process - erbium related                     459,424                        --
                    Finished goods - excimer related                   1,024,180                   862,775
                    Finished goods - erbium related                       99,000                        --
                    Test equipment - clinical trials                     187,497                   263,325
                    Training/show units - erbium related                 273,395                        --
                                                                 ---------------            --------------
                                                                       7,544,021                 4,448,235
                    Less reserve for obsolescence                        321,252                   100,000
                                                                 ===============            ==============
                                                                      $7,222,769                $4,348,235
                                                                 ===============            ==============
</TABLE>


NOTE 5   MARKETABLE EQUITY SECURITIES

         Through  September  30,  1998,  the Company  received  net  proceeds of
         $6,527,452  in  exchange  for the sale of shares of Vision  Twenty-One,
         Inc.  (Vision 21) common stock received in connection with the December
         1997 sale of MEC Health  Care,  Inc.  (MEC) and LSI  Acquisition,  Inc.
         (LSIA) to Vision 21. Through September 30, 1998, the Company realized a
         gain on the sale of such stock of  $27,452.  The  Company  is  pursuing
         additional  amounts  believed  due from Vision 21 pursuant to the Stock
         Distribution Agreement between the companies.


                                       7
<PAGE>


NOTE 6   SALE OF INTERNATIONAL PATENT RIGHTS

         In February  1998,  the Company  closed a  transaction  for the sale of
         certain  rights in  certain  patents  to Nidek  Co.,  Ltd.  (Nidek)  in
         exchange for $6.3  million in cash (of which  $200,000 was withheld for
         the payment of Japanese taxes).  The Company  transferred all rights in
         those patents  issued in countries  outside of the United States (U.S.)
         but retained the  exclusive  right to use and  sublicense  the non-U.S.
         patents  in  all  fields  other  than  ophthalmic,  cardiovascular  and
         vascular.  The Company received a non-exclusive license to the non-U.S.
         patents in the ophthalmic field. In addition, the Company has granted a
         non-exclusive  license to use those patents  issued in the U.S.,  which
         resulted in $1.2 million of deferred royalties that are being amortized
         to income  over  three  years.  The  transaction  did not result in any
         current gain or loss,  but reduced the Company's  amortization  expense
         over the  remaining  useful  life  (approximately  8 years) of the U.S.
         patents.

NOTE 7   COMMITMENTS AND CONTINGENCIES

         Photomed Amendment
         ------------------

         On September  11,  1998,  the Company  entered  into an amendment  with
         Photomed,  Inc.  (Photomed)  amending the  Agreement and Plan of Merger
         dated  July 15,  1997 by which  the  Company  acquired  a laser in situ
         keratomileusis  (LASIK)  Pre-Market  Approval  (PMA)  application.  The
         amended terms of the agreement  follow.  In September 1998,  based on a
         U.S. Food and Drug Administration (FDA) approval received in July 1998,
         the Company paid Photomed a total of $1,740,000,  of which $990,000 was
         paid in cash and the  balance  paid  through  the  issuance  of 187,500
         shares of Common Stock. Upon receipt of FDA approval of a laser for the
         treatment of  hyperopia,  utilizing  part or all of the know how of the
         laser  acquired,  the  Company is required to issue up to $1 million in
         Common Stock with the obligation  decreasing  approximately  $2,740 per
         day beginning June 1, 1999 and  terminating  June 1, 2000. Upon receipt
         of FDA approval of  equivalency  of the Company's  refractive  scanning
         laser to the laser acquired, payment of up to $1 million in cash is due
         if the  approval is obtained  within four months after  Photomed  takes
         delivery of the Company's  refractive  scanning laser.  Such obligation
         decreases  approximately  $2,740 per day after such four month  period.
         If, prior to August 1, 1999,  the  Company's  gross sales of refractive
         lasers  for final use within the United  States  exceeds  $14  million,
         Photomed is to receive 25% of gross sales in excess of $14 million.

         Litigation
         ----------

         On  August  3,  1998,  Mercacorp,  Inc.  filed an  action  in the U. S.
         District  Court  for the  Eastern  District  of New  York  against  the
         Company, the President and Chief Executive Officer of the Company, Wall
         & Broad Equities,  Inc., a "purported investment banking establishment"
         and Isaac Weinhouse, the principal of such purported investment banking
         establishment,  asserting violations of Section 10(b) of the Securities
         and  Exchange Act of 1934 and common law fraud in  connection  with the
         alleged  issuance  of  false  press  releases,  misrepresentations  and
         omissions by all of the  defendants  on which the  plaintiff  allegedly
         relied in purchasing the Company's  Common Stock. The action seeks both
         actual and punitive monetary damages from the Company in the amounts of
         $5 million and $50 million,  respectively.  On November  11, 1998,  the
         plaintiff dismissed the action, with prejudice,  and the parties agreed
         to a release  of all  claims.  In  connection  with the  dismissal  and
         release  of claims  the  Company  issued  the  plaintiff  two  separate
         warrants  to  purchase  Common  Stock.  Under  the first  warrant,  the
         plaintiff is entitled to purchase up to 750,000  shares of Common Stock
         at an  exercise  price of $4.00 per  share,  the  closing  bid price on

                                       8

<PAGE>

         November  10,  1998,  and under the second  warrant,  the  plaintiff is
         entitled  to  purchase  up to  750,000  shares  of  Common  Stock at an
         exercise price of $5.00 per share. Both of the warrants contain certain
         prohibitions  against  assignment and transfer to third parties as well
         as other  terms  and  conditions.  No  provision  has been  made in the
         condensed consolidated financial statements with respect to this matter
         as of September 30, 1998.
                                   
                    
 
NOTE 8   STOCKHOLDERS' EQUITY

         TLC Private Placement

         In June 1998, the Company entered into a Securities  Purchase Agreement
         with TLC The Laser  Center  Inc.  (TLC),  pursuant to which the Company
         issued  2,000,000   shares  of   newly-created   Series  C  Convertible
         Participating  Preferred  Stock (Series C Preferred  Stock) with a face
         value of $4.00 per share,  resulting in an aggregate  offering price of
         $8 million.  The Series C Preferred  Stock is  convertible  by TLC on a
         fixed,  one-for-one  basis into 2,000,000 shares of Common Stock at any
         time until June  2001,  on which date all shares of Series C  Preferred
         Stock then  outstanding  will  automatically be converted into an equal
         number of shares of Common Stock.

         The net proceeds to the Company,  after deduction of costs of issuance,
         was approximately $7.9 million. The net proceeds were partially used to
         repurchase  all  525  outstanding  shares  of the  Company's  Series  B
         Convertible Participating Preferred Stock (Series B Preferred Stock) on
         June 5, 1998 for approximately $6.3 million, including a 20% premium.

         Pequot  Private  Placement  

         In June 1998, the Company entered into a Securities  Purchase Agreement
         with Pequot Private  Equity Fund,  L.P.,  Pequot Scout Fund,  L.P., and
         Pequot Offshore Private Equity Fund, Inc.  (Pequot Funds),  pursuant to
         which  the  Company  issued,  collectively,  2,000,000  shares  of  the
         newly-created  Series  D  Convertible   Participating  Preferred  Stock
         (Series  D  Preferred  Stock)  with a face  value of $4.00  per  share,
         resulting in an aggregate  offering  price of $8 million.  The Series D
         Preferred  Stock is  convertible  by the Pequot Funds on a  one-for-one
         basis  into  2,000,000  shares of Common  Stock at any time  until June
         2001,  on which  date all  shares  of  Series D  Preferred  Stock  then
         outstanding  will  automatically  be converted  into an equal number of
         shares of Common  Stock.  The  Series D  Preferred  Stock is subject to
         certain anti-dilution adjustments if the Company issues or sells shares
         of Common Stock before June 2001 at a price per share less than $4.00.

         The net proceeds to the Company,  after deduction of costs of issuance,
         was approximately $7.9 million.

         Series B Preferred Stock Repurchase

         In June 1998,  the  Company  repurchased  the  remaining  525 shares of
         Series B Preferred  Stock,  representing  an  aggregate  face amount of
         $5,250,000,  using  proceeds  from the  issuance  of Series C Preferred
         Stock,  at a 20% premium.  Prior to such date,  the holders of Series B
         Preferred  Stock had converted  419 shares of Series B Preferred  Stock
         into 2,392,220 shares of Common Stock. In February 1998, the holders of
         the Series B  Preferred  Stock had  exercised  an option to require the
         Company to repurchase 351 shares of Series B Preferred Stock, also at a
         20%  premium,  using  proceeds  from the sale of  international  patent
         rights (see Note 6).


                                       9
<PAGE>

         The amount of the  repurchase  price in excess of the carrying value of
         the Series B  Preferred  Stock  repurchased  and a pro rata  portion of
         Series B Preferred  Stock-related  financing  costs  increased the loss
         attributable  to common  shareholders  for the nine month  period ended
         September 30, 1998.

         Issuance of Common Stock

         In July 1998,  the Company  issued  102,798  shares of Common  Stock in
         connection  with its  acquisition  of the  assets of the  Northern  New
         Jersey Eye Institute  (NNJEI) in July 1996. The shares were issuable as
         of July 3, 1998 because the Company's quoted stock price was lower than
         $15.00 per share on that date.  Because the fair value of the  purchase
         consideration  was  determinable  at the  date of  acquisition  and was
         recorded at that time, the entry upon the issuance of the shares was to
         record  the par value of the  shares of Common  Stock  issued  with the
         offset to additional paid-in capital.

NOTE 9   ACQUISITION

         In April 1998,  the Company and  Schwartz  Electro-Optics,  Inc.  (SEO)
         completed an acquisition  whereby the Company  purchased  substantially
         all of the assets,  and assumed certain  liabilities,  of SEO's medical
         products  division (the Division) in exchange for 305,820 shares of the
         Company's Common Stock. The Company is contingently  obligated to issue
         up to  223,280  additional  shares  on April  15,  1999 if its five day
         average  Common Stock price is not then $5.00 or greater.  The value of
         the  acquisition  was  $1,250,000.   The  Division   develops,   tests,
         manufacturers, assembles, and sells lasers and their related equipment,
         accessories,  parts,  and  software  for medical  and medical  research
         applications.  The Division's primary focus is erbium lasers, which are
         primarily used to perform dermatology procedures.

         The   acquisition   was  accounted  for  using  the  purchase   method.
         Accordingly,  the Division's  results of operations are included in the
         Company's   consolidated   financial   statements   subsequent  to  the
         acquisition  date.  The fair value of the  purchase  consideration  was
         determined at the date of acquisition and was recorded at that time. If
         and when the  additional  shares  of Common  Stock are  issued in April
         1999, the entry will be to record the par value of the shares of Common
         Stock with the offset to additional  paid-in  capital.  The acquisition
         did not have a  material  effect  on the  assets or  operations  of the
         Company.


NOTE 10  NOTES PAYABLE

         In June 1998, the Company  repaid its note payable to Foothill  Capital
         Corporation  (Foothill) of $2,000,000  and also  terminated its line of
         credit arrangement with Foothill.


