SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A
(Mark One)
[ X ]  Quarterly  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
       Exchange Act of 1934. For the quarterly period ended June 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, Orlando, 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
August 13, 1998 is 12,970,135.



                                       1
<PAGE>

                                EXPLANATORY NOTE

This  Amendment  No. 1 on Form  10-Q/A  amends  and  restates  previously  filed
information  contained in Part I, Items 1 and 2, and Part II, Items 1 through 6.
The  amendment  and   restatement  was   necessitated   due  to  an  inadvertent
administrative error in connection with the preparation of this quarterly report
for filing with the SEC via Edgar.



                    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 (file no. 333-59369) filed on July 17, 1998.

                                     INDEX

PART I.         FINANCIAL INFORMATION

                Item 1.     Condensed Consolidated Financial Statements

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

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

                            Condensed Consolidated  Statements of Cash Flows for
                            the Six Month Periods Ended June 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>

                                                                                        June 30,           December 31,
                                                            ASSETS                        1998                 1997
                                                                                     ---------------    --------------
CURRENT ASSETS                                                                         (Unaudited)
<S>                                                                                     <C>                <C>       
  Cash and cash equivalents                                                             $12,444,856        $3,858,400
  Marketable equity securities                                                                    0        7,475,000
  Accounts receivable - trade, net                                                        6,149,872         2,649,202
  Notes receivable - current portion, net                                                 4,788,872         3,762,341
  Inventories                                                                             5,965,282         4,348,235
  Deferred tax assets                                                                       512,813           571,009
  Other current assets                                                                      216,108           219,723
                                                                                     ---------------    --------------
                                                       TOTAL CURRENT ASSETS              30,077,803        22,883,910

Restricted cash                                                                             194,000           200,000
Notes receivable, less current portion, net                                               2,197,076         2,380,193
Property and equipment, net                                                               1,463,042         1,354,168
Patents, net                                                                              4,745,424        11,275,289
Pre-market approval application, net                                                      2,291,134         2,571,682
Goodwill, net                                                                             6,815,177         7,077,491
Other assets, net                                                                         2,123,763         2,718,340
                                                                                     ---------------    --------------
                                                                                        $49,907,419       $50,461,073
                                                                                     ===============    ==============

                                        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                                                       $1,714,398        $2,142,979
  Note payable, less discount                                                                     0         1,758,333
  Accrued expenses                                                                        2,663,575         2,782,521
  Accrued commissions                                                                     1,358,914         1,230,474
  Income tax payable                                                                         11,409         1,255,491
  Deferred royalty revenue, current portion                                                 400,000                 0
  Other current liabilities                                                                 799,673           984,412
                                                                                     ---------------    --------------
                                                  TOTAL CURRENT LIABILITIES               6,947,969        10,154,210

Refundable deposits                                                                         194,000           200,000
Accrued expenses, less current portion                                                      526,316           518,730
Deferred royalty revenue, less current portion                                              633,334                 0
Deferred income taxes                                                                       512,813           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 June 30, 1998 and December 31, 1997, respectively                    0        11,477,184


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 June 30, 1998 and  
  December 31, 1997, respectively                                                             2,000                 0
Series D - par value $.001 per share; authorized 2,000,000 shares;
  2,000,000 and zero issued and outstanding at June 30, 1998 and 
  December 31, 1997, respectively                                                             2,000                 0
Common stock - par value $.001 per share; authorized 40,000,000 shares;
  12,867,912 and 10,149,872 shares issued at June 30,1998 and December                                  
  31, 1997, respectively                                                                     12,868            10,150
Additional paid-in capital - common stock                                                57,873,297        40,045,564
Stock subscription receivable                                                            (1,140,000)       (1,140,000)
Accumulated deficit                                                                    ( 15,580,294)      (11,865,914)
Accumulated other comprehensive income - unrealized gain                                          0           604,500
Less treasury stock, at cost;  155,200 and 165,200 common shares at June
  30, 1998 and December 31, 1997, respectively                                             (576,884)         (614,360)
                                                                                     ---------------    --------------
                                                                                         40,592,987        27,039,940
                                                                                     ---------------    --------------
                                                                                        $49,907,419       $50,461,073
                                                                                     ===============    ==============

   See accompanying notes to the condensed consolidated financial statements.