                                       10
<PAGE>


ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Revenue.  The following tables present the Company's  revenue by major operating
segments:  technology  related and health care  services  for the three and nine
month periods ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>

                                            For the Three Month                          For the Three Month
                                                Period Ended                                 Period Ended
                                             September 30, 1998                           September 30, 1997
                                             ------------------                           ------------------

                                             Revenue         % of Total                    Revenue        % of Total

<S>                                       <C>                       <C>                 <C>                      <C>
Technology                                $5,121,834                97%                 $2,677,831               43%
Health care services                         138,780                 3%                  3,478,528               57%
                                          ----------                ---                 -----------              ---

Total revenue                             $5,260,614               100%                 $6,156,359              100%
                                          ===========              ====                 ===========             ====


                                             For the Nine Month                           For the Nine Month
                                                Period Ended                                 Period Ended
                                             September 30, 1998                           September 30, 1997
                                             ------------------                           ------------------

                                             Revenue         % of Total                    Revenue        % of Total

Technology                               $13,947,836                97%                 $8,362,374               46%
Health care services                         504,977                 3%                  9,720,699               54%
                                        ------------                ---                 ----------               ---

Total revenue                            $14,452,813               100%                $18,083,073              100%
                                        ============               ====                ===========              ====
</TABLE>

Revenue in the third quarter of 1998 was $5,260,614, compared to $6,156,359 (for
a decrease of $895,745) over the same period in 1997. Revenue for the nine-month
period ended September 30, 1998, decreased by $3,630,260 to $14,452,813 from the
same period in 1997.  Technology  revenues  increased  $2,444,003 and $5,585,462
during the three and nine-month periods ended September 30, 1998,  respectively,
compared to the same periods in 1997.  These technology  revenue  increases were
primarily a result of (i) a higher  level of laser system sales during the three
and nine month  periods  ended  September  30,  1998;  (ii) a  fourteen  percent
increase in the average selling price of laser systems  resulting from increased
sales  of  the  Company's  higher-priced  LSX  model  and  fewer  sales  of  the
lower-priced LS-300 model; (iii) an increase in revenues generated from the sale
of service  contracts;  and (iv) revenues generated from royalty payments earned
on  intellectual  property  agreements.  Thirteen laser systems were sold in the
third  quarter of 1998  compared to ten system sales during the third quarter of
1997.  Forty-two  laser  systems  were sold during the nine month  period  ended
September 30, 1998, compared to thirty-three systems sold during the same period
in 1997.

More than  offsetting  the  increases in technology  revenues were  decreases in
health care services  revenue  ($3,339,748 and $9,215,722 for the three and nine
month  periods  ended  September  30, 1998,  respectively,  compared to the same
periods in 1997),  which was  attributable to the sale of MEC and LSIA to Vision
21 in a  transaction  effective as of December 1, 1997.  These two  subsidiaries
contributed   $3,120,298  and  $8,710,401  in  revenues  during  the  three  and
nine-month periods ended September 30, 1997, respectively.  All of the Company's
health care  services  revenue for the first nine months of 1998 was provided by
MRF,  Inc.,  d/b/a The Farris  Group  (TFG).  Net  revenue  for TFG in the third
quarter of 1998 was $138,780  compared to $358,230  (for a decrease of $219,450)
over the same  period in 1997.  This  decrease  was  accompanied  by a  $339,227


                                       11
<PAGE>


reduction in expenses over the same three-month  period in 1997. Net revenue for
TFG during the nine-month period ended September 30, 1998, was $504,977 compared
to  $1,010,298  (for a decrease of $505,321)  for the same period in 1997.  That
decrease  was  accompanied  by a $709,805  reduction  in expenses  over the same
period in 1997.

Cost of Revenue;  Gross  Profits.  The  following  tables  present a comparative
analysis of cost of revenue, gross profit and gross profit margins for three and
nine month periods ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                              For the Three Month                            For the Three Month
                                                  Period Ended                                   Period Ended
                                               September 30, 1998       Percent Change        September 30, 1997
                                               ------------------       --------------        ------------------

<S>                                                  <C>                       <C>                  <C>       
Product cost                                         $1,444,653                35%                  $1,068,498
Cost of services                                         61,063              (97%)                   2,421,783
Gross profit                                          3,754,898                41%                   2,666,078
Gross profit percentage                                     71%                                            43%

Products only                                         3,677,181               128%                   1,609,333
                                                            72%                                            60%

                                               For the Nine Month                             For the Nine Month
                                                  Period Ended                                   Period Ended
                                               September 30, 1998       Percent Change        September 30, 1997
                                               ------------------       --------------        ------------------

Product cost                                         $4,334,274                48%                  $2,934,001
Cost of services                                        222,190              (97%)                   6,725,488
Gross profit                                          9,896,349                17%                   8,423,584
Gross profit percentage                                     68%                                            47%

Products only                                         9,613,562                77%                   5,428,373
                                                            69%                                            65%
</TABLE>

Gross profit margins were 71% of net sales in the third quarter of 1998 compared
to 43% for the same period in 1997. For the nine-month  periods ended  September
30, 1998 and 1997,  gross  profit  margins were 68% and 47%,  respectively.  The
gross margin  increase is primarily  attributable to the sale of MEC and LSIA to
Vision  21 in a  transaction  effective  as  of  December  1,  1997.  Those  two
subsidiaries  operated  at a gross  margin of 26% for the  three and nine  month
periods ended September 30, 1997.

Research,  Development and Regulatory  Expense.  The following  tables present a
comparative  analysis of research,  development and regulatory  expenses for the
three and nine month periods ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>

                                          For the Three Month                                For the Three Month
                                              Period Ended                                       Period Ended
                                           September 30, 1998          Percent Change         September 30, 1997
                                           ------------------          --------------         ------------------
<S>                                            <C>                            <C>                <C>    
Research, development
   and regulatory                              $   923,850                    13%                $    816,522

As a percentage of technology
   Revenues                                            18%                                                30%
     

</TABLE>
                                       12

<PAGE>
<TABLE>

                                           For the Nine Month                                 For the Nine Month
                                              Period Ended                                       Period Ended
                                           September 30, 1998          Percent Change         September 30, 1997
                                           ------------------          --------------         ------------------

<S>                                              <C>                           <C>                 <C>    
Research, development
   and regulatory                               $2,485,194                     44%                 $1,729,153

As a percentage of technology
   Revenues                                            18%                                                21%
</TABLE>

Research, development and regulatory expenses for the third quarter of 1998 were
$923,850,  an increase of $107,328 or 13% from such expenditures during the same
period in 1997. Research, development and regulatory expenses for the nine-month
period ended  September 30, 1998  increased by $756,041 from  $1,729,153 for the
same  period  in  1997,  or 44%.  The  increase  in  research,  development  and
regulatory  expenses during the three and nine month periods ended September 30,
1998,  can primarily be attributed to ongoing  research and  development  of new
scanning refractive laser systems,  including  continued  development of the LSX
and add-on features for the LaserScan 2000, and continued  software  development
for the laser systems.  Additionally,  the Company has incurred  increased costs
related to the FDA regulatory approval process,  both for its own scanning laser
system and the LASIK laser system (for which the Company purchased the rights to
manufacture and  commercialize if FDA approval is received--see  Note 7 of Notes
to Condensed  Consolidated  Financial  Statements).  Additional  costs have been
incurred  in  the  clinical  and  manufacturing   validation  of  the  Automated
Disposable Keratome ("A*D*K"). Since the initial announcement of the development
of the A*D*K and LSX, the Company has solicited and received input from clinical
users and  prospective  customers.  This has  resulted in  modifications  to the
products,   necessitating   additional  development  and  testing  for  clinical
validation.  As a result of a  continuation  of the efforts  described  plus the
anticipated  development of new product ideas,  the Company expects research and
development  expenses  during the remainder of 1998 and 1999 to remain at levels
consistent  with those  incurred  during the third  quarter of 1998.  Regulatory
expenses may increase as a result of the Company's  continuation  of current FDA
clinical trials, protocols added during 1997 related to the potential use of the
Company's laser systems for treatment of glaucoma,  the possible  development of
additional future protocols for submission to the FDA and the LASIK PMA acquired
in July 1997.

Selling Related Expenses. The following tables present a comparative analysis of
selling  related  expenses for the three and nine month periods ended  September
30, 1998 and 1997.
<TABLE>
<CAPTION>

                                     For the Three Month                                     For the Three Month
                                         Period Ended                                            Period Ended
                                      September 30, 1998            Percent Change            September 30, 1997
                                      ------------------            --------------            ------------------

<S>                                     <C>                               <C>                       <C>       
Selling related expenses                $1,421,818                        128 %                     $  623,060

Percentage of revenues                        27 %                                                        10 %

                                      For the Nine Month                                      For the Nine Month
                                         Period Ended                                            Period Ended
                                      September 30, 1998            Percent Change            September 30, 1997
                                      ------------------            --------------            ------------------

Selling related expenses                   $3,385,971                      71 %                     $1,982,269

Percentage of revenues                           23 %                                                     11 %
</TABLE>


Selling  related  expenses  consist  of those  items  directly  related to sales
activities,  including  commissions on sales,  royalty or license fees, warranty
expenses, and costs of shipping and installation.  Commissions and royalties, in


                                       13
<PAGE>

particular,  can  vary  significantly  from  sale to sale or  period  to  period
depending on the location and terms of each sale.

Selling  related  expenses  increased by $798,758 for the third  quarter of 1998
compared to the same  period in 1997.  The  primary  reasons  for this  increase
include a higher  level of laser  system  sales with an  associated  distributor
commission  ($482,000),  a higher  level of royalty fees  ($117,000)  and higher
warranty expenses resulting from increased system sales.

Selling  related  expenses  increased  by  $1,403,702  for the nine months ended
September 30, 1998 compared to the same period in 1997. The primary  reasons for
this  increase  include a higher level of laser system sales with an  associated
distributor commission ($519,000), a higher level of royalty fees ($473,000) and
higher warranty expenses resulting from increased system sales.

Other  General and  Administrative  Expenses.  The  following  tables  present a
comparative analysis of other general and administrative  expenses for the three
and nine month periods ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>

                                     For the Three Month                                     For the Three Month
                                         Period Ended                                            Period Ended
                                      September 30, 1998            Percent Change            September 30, 1997
                                      ------------------            --------------            ------------------

<S>                                      <C>                              <C>                    <C>    
Other General and
    Administrative                       $   3,239,836                     18%                   $  2,746,800

Percentage of revenues                             62%                                                    45%

                                      For the Nine Month                                      For the Nine Month
                                         Period Ended                                            Period Ended
                                      September 30, 1998            Percent Change            September 30, 1997
                                      ------------------            --------------            ------------------
Other General and
    Administrative                         $8,073,145                     (3%)                      8,324,327

Percentage of revenues                            56%                                                     46%
</TABLE>

Other general and  administrative  expenses  increased by $493,036 for the third
quarter  of 1998  compared  to the same  period in 1997.  These  increases  were
necessary to fund the strategic  initiatives of the Company and the  development
of its products and services. Such efforts included enhancements to the customer
support,   quality   assurance,   manufacturing   and  engineering   departments
($397,000),  costs  of the  aesthetic  laser  product  acquired  in  April  1998
($218,000)  and bad debt expense  ($212,000).  The total  increase was partially
offset  by the sale of MEC and LSIA  ($491,000)  and a  reduction  in the  other
general and administrative expenses of TFG ($299,000).

Other  general and  administrative  expenses  decreased by $251,182 for the nine
months  ended  September  30, 1998  compared  to the same  period in 1997.  This
decrease  primarily  resulted from the sale of MEC and LSIA  ($1,504,000)  and a
reduction in the other general and  administrative  expenses of TFG  ($619,000).
Such  decreases  were  partially  offset by other  increases,  including  to the
customer support,  quality assurance,  manufacturing and engineering departments
($656,000),  costs  of the  aesthetic  laser  product  acquired  in  April  1998
($424,000),  bad debt expense ($275,000) and patent related expenses ($149,000),
which were nominal before August 1997.

Loss From  Operations.  There was an operating  loss of  $2,373,183 in the third
quarter of 1998 compared to an operating  loss of $2,019,485 for the same period
in 1997,  including TFG's losses (including  goodwill  amortization) of $101,980
and $221,757,  respectively.  The results are  attributed to the sale of MEC and
LSIA,  which  generated  income from  operations  of  $199,052  during the third
quarter of 1997, and the increases in operating expenses  previously  described.


                                       14
<PAGE>

The  operating  loss for the nine month  period  ended  September  30,  1998 was
$5,725,559  compared to an operating  loss of $4,599,316  for the same period in
1997,  including TFG's losses (including goodwill  amortization) of $442,759 and
$647,243  respectively.  The  decrease in  operating  results for the nine month
period ended  September 30, 1998, can be attributed to the sale of MEC and LSIA,
which generated  income from operations of $481,922 during the 1997 period,  and
the increases in operating expenses previously described.  These reductions were
partially offset by the increase in technology generated revenues.

Other Income and Expense. Interest and dividend income was $224,525 in the third
quarter of 1998 compared to interest and dividend income of $94,401 for the same
period in 1997.  Interest  and  dividend  income for the nine month period ended
September  30, 1998 was $450,823  compared to interest  and  dividend  income of
$292,272 for the same period in 1997.  Interest  and dividend  income was earned
from the investment of cash and cash equivalents and the collection of long-term
receivables related to laser system sales.  Interest expense incurred was $1,272
in the third  quarter of 1998  compared to interest  expense of $483,794 for the
same period in 1997.  Interest expense for the nine month period ended September
30, 1998 was  $721,813  compared to  interest  expense of $911,966  for the same
period in 1997.  Interest  expense  incurred by the Company during the three and
nine month  periods ended  September 30, 1998 and 1997 related  primarily to the
credit facility established with Foothill on April 1, 1997 and repaid in full in
June 1998. In addition to interest paid on the outstanding note payable balance,
interest  expense  includes the  amortization of deferred  financing  costs, the
accretion  of the  discount  on the  note  payable,  and  fees  associated  with
amendments to the original loan  agreement.  The Company also recorded a gain on
the sale of investments  and  subsidiaries  resulting from the sale of Vision 21
common stock and MEC and LSIA.

Income  Taxes.  For the three  months  ended  September  30, 1998 and 1997,  the
Company recorded no income tax expense.  For the nine months ended September 30,
1998, the Company recorded income tax expense of $232,213  compared to no income
tax  expense  over the same  period in 1997.  The net expense for the nine month
period is  primarily  the result of  realized  gains and the payment of Japanese
taxes (see Note 6 of Notes to Condensed Consolidated Financial Statements).

Net Loss.  Net loss for the third quarter of 1998 was  $2,149,930  compared to a
net loss of $2,408,878  for the same period in 1997. Net loss for the nine month
period  ended  September  30,  1998,  was  $5,864,310  compared to a net loss of
$5,499,410  for the same period in 1997.  The decrease in net loss for the third
quarter of 1998 can be  attributed  to the  decrease in interest  expense and an
increase  in  technology  revenues,  partially  offset by the higher  technology
operating  expenses and the effect of the sale of MEC and LSIA.  The increase in
net loss for the nine month period ended  September 30, 1998,  can be attributed
the sale of MEC and LSIA,  increases in  research,  development  and  regulatory
expenses,  general and administrative  expenses,  and income tax expense.  These
reductions  were  partially  offset by an increase in technology  revenues and a
decrease in interest expense and gain on sale of investments and MEC and LSIA.

Loss  Attributable to Common  Shareholders.  For the nine months ended September
30, 1998, the Company's loss attributable to common shareholders was impacted by
the following  events,  which occurred in the first and second quarters of 1998:
premiums  paid  on  the  repurchase  of  shares  of  Series  B  Preferred  Stock
($1,752,000), accretion of the financing costs related to such shares ($999,953)
and the value of the conversion  discount on Series B Preferred  Stock ($25,372)
and on Series C Preferred Stock and Series D Preferred Stock ($833,500).

Loss Per Share.  Loss per basic and diluted  share  decreased to ($0.17) for the
third quarter of 1998 compared to ($0.25) for the same period in 1997.  The loss
per basic and diluted share increased to ($0.79) for the nine month period ended
September  30,  1998,  compared to ($0.59)  for the same period in 1997.  Of the
basic and diluted losses per share for the nine month period ended September 30,
1998, ($0.30), was a result of the value of the conversion discount on preferred
stock in accordance with EITF Topic D-60 and accretion and dividend requirements
on the Series B Preferred  Stock.  The weighted  average  shares of Common Stock


                                       15
<PAGE>

outstanding  increased  primarily  due to the  exercise  of  stock  options  and
warrants,  the  conversion  of  Series B  Preferred  stock,  and the  additional
issuance of Common Stock  related to the  acquisition  of the Division from SEO,
the assets of NNJEI,  and to Photomed during the nine months ended September 30,
1998.

Liquidity and Capital Resources.

Working capital  increased  $7,139,830 from  $12,729,700 at December 31, 1997 to
$19,869,530 as of September 30, 1998. This increase in working capital  resulted
primarily  from the private  placement of Series C Preferred  Stock and Series D
Preferred Stock and an increase in trade accounts and notes receivable offset by
accrued commissions. Operating activities used net cash of $9,651,392 during the
first nine months of 1998,  compared to  $2,955,728  of net cash used during the
same period in 1997.  This  increase is  primarily  the result of an increase in
accounts  and notes  receivable  (primarily  the result of slow  collections  of
outstanding  receivables and higher selling prices  resulting from more sales of
the  Company's  LSX system),  increases in  inventory  levels and a  significant
decrease in income taxes  payable,  partially  offset by an increase in deferred
royalty revenue and amortization  and  depreciation  costs. Net cash provided by
investing  activities  during  the first  nine  months  of 1998 was  $11,275,825
compared to $15,247,194 in net cash used in investing  activities  over the same
period in 1997. Net cash provided by investing  activities during the first nine
months  of 1998 can be  primarily  attributed  to  proceeds  generated  from the
exclusive  licensing  of  patents  and from the sale of Vision  21 common  stock
resulting from the Company's December 1997 sale of MEC & LSIA,  partially offset
by the purchase of furniture,  equipment and  leasehold  improvements.  Net cash
provided from financing  activities was $3,789,627  during the first nine months
of 1998, compared to $17,363,579 over the same period in 1997. Net cash provided
from financing activities during the first nine months of 1998 resulted from the
exercise  of stock  options  and  warrants  and net  proceeds  from the Series C
Preferred Stock and Series D Preferred Stock issuances, offset by the repurchase
of Series B Preferred  Stock and the  repayment of the note payable to Foothill.
Net cash provided by financing  activities  during the first nine months of 1997
consisted of net proceeds  from the  issuance of Series B Preferred  Stock,  net
proceeds  from the credit  facility  with  Foothill  and the  exercise  of stock
options,  offset by the  repayment of a note payable to the former owners of MEC
and repayment of a capital lease obligation.

The Company believes that its balances of cash and cash  equivalents  along with
operating cash flows will be sufficient to fund its anticipated  working capital
requirements  for the next  twelve  month  period  based on  modest  growth  and
anticipated timely collection of receivables and entry into the U.S. marketplace
with  keratome  related  products  and/or  the LSX  system.  A failure to timely
collect a material portion of current  receivables or further delays to entering
the  U.S.  market,  could  have a  material  adverse  effect  on  the  Company's
liquidity.  There can be no  assurance  as to the terms or amount of third party
financing, if any, that the Company's customers may obtain in the future.

The Company expects to increase the level of  manufacturing  and distribution of
its  laser  systems  and to  continue  a variety  of  research  and  development
activities  on its excimer and  solid-state  laser  systems over the next twelve
months and it is  anticipated  that such  research  and  development  as well as
regulatory  efforts in the U.S. will be the most significant  technology related
expenses in the foreseeable future.

The Company is receptive to joint venture discussions with compatible  companies
for the further development of international markets for the Company's products.
The Company has no present commitments for joint venture  relationships,  and no
assurance  can be given  that any such  relationships  will be  secured on terms
satisfactory to the Company.


                                       16
<PAGE>

RISK FACTORS AND UNCERTAINTIES

The business,  results or operations and financial  condition of the Company and
the market price of the Common  Stock may be adversely  affected by a variety of
factors,  including  the ones  listed  under the caption  "Risk  Factors" in the
Company's  Registration  Statement on Form S-3/A (file no.  333-59369)  filed on
August 31, 1998, and the additional or updated factors listed below:

Shares Eligible For Future Sale. Except as provided below,  substantially all of
the Company's  outstanding  Common Stock  (13,157,635  shares as of November 13,
1998) is freely tradable without  restriction or further  registration under the
Securities  Act,  unless such shares are held by  "affiliates" of the Company as
that term is defined in Rule 144 under the Securities  Act. The shares of Common
Stock listed below are  "restricted  securities."  Restricted  securities may be
sold in the public market only if they have been registered under the Securities
Act or if their sales qualify for Rule 144 or another  available  exemption from
the registration requirements of the Securities Act.

        o   A  warrant  to  purchase  40,673  shares of  Common  Stock  (with an
            exercise  price  of  $5.81)  has  been  issued  to four  individuals
            associated with its placement agent in connection with the placement
            of the  Series B  Preferred  Stock and  shares  issuable  under such
            warrant (the "Shoreline  Shares") will be freely saleable  following
            such  exercise,  subject  only to the  satisfaction  of a prospectus
            delivery requirement.

        o   Warrants to purchase an aggregate of 762,616  shares of Common Stock
            (with an  exercise  price of $2.71 per share) has been issued to the
            former holders of the Series B Preferred  Stock and shares  issuable
            under such warrant (the "Series B Shares")  will be freely  saleable
            following  such  exercise,  subject  only to the  satisfaction  of a
            prospectus  delivery  requirement.  As of November 13, 1998, 140,625
            such warrants have been exercised.

        o   The 535,515 shares issued in an unregistered acquisition transaction
            in July 1997 (the  "Photomed  Shares") have become freely  tradable,
            subject only to a prospectus delivery requirement.

        o   The 187,500 shares issued in an unregistered acquisition transaction
            in September 1998 (the "Photomed  Amendment Shares") are the subject
            of certain demand and piggyback registration rights.

        o   The 581,825 shares of Common Stock (the "Foothill  Shares") issuable
            upon the exercise  (at an exercise  price of $5.21 per share) of the
            warrants issued to Foothill Capital Corporation ("Foothill") are the
            subject of certain demand and piggyback registration rights.

        o   Other shares of Common Stock (the "Other  Shares") which the Company
            may be  required  to issue in the  future may  become  eligible  for
            resale pursuant to Rule 144, the exercise of registration rights, or
            otherwise.    See    "Possible    Dilutive    Issuance   of   Common
            Stock--LaserSight Centers and Florida Laser Partners; --SEO Medical;
            --Series D Preferred Stock."

Sales, or the possibility of sales,  of the Shoreline  Shares,  Series B Shares,
Photomed Shares,  Photomed  Amendment Shares,  Foothill Shares, or Other Shares,
whether  pursuant to a  prospectus,  Rule 144 or  otherwise,  could  depress the
market price of the Common Stock.

Past and Expected  Future Losses and Operating Cash Flow Deficits;  No Assurance
of Future Profits or Positive  Operating Cash Flows. The Company incurred losses
of $5.9  million for the nine months ended  September  30, 1998 and $7.3 million
and $4.1 million during 1997 and 1996,  respectively.  During such periods,  the
Company  had a deficit  in cash  flow  from  operations  of $9.7  million,  $4.4
million,  and  $4.2  million,   respectively.   Although  the  Company  achieved
profitability  during  1995  and  1994,  it had a  deficit  in  cash  flow  from
operations of $1.9 million during 1995. In addition, the Company incurred losses
in 1991 through 1993. As of September 30, 1998,  the Company had an  accumulated


                                       17
<PAGE>

deficit of $17.7  million.  As a result of the Company's sale of MEC and LSIA in
December 1997, the Company's losses and deficits in cash flow from operations in
future periods may be greater than if the Company had not sold MEC and LSIA. The
Company  expects to report a loss and deficit in cash flow from  operations  for
the fourth  quarter of 1998.  The  Company  recently  resolved  its  outstanding
litigation  with  Mercacorp and expects to record a non-cash  charge to earnings
during the fourth quarter of 1998 equal to the fair value of the warrants issued
to Mercacorp  (approximately  $300,000) in  connection  with  resolution  of the
litigation.  There can be no  assurance  that the  Company can regain or sustain
profitability or positive operating cash flow.

Uncollectible  Receivables  Could Exceed  Reserves.  At September 30, 1998,  the
Company's trade accounts and notes  receivable  aggregated  approximately  $13.6
million net of allowances  for  collection  losses and returns of  approximately
$2.1 million. Accrued commissions, the payment of which generally depends on the
collection  of  such  net  trade  accounts  and  notes  receivable,   aggregated
approximately $2.1 million at September 30, 1998.  Exposure to collection losses
on  receivables  is principally  dependent on the Company's  customer's  ongoing
financial  condition and their  ability to generate  revenues from the Company's
laser  systems.  In addition,  approximately  94% and 90% of net  receivables at
September 30, 1998 and December 31, 1997, respectively, related to international
accounts.  The Company's ability to evaluate the financial condition and revenue
generating  ability of its  prospective  customers  located  outside of U.S.  is
generally  more  limited  than for  customers  located in the U.S.  Although the
Company  monitors  the status of its  receivables  and  maintains  a reserve for
estimated  losses,  there can be no assurance  that the  Company's  reserves for
estimated  losses  (approximately  $1.9 million at  September  30, 1998) will be
sufficient  to  cover  actual  write-offs  over  time.  Actual  write-offs  that
materially  exceed amounts  reserved could have a material adverse effect on the
Company's consolidated financial condition and results of operations.

Restructuring   of   Receivables.   At  September  30,  1998,  the  Company  had
restructured  laser customer  accounts in the aggregate  amount of approximately
$963,466 (7% of the net receivables as of such date), resulting in the extension
of the  original  payment  terms by periods  ranging  from 12 to 60 months.  The
Company's  liquidity  and  operating  cash  flow may be  adversely  affected  if
additional  extensions  become necessary in the future.  In addition,  it may be
more  difficult to collect  laser  system  receivables  if the payment  schedule
extends beyond the expected economic life of the laser system.

Potential Liquidity Problems.  During the three months ended September 30, 1998,
the Company  experienced  a $2.5  million  deficit in cash flow from  operations
largely  resulting  from the loss  incurred  during the period and  increases in
inventory and receivables, partially offset by depreciation and amortization and
increases  in  liabilities.  Of  this  amount,  the  Company  expects  that  any
improvements  in cash flow from  operations  will depend on, among other things,
the Company's  ability to market,  produce and sell its new LSX laser systems in
larger  quantities  and its A*D*K  product on a commercial  basis.  In the third
quarter of 1998, the LSX laser system  represented  the majority of systems sold
and is  expected  to  make  a more  significant  contribution  to the  Company's
operating results in the future.  Based on the status of clinical validation and
refinement  of  the  manufacturing   processes,  the  Company  does  not  expect
significant  commercial  shipments  of the A*D*K in the fourth  quarter of 1998.
Subject to these  factors,  the Company  believes  that its balances of cash and
cash  equivalents,  will be sufficient to fund its  anticipated  working capital
requirements for a 12-month period based on modest growth and anticipated timely
collection  of  receivables  and entry into the U.S.  marketplace  with keratome
related products and/or the LSX system. However, if the Company does not collect
a material portion of current  receivables in a timely manner, or if the Company
experiences  significant further delays in the shipment of its A*D*K product, or
experiences  less  market  demand  for its  products  than it  anticipates,  the
Company's liquidity could be materially adversely affected.

Uncertainty  Regarding  Availability  or Terms of Capital  to  Satisfy  Possible
Additional Needs. The Company may need additional capital, including to fund the
following:

        o   Any future negative cash flow from operations.


                                       18
<PAGE>

        o   Certain  cash  payment  obligations  under the  Company's  LASIK PMA
            application  acquisition  agreement  of July 1997 with  Photomed  as
            amended in September 1998. Such contingent cash payment  obligations
            are  outlined  in  Note 7 in the  Notes  to  Condensed  Consolidated
            Financial Statements.

        o   Additional  working  capital  necessary to develop a production line
            for the LASIK laser system and to obtain the GMP (Good Manufacturing
            Practices)   clearance  from  the  FDA  that  is  required  for  the
            commercial sale of the LASIK laser system.

        o   Additional  working  capital  necessary  to support  the  commercial
            introduction  of its laser  systems  into the U.S.  market  upon FDA
            approval.  (The Company began  incurring such expenses in the second
            half of 1998.)

        o   Additional  working  capital  necessary  to more fully  develop  the
            Company's  mobile  refractive laser business plan and other possible
            business lines and products.

In  addition,  the Company may seek  alternative  sources of capital to fund its
product development activities and to consummate future strategic  acquisitions.
The Company has no commitments from third parties to supply additional  capital,
and there can be no assurance  as to whether or on what terms the Company  could
obtain additional capital.

To the extent  that the  Company  satisfies  its future  financing  requirements
through the sale of equity  securities,  holders of Common Stock may  experience
significant dilution in earnings per share and in net book value per share. Such
dilution may be more  significant  if the Company  sells Common Stock at a price
below  current  market  prices  or  sells  additional  preferred  stock  with  a
conversion  price  linked to the market price of the Common Stock at the time of
conversion.  Debt  financing  could  result  in a  substantial  portion  of  the
Company's cash flow from operations  being dedicated to the payment of principal
and interest on such  indebtedness and may render the Company more vulnerable to
competitive  pressures and economic  downturns.  If the Company needs but cannot
obtain  additional  capital on  satisfactory  terms,  it may be required to sell
additional assets.

Possible Dilutive Issuance of Common Stock--LaserSight Centers and Florida Laser
Partners.  Based  on  previously-reported  agreements  entered  into  in 1993 in
connection with the Company's  acquisition of LaserSight  Centers (the Company's
development-stage  subsidiary)  and  modified in July 1995 and March  1997,  the
Company is obligated as follows:

        o   To issue to the former  stockholders  and option holders  (including
            two trusts  related to the  Chairman of the Board of the Company and
            certain former  officers and directors of the Company) of LaserSight
            Centers, up to 600,000 unregistered shares of Common Stock ("Centers
            Contingent  Shares") based on the Company's pre-tax operating income
            through March 2002 from utilizing a fixed or mobile excimer laser to
            perform   photorefractive   keratectomy  (PRK),  arranging  for  the
            delivery of PRK or receiving license or royalty fees associated with
            patents held by LaserSight  Centers.  The Centers  Contingent Shares
            are  issuable  at the rate of one share per $4.00 of such  operating
            income.

        o   To pay to a partnership  whose partners  include the Chairman of the
            Board of the Company and certain  former  officers and  directors of
            the  Company a royalty  of up to $43  (payable  in cash or shares of
            Common  Stock  ("Royalty  Shares")),  for each  eye on which  PRK is
            performed  on a fixed  or  mobile  excimer  laser  system  owned  or
            operated by LaserSight  Centers or its affiliates.  Royalties do not
            begin to accrue  until the earlier of March 2002 or the  delivery of
            all of the 600,000 Centers Contingent Shares.

                                       19
<PAGE>

As of November 13,  1998,  the Company had not accrued any  obligation  to issue
Centers Contingent Shares or Royalty Shares.  There can be no assurance that any
issuance of Centers  Contingent  Shares or Royalty Shares will be accompanied by
an increase in the Company's  per share  operating  results.  The Company is not
obligated  to pursue  strategies  that may  result in the  issuance  of  Centers
Contingent  Shares or Royalty Shares.  It may be in the interest of the Chairman
of the Board for the Company to pursue  business  strategies  that  maximize the
issuance of Centers Contingent Shares and Royalty Shares.

Possible  Dilutive  Issuance of Common  Stock--Photomed.  If the FDA  approves a
LaserSight-manufactured laser system for general commercial use in the treatment
of  hyperopia  (farsightedness),  utilizing  part or all of the  know-how of the
laser acquired from Photomed,  the Company would be required to issue additional
shares of Common Stock with a market  value of up to $1.0 million  (based on the
average closing price of the Common Stock during the preceding 10-day period) to
the former Photomed stockholders. Such obligation will decrease by approximately
$2,740 per day  beginning  June 1, 1999 if such approval is not received by that
date, and will be eliminated  entirely on June 1, 2000. If such market value had
been computed as of November 16, 1998, the number of additional  shares issuable
would have been approximately 222,000.  Depending on whether and when such FDA
approval is received  and on the market price of the Common Stock at the time of
any such  approval,  the  actual  number of  additional  shares of Common  Stock
issuable could be more (but not more than  permitted  under the listing rules of
The NASDAQ Stock Market) or less than this number.

Possible  Dilutive  Issuance  of  Common  Stock--SEO.  In  connection  with  the
acquisition  of certain assets of SEO in April 1998, the Company agreed to issue
up to 223,280  additional  shares of Common  Stock if the average of the bid and
ask prices of Common Stock for the five trading day period  immediately prior to
April 15, 1999 is less than $5.00 per share.  All 223,280 shares of Common Stock
will be issuable unless such price is more than $2.36 per share.

Possible Dilutive Issuance of Common Stock--Foothill Warrant. In April 1996, the
Company issued to Foothill a warrant to purchase  500,000 shares of Common Stock
(the "Foothill Warrant") at a price of $6.067 per share. The Company is required
to make  anti-dilution  adjustments to both the number of warrant shares and the
warrant  exercise  price in the event the Company  sells  Common Stock or Common
Stock-equivalents  (such as  convertible  securities or warrants) at a price per
share that is (or could be) less than the fair market  value of the Common Stock
at the time of such  sale.  In  connection  with its sale of Series B  Preferred
Stock in August 1997 and  subsequent  conversion of such  preferred  shares into
Common  Stock,  the  sale of the  Series  C  Preferred  Stock  and the  Series D
Preferred Stock such anti-dilution  adjustments have resulted in (i) an increase
in the number of Foothill Warrant shares to 581,825, and (ii) a reduction to the
exercise  price of the Foothill  Warrant  shares to $5.21 per share.  Additional
anti-dilution  adjustments  to the Foothill  Warrant  could also result from any
future below-market sales of Common Stock by the Company.

Possible Dilutive Issuance of Common Stock--Series B Warrant. In connection with
its sale of the Series B Preferred  Stock in August 1997,  the Company issued to
the former holders of the Series B Preferred Stock warrants to purchase  750,000
shares of Common Stock (the "Series B Warrant") at a price of $5.91 per share at
any time before  August 29,  2002.  In  connection  with a March 1998  agreement
whereby the Company  obtained  the option to  repurchase  the Series B Preferred
Stock and a lock-up on  conversions,  the exercise price of the Series B Warrant
shares  was  reduced  to $2.753  per share.  The  Company  is  required  to make
anti-dilution  adjustments  to both the number of warrant shares and the warrant
exercise   price  in  the  event  the  Company  sells  Common  Stock  or  Common
Stock-equivalents  (such as  convertible  securities or warrants) at a price per
share that is (or could be) less than the fair market  value of the Common Stock
at the time of such  sale.  As a result of the  Company's  sale of the  Series C
Preferred Stock and the Series D Preferred Stock such anti-dilution  adjustments
and other  agreements  among the former holders of the Series B Preferred  Stock
and the  Company  have  resulted  in (i) an  increase  in the number of Series B
Warrant shares to  approximately  762,616,  and (ii) a reduction to the exercise
price of Series B Warrant shares to  approximately  $2.71 per share.  Additional


                                       20
<PAGE>

anti-dilution  adjustments  to the Series B Warrants  could also result from any
future  below-market  sales of Common Stock by the  Company.  As of November 13,
1998, 140,625 of such warrants had been exercised.
                            
Possible Dilutive  Issuance of Common  Stock--Shoreline  Warrant.  In connection
with its sale of the Series B Preferred Stock in August 1997, the Company issued
to four  individuals  associated  with its placement  agent warrants to purchase
40,000 shares of Common Stock (the "Shoreline  Warrant") at a price of $5.91 per
share at any time  before  August 29,  2002.  The  Company is  required  to make
anti-dilution  adjustments  to both the number of warrant shares and the warrant
exercise   price  in  the  event  the  Company  sells  Common  Stock  or  Common
Stock-equivalents  (such as  convertible  securities or warrants) at a price per
share that is (or could be) less that the fair market  value of the Common Stock
at the time of such sale. In connection  with the Company's sale of the Series C
Preferred Stock and the Series D Preferred Stock such anti-dilution  adjustments
have  resulted in (i) an increase in the number of Shoreline  Warrant  shares to
approximately  40,673,  and (ii) a reduction to the exercise  price of Shoreline
Warrant  shares to  approximately  $5.81  per  share.  Additional  anti-dilution
adjustments  to the  Shoreline  Warrants  could  also  result  from  any  future
below-market sales of Common Stock by the Company.

Possible  Dilutive  Issuance  of Common  Stock--Series  D  Preferred  Stock.  In
accordance  with  the  terms  of  the  Company's   Certificate  of  Designation,
Preferences  and  Rights of the Series D  Preferred  Stock,  the  holders of the
Series D Preferred  Stock are entitled to certain  anti-dilution  adjustments if
the  Company  issues  its  Common  Stock or  Common  Stock-equivalents  (such as
convertible securities or warrants) at a price per share (or having a conversion
or exercise price per share) less than $4.00 per share.

Acquisition- and  Financing-Related  Contingent  Commitments to Issue Additional
Common Shares. The Company may from time to time include in future  acquisitions
and financings,  provisions  that would require the Company to issue  additional
shares of its Common  Stock at a future  date  based on the market  price of the
Common Stock at such date.  Persons who are the beneficiaries of such provisions
effectively  receive some  protection  from  declines in the market price of the
Common  Stock,  but other  stockholders  of the  Company  will incur  additional
dilution of their  ownership  interest in the event of a decline in the price of
the Common Stock. Such dilution may be increased by the anti-dilution protection
provisions  in the  Foothill  Warrant,  the Series B Warrant  and the  Shoreline
Warrant  that may  increase  the  number of shares  issuable  under each of such
warrants and decrease the  exercise  price of such  warrants.  The factors to be
considered by the Company in including such provisions may include the Company's
cash resources, the trading history of Common Stock, the negotiating position of
the selling party or the investors,  as applicable,  and the extent to which the
Company  estimates that the expected  benefit from the  acquisition or financing
exceeds the expected dilutive effect of the price-protection provision.

Dependence on Key Personnel.  The Company is dependent on its executive officers
and other key employees,  especially  Michael R. Farris, its President and Chief
Executive  Officer,  and J. Richard  Crowley,  the President and Chief Operating
Officer of the Company's LaserSight  Technologies  subsidiary.  A loss of one or
more such officers or key  employees,  especially of Mr. Farris or Mr.  Crowley,
could have a material adverse effect on the Company's business. The Company does
not carry "key man" insurance on Mr.  Farris,  Mr. Crowley or any other officers
or key employees.

As the Company  continues  the clinical  development  of its excimer  lasers and
other products and prepares for regulatory approvals and other commercialization
activities,  it will need to continue to implement  and expand its  operational,
financial and management  resources and controls.  The failure of the Company to
attract and retain experienced  individuals for necessary positions,  as well as
any  inability of the Company to  effectively  manage growth in its domestic and
international  operations  could have a material adverse effect on the Company's
business, financial condition and results of operations.

Risks  Associated  with Past and Possible Future  Acquisitions.  The Company has
made  several  significant  acquisitions  since  1994,  including  TFG in  1994,
Photomed in 1997 and 1998,  the patents  purchased from  International  Business
Machines  Corporation in August 1997 and its acquisition of SEO Medical in April
1998. These  acquisitions,  as well as any future  acquisition,  may not achieve


                                       21

<PAGE>

adequate levels of revenue,  profitability  or productivity or may not otherwise
perform as expected. Acquisitions involve special risks, including unanticipated
liabilities and  contingencies,  diversion of management  attention and possible
adverse  effects  on  operating  results   resulting  from  increased   goodwill
amortization,  increased  interest costs, the issuance of additional  securities
and difficulties related to the integration of the acquired businesses. Although
the Company is currently focusing on its existing operations, the future ability
of the Company to achieve growth through acquisitions will depend on a number of
factors, including the availability of attractive acquisition opportunities, the
availability  of funds  needed to complete  acquisitions,  the  availability  of
working  capital  needed to fund the  operations of acquired  businesses and the
effect of existing and emerging  competition  on operations.  Should  additional
acquisitions be sought,  there can be no assurance that the Company will be able
to successfully  identify additional suitable acquisition  candidates,  complete
additional acquisitions or integrate acquired businesses into its operations.

Amortization of Significant  Intangible Assets. Of the Company's total assets at
September 30, 1998, approximately $16.9 million (34%) were intangible assets, of
which  approximately  $6.7 million  reflects  goodwill (which is being amortized
using an estimated life ranging from 12 to 20 years), approximately $4.5 million
reflects the cost of patents  (which is being  amortized  over a period  ranging
from  approximately 8 to 17 years),  and approximately $5.7 million reflects the
cost of acquired licenses and technology (which is being amortized over a period
ranging from 31 months to 12 years). The 12-year life of acquired technology was
determined  based on the Company's  best judgment at the time of the most likely
life span of a solid-state  laser product and related patent.  The major factors
involved in the Company's ongoing assessment are its judgment whether there will
be a  market  for  solid-state  as an  improvement  to  existing  excimer  laser
technology  and that  there is an  industry  and  marketplace  interest  in such
development that can be successfully  pursued by the Company or others that will
result in revenue from the associated  patent.  Goodwill is an intangible  asset
that  represents  the  difference  between  the  total  purchase  price  of  the
acquisitions  and the amount of such purchase price  allocated to the fair value
of the net assets acquired.  Goodwill and other intangibles are amortized over a
period of time, with the amount amortized in a particular period  constituting a
non-cash  expense  that  reduces  the  Company's  net income (or  increases  the
Company's net loss) in that period. A reduction in net income resulting from the
amortization  of goodwill and other  intangibles may have an adverse impact upon
the market price of the Common  Stock.  In  addition,  in the event of a sale or
liquidation  of the Company or its assets,  there can be no  assurance  that the
value of such intangible assets would be recovered.

In  accordance  with  SFAS  121,  the  Company  reviews  intangible  assets  for
impairment  whenever events or changes in circumstances,  including a history of
operating or cash flow losses, indicate that the carrying amount of an asset may
not be recoverable.  In such cases, the carrying amount of the asset is compared
to the estimated  undiscounted future cash flows expected to result from the use
of  the  asset  and  its  eventual  disposition.  If the  sum  of  the  expected
undiscounted future cash flows is less than the carrying amount of the asset, an
impairment  loss will be computed and  recognized in  accordance  with SFAS 121.
Expected cash flows are based on factors including  historical results,  current
operating  budgets  and  projections,  industry  trends  and  expectations,  and
competition.

The Company  continues to assess the current results and future prospects of TFG
in view of the substantial  reduction in the subsidiary's  operating  results in
1996 and 1997. TFG's operation  results have improved in 1998 from 1996 and 1997
performance.  If TFG is  unsuccessful  in  continuing  to improve its  financial
performance, some or all of the carrying amount of goodwill recorded ($3,790,000
at September 30, 1998) may be subject to an impairment adjustment.

Year  2000  Compliance.  The  company  understands  the  material  nature of the
business  issues  surrounding  computer  processing of dates into and beyond the
Year 2000 ("Y2K"). Any computer program or computer chip controlled device could
harbor a Y2K  processing  issue.  Typically,  Y2K issues  arise from  systems or
software  processing only two digits representing a date. The century digits, if
not present  ("19" for years  1900-1999,  or "20" for years  beginning in 2000),
usually lead to false results from computer  controlled systems and are the most
pervasive issue.

                                       22

<PAGE>

The Company  recognizes that these issues exist within its computer programs and
computer chip controlled  devices and is taking corrective action. The Company's
actions to address Y2K issues began with the development of a comprehensive plan
to assess the actual and potential impact of the issues on the Company,  both in
information  technology ("IT") areas and non-information  technology  ("Non-IT")
areas,  which include its  manufacturing and operating systems and the readiness
of vendors and other third parties upon whom the Company relies.

The  Company's  IT systems  are  microcomputer-based  and  consist  of  standard
software  purchased from outside  vendors.  All software is being identified and
assessed  to  determine  the extent of  remediation  required in order to be Y2K
compliant.  The Company  believes  that all software  will be made Y2K compliant
before the end of June 1999 through  vendor-provided updates or replacement with
other Y2K compliant hardware and software.  The Company, as has been planned for
some time, is also replacing its financial and accounting software,  and expects
to have the  majority  of such new  software  implemented  by the end of January
1999. Such software has been represented to be Y2K compliant by the vendors. The
Company's IT inventory  related to Y2K compliance is approximately 50% complete,
the remediation  assessment of problem areas is approximately 25% complete,  and
testing,  including  validation of  compliance,  is expected to begin in January
1999 and be completed by the end of April 1999.

For its Non-IT  systems,  the  Company is in the  process of  identifying  third
parties with which it has a significant relationship that, in the event of a Y2K
failure,  could have a material  impact on the Company's  financial  position or
operating  results.  The third parties include utility  suppliers,  material and
supply   vendors,   communication   vendors   and  the   Company's   significant
distributors.  Some of these  relationships,  especially  those  associated with
certain  suppliers  and  distributors,  are  material  to the  Company and a Y2K
failure  by one or more of these  parties  could  result in a  material  adverse
effect on the Company's operating results and financial position. The Company is
corresponding with these business partners and service providers to assess their
ability to support the Company's operations with respect to their individual Y2K
issues.  The  issues  that  are  identified  as  part of  this  process  will be
prioritized in order of significance to the Company's  operations and corrective
action taken as appropriate.  The Company estimates that correspondence has been
initiated with approximately 90% of the Company's vendors, business partners and
service providers.  Approximately 40% have responded to date, and the Company is
in the process of  assessing  their  responses.  The Company  expects  that this
process will continue throughout the current and subsequent fiscal year.

For Y2K issues which, if not timely resolved, could have a significant impact on
the Company's  operations,  the Company  intends to develop  contingency  plans.
Those plans will be  designed  to minimize  the impact of failure to achieve Y2K
compliance.  Such  contingency  plans are expected to be developed by the end of
March 1999.

The Company estimates that costs to address Y2K issues will total  approximately
$150,000,  of which approximately  $20,000 has been incurred to date. Such costs
will be  expensed  as  incurred,  and  exclude  the costs of the  Company's  new
financial and accounting software. Y2K compliance related costs are estimated to
be approximately 50% of the Company's total IT expense budget through the end of
1999. No material IT projects are expected to be delayed.

Due to the general uncertainty inherent in the Company's Y2K compliance,  mainly
resulting  from  the  Company's  dependence  upon  the  Y2K  compliance  of  the
government agencies,  suppliers,  vendors and distributors with whom the Company
and its service  providers deal, the Company is unable to determine at this time
its most reasonably likely worst case scenario.  While costs related to the lack
of Y2K compliance of third parties, business interruptions, litigation and other
liabilities  related to Y2K issues could  materially  and  adversely  affect the
company's business,  results of operations and financial condition,  the Company
expects its Y2K compliance  efforts to reduce  significantly the Company's level
of uncertainty  about the impact of Y2K issues  affecting both its IT and Non-IT
systems.

                                       23


<PAGE>

Government  Regulation.  The  Company's  laser  products  are  subject to strict
governmental  regulations  which  materially  affect  the  Company's  ability to
manufacture and market these products and directly impact the Company's  overall
prospects.  All laser devices to be marketed in interstate  commerce are subject
to the laser regulations required by the Radiation Control for Health and Safety
Act,  as  administered  by the FDA.  Such Act  imposes  design  and  performance
standards,  labeling and reporting  requirements,  and submission  conditions in
advance of marketing for all medical laser products. The Company's laser systems
produced  for medical use require PMA approval by the FDA before the Company can
ship its laser systems for use in the U.S. Each separate medical device requires
a separate FDA  submission,  and specific  protocols have to be submitted to the
FDA for each claim made for each medical device.

If and when the  Company's  laser  systems  receive PMA approval by the FDA, the
Company  will  be  required  to  obtain  GMP  clearance   with  respect  to  its
manufacturing  facilities.  These  regulations  impose  certain  procedural  and
documentation  requirements  upon the Company with respect to its  manufacturing
and quality assurance  activities.  The Company's  facilities will be subject to
inspections  by the FDA, and if any  noncompliance  with GMP guidelines is noted
during facility  inspections,  the marketing of the Company's laser products may
be  adversely  affected.  In  addition,  if any of the  Company's  suppliers  of
significant components or sub-assemblies cannot meet the quality requirements of
the Company,  the Company could be delayed in producing  commercial  systems for
the U.S.
market.

Additionally,  product  and  procedure  labeling  and all  forms of  promotional
activities are subject to  examination  by the FDA, and current FDA  enforcement
policy  prohibits the marketing of approved medical devices for unapproved uses.
Noncompliance  with these  requirements  may result in warning  letters,  fines,
injunctions, recall or seizure of products, suspension of manufacturing,  denial
or withdrawal of PMAs, and criminal prosecution.

Laser  products  marketed in foreign  countries  are often subject to local laws
governing health product development processes which may impose additional costs
for overseas  product  development.  In particular,  all member countries of the
European Economic Union ("EU") require CE Mark  certification of compliance with
the EU medical  directives as the standard for  regulatory  approval for sale of
laser systems in EU member countries.  Both the Company's LSX and LaserScan 2000
laser  systems  have  received  CE Mark  certification,  the former of which was
received in September 1998.

The Company  cannot  determine  the costs or time it will take to  complete  the
approval  process  and  the  related  clinical  testing  for its  medical  laser
products.  Future  legislative or  administrative  requirements  in the U.S., or
elsewhere,  may  adversely  affect  the  Company's  ability  to obtain or retain
regulatory  approval  for its laser  products.  The  failure to obtain  required
approvals  on a  timely  basis  could  have a  material  adverse  effect  on the
Company's business, financial condition and results of operations.

Uncertainty  Concerning  Patents--International.  Should  the  Company's  lasers
infringe upon any valid and enforceable patents in international  markets,  then
the Company may be required to obtain  licenses  for such  patents.  Should such
licenses not be  obtained,  LaserSight  Technologies  might be  prohibited  from
manufacturing  or marketing its excimer lasers in those  countries where patents
are in effect.  The  Company's  international  sales  accounted for 88% and 42%,
respectively,  of the  Company's  total  revenues  during the nine months  ended
September  30, 1998 and 1997,  respectively.  In the  future,  until the Company
receives  necessary  regulatory  approvals  and enters the U.S.  market (or with
respect to those  products that do not require  regulatory  approval,  otherwise
enters the U.S.  market) in a  significant  way with its  products,  the Company
expects its percentage of international sales to be more comparable to the sales
percentages which were reported for the nine months ended September 30, 1998.

Uncertainty Concerning  Patents--U.S.  Two of the Company's competitors,  Summit
Technology,  Inc. ("Summit") and Visx, Inc. ("Visx") formed a U.S.  partnership,
Pillar  Point  Partners  ("Pillar  Point"),  in 1992 to pool  certain  of  their
respective patents related to corneal sculpting  technologies.  On June 9, 1998,
Summit and Visx announced that they had reached  agreement on the dissolution of


                                       24
<PAGE>

Pillar Point to be effected as soon as possible.  As a part of this dissolution,
Summit and Visx  granted  each other a  worldwide,  royalty  free  cross-license
whereby each party will have full rights to license all existing  patents  owned
by  either  company  relating  to laser  vision  correction  for use with  their
systems.
                                  
Should the Company's lasers infringe upon any valid and enforceable patents held
by Visx or Summit in the U.S.,  then the  Company  may be  required  to obtain a
license for such patents and pay  royalties  and per  procedure  fees to Visx or
Summit for all revenues  generated in the U.S. If such licenses are required but
not obtained,  the Company might be prohibited from  manufacturing  or marketing
its excimer lasers in the U.S. In connection  with its March 1996  settlement of
litigation with Pillar Point Partners, the Company agreed to notify Pillar Point
Partners before the Company begins manufacturing or selling its laser systems in
the U.S.  As of this date,  the  Company has not  obtained a U.S.  license  from
either of Summit or Visx,  and the actual per  procedure  fee and other terms of
any license, if such license is granted, have yet to be determined.

In addition,  there may be other U.S. and foreign  patents for which the Company
will  need to  negotiate  licenses  in order to sell,  lease or use the  excimer
lasers in certain  markets.  There can be no  assurance  that the Company or its
customers  will be  successful  in securing  licenses,  including  any necessary
licenses from Summit or Visx, or that if the Company does obtain licenses,  such
licenses  will be on terms  acceptable  to the  Company.  The  failure to either
obtain required licenses or to obtain licenses on terms favorable to the Company
could have a material adverse effect on the business of the Company.

Competition.  The vision correction  industry is subject to intense,  increasing
competition.  The Company  competes  against both  alternative  and  traditional
medical  technologies (such as eyeglasses,  contact lenses and radial keratotomy
(RK) and other  laser  manufacturers.  Many of the  Company's  competitors  have
existing   products  and  distribution   systems  in  the  marketplace  and  are
substantially  larger,  better  financed,  and better known.  A number of lasers
manufactured  by other  companies  have  either  received,  or are much  further
advanced in the process of receiving, FDA approval for specific procedures, and,
accordingly,  may have or develop a higher level of  acceptance  in some markets
than the Company's lasers. The entry of new competitors into the markets for the
Company's  products could cause downward pressure on the prices of such products
and a material  adverse effect on Company's  business,  financial  condition and
results of operations.

Technological  Change.  Technological  developments  in the  medical  and  laser
industries  are  expected to continue at a rapid pace.  Newer  technologies  and
surgical  techniques could be developed which may offer better  performance than
the Company's  laser systems.  The success of any competing  alternatives to PRK
and LASIK  could  have a  material  adverse  effect on the  Company's  business,
financial condition and results of operations.

New Products.  The Company may experience  difficulties that could further delay
or  prevent  the  successful  development,  introduction  and  marketing  of its
recently-announced  A*D*K, and other new products and enhancements,  or that its
new products and enhancements will be accepted in the marketplace. As is typical
in the case of new and rapidly evolving industries, demand and market acceptance
for  recently-introduced  technology and products are subject to a high level of
uncertainty. In addition, announcements of new products (whether for sale in the
near  future or at some  later  date) may cause  customers  to defer  purchasing
existing Company products.

Minimum  Payments  Under  A*D*K  License  Agreement.  In  addition  to the risks
relating to the  introduction of any new product (see "--New  Products"  above),
the Company's  A*D*K is subject to the risk that the Company is required to make
certain minimum  payments to the licensors under its limited  exclusive  license
agreement relating to the A*D*K.  Under that agreement,  the Company is required
to pay a total of $300,000 in two  installments  due six and 12 months after the
date of the  Company's  receipt of completed  limited  production  molds for the
A*D*K and provide an excimer  laser (such laser was provided  during the quarter
ended June 30,  1998).  The  Company  expects to receive  such molds  during the


                                       25
<PAGE>

fourth  quarter of 1998. In addition,  commencing  seven months after such date,
the  Company's  royalty  payments  (50% of its defined  gross profits from A*D*K
sales) will become  subject to a minimum of $400,000 per calendar  quarter for a
period of eight quarters.
                                  
Uncertainty  of Market  Acceptance of  Laser-Based  Eye  Treatment.  The Company
believes that its  achievement of  profitability  and growth will depend in part
upon broad acceptance of PRK or LASIK in the U.S. and other countries. There can
be  no   assurance   that  PRK  or  LASIK  will  be   accepted   by  either  the
ophthalmologists or the public as an alternative to existing methods of treating
refractive  vision  disorders.  The  acceptance of PRK and LASIK may be affected
adversely  by their cost,  possible  concerns  relating to safety and  efficacy,
general  resistance to surgery,  the effectiveness and lower cost of alternative
methods  of  correcting  refractive  vision  disorders,  the  lack of  long-term
follow-up data, the possibility of unknown side effects, the lack of third-party
reimbursement for the procedures,  any future  unfavorable  publicity  involving
patient outcomes from use of PRK or LASIK systems, and the possible shortages of
ophthalmologists  trained  in the  procedures.  The  failure  of PRK or LASIK to
achieve  broad market  acceptance  could have a material  adverse  effect on the
Company's business, financial condition and results of operations.

International  Sales.  International  sales may be limited or  disrupted  by the
imposition  of  government  controls,  export  license  requirements,  political
instability,  trade restrictions,  changes in tariffs,  difficulties in staffing
and coordinating  communications  among and managing  international  operations.
Additionally,  the Company's  business,  financial  condition and  international
results of  operations  may be  adversely  affected by  increases in duty rates,
difficulties  in  obtaining  export  licenses,  ability to  maintain or increase
prices,  and  competition.  To date,  all sales  made by the  Company  have been
denominated in U.S.  dollars.  Therefore,  the Company does not have exposure to
typical foreign currency fluctuation risk. Due to its export sales, however, the
Company is subject to currency  exchange rate  fluctuations in the U.S.  dollar,
which could  increase the effective  price in local  currencies of the Company's
products.  This could in turn result in reduced sales, longer payment cycles and
greater  difficulty in collection of  receivables.  See  "--Receivables"  above.
Although  the Company has not  experienced  any material  adverse  effect on its
operations as a result of such  regulatory,  political and other  factors,  such
factors may have a material  adverse  effect on the Company's  operations in the
future or require the Company to modify its business practices.

Potential Product Liability Claims; Limited Insurance.  As a producer of medical
devices,  the Company may face liability for damages to users of such devices in
the event of product failure. The testing and use of human care products entails
an inherent risk of negligence or other action. An award of damages in excess of
the Company's  insurance  coverage  could have a material  adverse effect on the
Company's  business,  financial  condition and results of operations.  While the
Company maintains product  liability  insurance,  there can be no assurance that
any such liability of the Company will be included within its insurance coverage
or that  damages  will not  exceed  the limits of its  coverage.  The  Company's
"claims made" product liability insurance coverage is limited to $10 million and
its general liability insurance coverage is limited to $6 million,  including up
to $5 million of coverage under an excess liability  policy.  The Company has in
the past  agreed,  and is likely in the future to agree,  to  indemnify  certain
medical  institutions and personnel thereof  conducting and participating in the
Company's clinical studies.

Supplier Risks. The Company contracts with third parties for certain  components
used in its lasers.  Certain key components are provided by a single vendor.  If
any of these  sole-source  suppliers were to cease  providing  components to the
Company,  the  Company  would  have to locate  and  contract  with a  substitute
supplier,  and there can be no assurances that such substitute supplier could be
located and qualified in a timely manner or could provide required components on
commercially  reasonable  terms. An interruption in the supply of critical laser
components  could  have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

No  Backlog;  Concentration  of  Sales  at  End  of  Quarter.  The  Company  has
historically  operated  with  little or no  backlog  because  its  products  are


                                       26
<PAGE>

generally shipped as orders are received. Historically, the Company has received
and shipped a  significant  portion of its orders for a particular  quarter near
the end of the quarter.  As a result,  the Company's  operating  results for any
quarter often depend on orders  received and laser systems  shipped late in that
quarter.  Any  delay  in such  orders  or  shipments  may  cause  a  significant
fluctuation in period-to-period operating results.
                                     
Anti-takeover  Measures;  Potential  Adverse  Effect on Common Stock Price.  The
Company's  Certificate  of  Incorporation  authorizes  the  Company's  Board  of
Directors to issue shares of the Company's  Preferred Stock and to determine the
rights, preferences, privileges and restrictions of such shares without any vote
or action by the  stockholders.  The  issuance  of  Preferred  Stock  under such
circumstances  could  have the  effect of  delaying  or  preventing  a change in
control of the  Company.  The rights of the holders of the Common  Stock will be
subject to, and may be  adversely  affected by, the rights of the holders of any
Preferred  Stock that may be created and issued in the future.  On July 2, 1998,
the Company  adopted a  stockholder  rights  agreement  and  declared a dividend
distribution of one Preferred Share Purchase Right ("Right") on each outstanding
share of the Company's  Common Stock.  The Rights will be exercisable  only if a
person or group (other than certain exempt persons)  acquires 15% or more of the
Company's Common Stock. One of the effects of the provisions described above may
be to discourage a future attempt to acquire  control of the Company that is not
presented to and  approved by the Board of  Directors,  but which a  substantial
number, and perhaps even a majority of the Company's stockholders, might believe
to be in  their  best  interests  or  in  which  stockholders  might  receive  a
substantial  premium  for their  shares  over the current  market  prices.  As a
result,  stockholders  who might desire to participate in such a transaction may
not have an opportunity to do so.


                                       27

<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1            LEGAL PROCEEDINGS

                  Visx, Incorporated
                  ------------------

                  In May 1998,  Visx asserted  that the Company was  underpaying
                  royalties due under an  international  license  agreement (the
                  "License  Agreement")  and  submitted  the dispute for binding
                  arbitration,  which is likely to be  scheduled  in early 1999.
                  The  Company  has denied  Visx's  allegations  and  intends to
                  vigorously  defend its position under the terms of the License
                  Agreement.  Management believes that its obligations under the
                  License Agreement will not result in a material adverse effect
                  on the Company's financial condition or results of operations.

                  Mercacorp, Inc.
                  ---------------

                  On August 3, 1998, Mercacorp,  Inc. commenced an action in the
                  U.S.  District  Court  for the  Eastern  District  of New York
                  against the  Company,  Michael R. Farris  (the  President  and
                  Chief  Executive  Officer  of  the  Company),   Wall  &  Broad
                  Equities, Inc., a "purported investment banking establishment"
                  and  Isaac   Weinhouse,   the  principal  of  such   purported
                  investment   banking   establishment.   This  action  asserted
                  violations of Section 10(b) of the Securities and Exchange Act
                  of 1934 and common law fraud in  connection  with the  alleged
                  issuance  of  false  press  releases,  misrepresentations  and
                  omissions  by all of the  defendants  on which  the  plaintiff
                  allegedly  relied in purchasing the Company's Common Stock and
                  later holding  (rather than  selling)  such Common Stock.  The
                  plaintiff  asked  that they be  awarded  $5  million in actual
                  damages and $50 million in punitive damages.

                  On November 11, 1998, the plaintiff dismissed the action, with
                  prejudice,  and the parties agreed to a release of all claims.
                  In  connection  with the  dismissal  and release of claims the
                  Company issued the plaintiff two separate warrants to purchase
                  Common  Stock.  Under  the first  warrant,  the  plaintiff  is
                  entitled to purchase up to 750,000  shares of Common  Stock at
                  an exercise price of $4.00 per share, the closing bid price on
                  November 10, 1998, and under the second warrant, the plaintiff
                  is entitled to purchase up to 750,000  shares of Common  Stock
                  at an exercise price of $5.00 per share.  Both of the warrants
                  contain certain  prohibitions  against assignment and transfer
                  to third parties as well as other terms and conditions.  For a
                  more complete  description  of the terms and conditions of the
                  warrants,  reference is hereby made to the warrants  which are
                  attached to this Report as Exhibits  10.33 and 10.34,  and are
                  incorporated in this Item 1 by this reference.
       
                  Certain legal proceedings against the Company are described in
                  Item 3 (Legal  Proceedings) of the Company's Form 10-K for the
                  year ended December 31, 1997.

ITEM 2            CHANGES IN SECURITIES

                  a)  Not applicable.

                  b)  On July 2, 1998, the Company adopted a stockholder rights
                      agreement  and  declared  a dividend  distribution  of one
                      Preferred   Share   Purchase   Right   ("Right")  on  each
                      outstanding  share of the  Company's  Common  Stock.  Each
                      Right will entitle  stockholders to buy one one-thousandth
                                     

                                       28

                    
<PAGE> 

                      of a  share  of  a  new  series  of  junior  participating
                      preferred stock at an exercise price of $20.00. The Rights
                      will be exercisable  only if a person or group (other than
                      certain  exempt  persons)  acquires  15%  or  more  of the
                      Company's Common Stock.  Reference is made to the Form 8-K
                      filed by the Company on July 8, 1998,  for a more complete
                      description of the stockholder rights agreement.
                                    
                  c)  During the third  quarter ended  September  30, 1998,  the
                      Company  has sold or  issued  the  following  unregistered
                      securities:

                      (1)      In July  1998,  the  Company  issued  a total  of
                               102,798 shares of Common Stock to John W. Norris,
                               Bernard Spier and Michael R. Norris in connection
                               with  its   acquisition  of  the  assets  of  the
                               Northern  New Jersey Eye  Institute in July 1996.
                               For further  information,  see Note 8 of Notes to
                               Condensed Consolidated Financial Statements.

                      (2)      In September  1998,  the Company  issued  187,500
                               shares of Common  Stock to  Frederic B. Kremer as
                               partial  consideration  for the  acquisition,  as
                               amended,  of  the  LASIK  PMA  application.   For
                               further  information,  see  Note  7 of  Notes  to
                               Condensed Consolidated Financial Statements.

                      On November 11, 1998,  subsequent  to the end of the third
                      quarter, the Company granted Mercacorp, Inc. ("Mercacorp")
                      two separate warrants to purchase Common Stock.  Under the
                      first  warrant,  Mercacorp  is  entitled to purchase up to
                      750,000  shares of Common  Stock at an  exercise  price of
                      $4.00 per share,  and under the second warrant,  Mercacorp
                      is entitled  to  purchase  up to 750,000  shares of Common
                      Stock at an  exercise  price of $5.00 per  share.  Both of
                      these  warrants will terminate if the first warrant is not
                      exercised in full within fourteen days after the effective
                      date of a  registration  statement  covering the shares of
                      common stock to be issued upon  exercise of the  warrants.
                      Prior to the exercise of the second  warrant,  the Company
                      has the option, but not the obligation,  to repurchase the
                      second  warrant  by paying  $1.00 per  share.  The  second
                      warrant  will  expire if not  exercised  prior to November
                      2001.  For a more  complete  description  of the warrants,
                      reference  is hereby made to  Exhibits  10.33 and 10.34 to
                      this Report which are  incorporated in this Item 5 by this
                      reference.

                      The  issuance  and sale of all such shares was intended to
                      be  exempt  from  registration  and  prospectus   delivery
                      requirements  under the Securities Act of 1933, as amended
                      (the  "Securities  Act") by virtue of Section 4(2) thereof
                      due to,  among other  things,  (i) the  limited  number of
                      persons  to  whom  the  shares  were   issued,   (ii)  the
                      distribution  of  disclosure  documents to all  investors,
                      (iii)  the fact  that each  such  person  represented  and
                      warranted to the Company,  among other  things,  that such
                      person was  acquiring the shares for  investment  only and
                      not with a view to the resale or distribution thereof, and
                      (iv) the fact that  certificates  representing  the shares
                      were  issued  with a legend to the effect that such shares
                      had not been  registered  under the  Securities Act or any
                      state securities laws and could not be sold or transferred
                      in  the  absence  of  such  registration  or an  exemption
                      therefrom.

ITEM 3            DEFAULTS UPON SENIOR SECURITIES

                  Not applicable.

ITEM 4            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not applicable.


                                       29
<PAGE>


ITEM 5            OTHER INFORMATION

                  Any  stockholder  desiring  to submit a proposal  or  director
                  nomination not for inclusion in the management proxy statement
                  and form of proxy for the 1999 Annual Meeting of  Stockholders
                  must submit  such  proposal  or  nomination  to the Company no
                  later than March 13, 1999.

                  In July 1998,  Juliet  Tammenoms  Bakker,  an  executive  with
                  Dawson Samberg Capital  Management,  Inc., joined the Board of
                  Directors of the Company as the  representative of the holders
                  of Series D Preferred Stock. In August 1998, Gary F. Jonas, an
                  executive  with  TLC,  joined  the Board of  Directors  of the
                  Company  as the  representative  of the  holder  of  Series  C
                  Preferred Stock.                               
          
ITEM 6            EXHIBITS AND REPORTS ON FORM 8-K

                  a)   Exhibits

                                INDEX TO EXHIBITS
Exhibit
Number                         Number Description
------                         ------------------
                               
2.1               See Exhibits 10.1, 10.6, 10.23, 10.26 and 10.31.

3.1               Certificate  of  Incorporation,  as amended  (incorporated  by
                  reference to Exhibit 1 of Form 8-A/A  (Amendment  No. 4) filed
                  by the Company on June 25, 1998*).

3.2               Bylaws,  as amended  (filed as Exhibit 3 to the Company's Form
                  10-K for the year ended December 31, 1992*).

3.3               Rights Agreement, dated as of July 2, 1998, between LaserSight
                  Incorporated  and American Stock Transfer & Trust Company,  as
                  Rights Agent, which includes (i) as Exhibit A thereto the form
                  of   Certificate   of  Designation  of  the  Series  E  Junior
                  Participating  Preferred Stock,  (ii) as Exhibit B thereto the
                  form  of  Right  Certificate  (separate  certificates  for the
                  Rights will not be issued until after the  Distribution  Date)
                  and (iii) as  Exhibit C thereto  the  Summary  of  Stockholder
                  Rights Agreement (incorporated by reference to Exhibit 99.1 to
                  the Form 8-K filed by the Company on July 8, 1998*).

4.1               See Exhibits 3.1,3.2 and 3.3.

10.1              Agreement  for  Purchase  and  Sale  of  Stock  by  and  among
                  LaserSight   Centers   Incorporated,   its   stockholders  and
                  LaserSight  Incorporated  dated  January  15,  1993  (filed as
                  Exhibit 2 to the  Company's  Form 8-K/A  filed on January  25,
                  1993*).
                                       
10.2              Amendment to  Agreement  for Purchase and Sale of Stock by and
                  among LaserSight Centers Incorporated,  its stockholders,  and
                  LaserSight  Incorporated dated April 5, 1993 (filed as Exhibit
                  2 to the Company's Form 8-K/A filed on April 19, 1993*).

10.3              Royalty   Agreement   by  and   between   LaserSight   Centers
                  Incorporated  and  LaserSight  Partners dated January 15, 1993
                  (filed as Exhibit 10.5 to the Company's Form 10-K for the year
                  ended December 31, 1995*).


                                       30

<PAGE>

10.4              Exchange  Agreement dated January 25, 1993 between  LaserSight
                  Centers Incorporated and Laser Partners (filed as Exhibit 10.6
                  to the  Company's  Form 10-K for the year ended  December  31,
                  1995*).

10.5              Stipulation  and  Agreement  of  Compromise,   Settlement  and
                  Release  dated April 18, 1995 among James  Gossin,  Francis E.
                  O'Donnell,    Jr.,   J.T.   Lin,   Wen   S.   Dai,    Emanuela
                  Dobrin-Charlton, C.H. Huang, W. Douglas Hajjar, and LaserSight
                  Incorporated (filed as Exhibit 10.7 to the Company's Form 10-K
                  for the year ended December 31, 1995*).

10.6              Agreement  for Purchase  and Sale of Stock dated  December 31,
                  1993, among LaserSight Incorporated, MRF, Inc., and Michael R.
                  Farris (filed as Exhibit 2 to the Company's  Form 8-K filed on
                  December 31, 1993*).
                                   
10.7              First Amendment to Agreement for Purchase and Sale of Stock by
                  and  among  MRF,  Inc.,   Michael  R.  Farris  and  LaserSight
                  Incorporated dated December 28, 1995 (filed as Exhibit 10.9 to
                  the  Company's  Form  10-K for the  year  ended  December  31,
                  1995*).

10.8              LaserSight  Incorporated  1995  Stock  Option  Plan  (filed as
                  Exhibit 10.5 to the Company's  Form 10-Q for the quarter ended
                  September 30, 1995*).

10.9              Modified  Promissory  Note  between  LaserSight  Incorporated,
                  EuroPacific  Securities  Services,  GmbH  and Co.  KG and Wolf
                  Wiese  (filed as Exhibit 10.6 to the  Company's  Form 10-Q for
                  the quarter ended September 30, 1995*).

10.10             Employment  Agreement by and between  LaserSight  Incorporated
                  and  Michael R.  Farris  dated  December  28,  1995  (filed as
                  Exhibit  10.17 to the  Company's  Form 10-K for the year ended
                  December 31, 1995*).

10.11             Patent  License  Agreement  dated  December  21,  1995  by and
                  between Francis E. O'Donnell, Jr. and LaserSight Centers, Inc.
                  (filed as  Exhibit  10.21 to the  Company's  Form 10-K for the
                  year ended December 31, 1995*).

10.12             LaserSight  Incorporated  Amended  and  Restated  1996  Equity
                  Incentive  Plan (filed as Exhibit 10.12 to the Company's  Form
                  10-Q/A for the quarter ended June 30, 1998*).

10.13             LaserSight  Incorporated  Amended  and  Restated  Non-Employee
                  Directors  Stock  Option  Plan  (filed  as  Exhibit  B to  the
                  Company's definitive proxy statement dated May 19, 1997*).

10.14             Agreement  dated  September  18, 1996 between David T. Pieroni
                  and  LaserSight  Incorporated  (filed as Exhibit  10.35 to the
                  Company's Form 10-K for the year ended December 31, 1996*).

10.15             Agreement  dated  January  1,  1997,   between   International
                  Business  Machines  Corporation  and  LaserSight  Incorporated
                  (filed as  Exhibit  10.37 to the  Company's  Form 10-K for the
                  year ended December 31, 1996*).
                                
10.16             Addendum   dated   March   7,   1997  to   Agreement   between
                  International  Business  Machines  Corporation  and LaserSight
                  Incorporated  (filed as Exhibit  10.38 to the  Company's  Form
                  10-K for the year ended December 31, 1996*).

10.17             Second  Amendment to Agreement  for Purchase and Sale of Stock
                  by and among LaserSight Centers Incorporated, its stockholders
                  and  LaserSight  Incorporated  dated  March 14, 1997 (filed as
                  Exhibit  99.1 to the  Company's  Form 8-K  filed on March  27,
                  1997*).

                                       31
<PAGE>

10.18             Amendment  to  Royalty  Agreement  by and  between  LaserSight
                  Centers   Incorporated,    Laser   Partners   and   LaserSight
                  Incorporated  dated March 14,  1997 (filed as Exhibit  99.2 to
                  the Company's Form 8-K filed on March 27, 1997*).

10.19             Employment  Agreement  dated September 16, 1996 by and between
                  LaserSight  Incorporated  and  Richard L.  Stensrud  (filed as
                  Exhibit  10.41  to the  Company's  Form  10-Q  filed on May 9,
                  1997*).

10.20             Warrant to purchase 500,000 shares of Common Stock dated March
                  31, 1997 by and between  LaserSight  Incorporated and Foothill
                  Capital  Corporation  (filed as Exhibit 10.44 to the Company's
                  Form 10-Q filed on August 14, 1997*).
                                 
10.21             License  Agreement  dated  May 20,  1997 by and  between  Visx
                  Incorporated  and  LaserSight  Incorporated  (filed as Exhibit
                  10.45 to the Company's Form 10-Q filed on August 14, 1997*).

10.22             Patent  Purchase  Agreement dated July 15, 1997 by and between
                  LaserSight Incorporated and Frederic B. Kremer, M.D. (filed as
                  Exhibit  2.(i) to the  Company's  Form 8-K filed on August 13,
                  1997*).

10.23             Agreement  and Plan of Merger dated July 15, 1997 by and among
                  LaserSight Incorporated, Photomed Acquisition, Inc., Photomed,
                  Inc., Frederic B. Kremer, M.D., Linda Kremer, Robert Sataloff,
                  Trustee for Alan Stewart Kremer and Robert  Sataloff,  Trustee
                  for Mark Adam Kremer (filed as Exhibit 2.(ii) to the Company's
                  Form 8-K filed on August 13, 1997*).

10.24             Warrant  to  purchase  750,000  shares of Common  Stock  dated
                  August 29, 1997 by and  between  LaserSight  Incorporated  and
                  purchasers  of Series B  Convertible  Participating  Preferred
                  Stock of  LaserSight  Incorporated  (filed as Exhibit 10.39 to
                  the Company's Form 10-Q filed on November 14, 1997*).

10.25             Independent  Contractor Agreement by and between Byron Santos,
                  M.D. and LaserSight Technologies, Inc. (filed as Exhibit 10.42
                  to the Company's Form 10-Q filed on November 14, 1997*).

10.26             Stock  Purchase  Agreement,  dated  December 30, 1997,  by and
                  among  LaserSight  Incorporated,  LSI  Acquisition,  Inc., MEC
                  Health  Care,  Inc.  and  Vision  Twenty-One,  Inc.  (filed as
                  Exhibit 2.(i) to the  Company's  Form 8-K filed on January 14,
                  1998*).

10.27             Stock Distribution Agreement,  dated December 30, 1997, by and
                  among  LaserSight  Incorporated,  LSI  Acquisition,  Inc., MEC
                  Health  Care,  Inc.  and  Vision  Twenty-One,  Inc.  (filed as
                  Exhibit  2.(ii) to the Company's Form 8-K filed on January 14,
                  1998*).
                                    
10.28             Agreement dated April 1, 1992 between  International  Business
                  Machines  Corporation  and LaserSight  Incorporated  (filed as
                  Exhibit  10.1 on Form  10-K for the year  ended  December  31,
                  1995*).

10.29             Securities  Purchase  Agreement,  dated June 5,  1998,  by and
                  between LaserSight Incorporated and TLC The Laser Center, Inc.
                  (filed as Exhibit 99.1 to the Company's Form 8-K filed on June
                  25, 1998*).

                                       32


<PAGE>

10.30             Securities  Purchase  Agreement,  dated June 12, 1998,  by and
                  between  LaserSight  Incorporated  and Pequot  Funds (filed as
                  Exhibit  99.5 to the  Company's  Form  8-K  filed  on June 25,
                  1998*).

10.31             Letter  Agreement,  dated  September  11,  1998,  amending the
                  Agreement and Plan of Merger dated July 15, 1997, by and among
                  LaserSight Incorporated, Photomed Acquisition, Inc., Photomed,
                  Inc., Frederic B. Kremer, M.D., Linda Kremer, Robert Sataloff,
                  Trustee for Alan Stewart Kremer and Robert  Sataloff,  Trustee
                  for Mark Adam Kremer.

10.32             Exclusive  License  Agreement,  dated August 20, 1998,  by and
                  between LaserSight Technologies, Inc. and TLC The Laser Center
                  Patents Inc.

10.33             Warrant to Purchase Common Stock,  dated November 11, 1998, by
                  and between LaserSight Incorporated and Mercacorp, Inc.
                                
10.34             Warrant to Purchase Common Stock,  dated November 11, 1998, by
                  and between LaserSight Incoporated and Mercacorp, Inc.
                                 
Exhibit 11        Statement of Computation of Loss Per Share

Exhibit 27        Financial Data Schedule


                  b)  Reports on Form 8-K

                  On July 8,  1998,  the  Company  filed with the  Commission  a
                  Current  Report  on  Form  8-K  regarding  the  adoption  of a
                  Stockholder Rights Plan by the Company.

                  On August 4, 1998,  the Company  filed with the  commission  a
                  Current  Report on Form 8-K regarding the press release issued
                  by the Company dated August 4, 1998, reporting a lawsuit filed
                  against the Company by Mercacorp, Inc.



----------------------
*Incorporated herein by reference.  File No. 0-19671.



                                       33
<PAGE>


                                   SIGNATURES
                                   ----------


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


                                                  LaserSight Incorporated




Dated:   November 16, 1998                          By:    /s/ Michael R. Farris
                                                           ---------------------
                                                              Michael R. Farris,
                                                         Chief Executive Officer



Dated:   November 16, 1998                          By:    /s/ Gregory L. Wilson
                                                           ---------------------
                                                              Gregory L. Wilson,
                                                         Chief Financial Officer

                                       34