</TABLE>
                                       3
<PAGE>
<TABLE>

                    LASERSIGHT INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<CAPTION>
                                                   Three Months Ended                        Six Months Ended
                                                        June 30,                                 June 30,
                                          -------------------------------------     ------------------------------------
                                               1998                 1997                 1998                1997
                                          ---------------      ----------------     ----------------    ----------------

REVENUES:
<S>                                           <C>                    <C>                  <C>                 <C>      
    PRODUCTS                                  $4,781,319             2,130,698            8,826,002           5,684,543
    SERVICES                                     167,661             3,277,874              366,197           6,242,171
                                          ---------------      ----------------     ----------------    ----------------
                                               4,948,980             5,408,572            9,192,199          11,926,714
COST OF REVENUE:
    PRODUCT COST                               1,713,301               821,705            2,889,621           1,865,503
    COST OF SERVICES                              73,771             2,129,318              161,127           4,303,705
                                          ---------------      ----------------     ----------------    ----------------

GROSS PROFIT                                   3,161,908             2,457,549            6,141,451           5,757,506

RESEARCH, DEVELOPMENT AND REGULATORY
  EXPENSES                                       743,788               550,427            1,561,344             912,631

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                     4,185,434             3,851,210            7,932,483           7,424,706
                                          ---------------      ----------------     ----------------
                                                                                                        ----------------

LOSS FROM OPERATIONS                         (1,767,314)           (1,944,088)          (3,352,376)         (2,579,831)

OTHER INCOME AND EXPENSES
  Interest and dividend income                   111,442               100,507              226,298             197,871
  Interest expense                             (324,020)             (368,529)            (720,541)           (428,172)
  Gain on sale of investments and
  subsidiaries                                   150,076             (230,400)              364,452           (280,400)
      and other
                                          ---------------      ----------------     ----------------    ----------------

NET LOSS BEFORE INCOME TAXES                 (1,829,816)           (2,442,510)          (3,482,167)         (3,090,532)

INCOME TAX EXPENSE (BENEFIT)                    (78,943)                    0              232,213                   0
                                          ---------------      ----------------     ----------------    ----------------

NET LOSS                                     (1,750,873)           (2,442,510)          (3,714,380)         (3,090,532)

CONVERSION DISCOUNT ON
    PREFERRED STOCK                            (833,500)                    0            (858,872)                   0

PREFERRED STOCK ACCRETION
   AND DIVIDEND REQUIRED                     (1,653,832)               (3,487)          (2,751,953)            (13,350)
                                          ---------------      ----------------     ----------------    ----------------

LOSS ATTRIBUTABLE TO COMMON
   SHAREHOLDERS                             ($4,238,205)           (2,445,997)          (7,325,205)         (3,103,882)
                                          ===============      ================     ================    ================

LOSS PER COMMON SHARE
  Basic:                                         ($0.34)               ($0.26)              ($0.64)             ($0.34)
                                          ===============      ================     ================    ================
  Diluted:                                       ($0.34)               ($0.26)              ($0.64)             ($0.34)
                                          ===============      ================     ================    ================

WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING
  Basic:                                      12,626,000             9,381,000           11,478,000           9,103,000
                                          ===============      ================     ================    ================
  Diluted:                                    12,626,000             9,381,000           11,478,000           9,103,000
                                          ===============      ================     ================    ================

      See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                       4
<PAGE>
<TABLE>


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

                                                                                    1998                 1997
                                                                              -----------------    ------------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                              <C>                   <C>          
  Net loss                                                                       $ (3,714,380)         $ (3,090,532)
  Adjustments to reconcile net loss to net cash used in operating
    activities:
  Depreciation and amortization                                                      1,881,290               966,793
  Gain on sale of investments and subsidiaries                                       (364,452)                     0
  Decrease (increase) in accounts and notes receivable                             (4,198,124)               683,501
  Increase in inventories                                                            (390,366)             (448,155)
  Increase (decrease) in accounts payable                                            (494,155)               288,911
  Increase (decrease) in accrued expenses                                            (282,712)               418,779
  Income taxes                                                                       (873,582)               742,036
  Deferred royalties                                                                 1,033,334                     0
  Other                                                                                214,438             (336,414)
                                                                              -----------------    ------------------

NET CASH USED IN OPERATING ACTIVITIES                                              (7,188,709)             (775,081)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment, net                                           (289,442)             (350,593)
  Net proceeds from exclusive and non-exclusive license 
  of patents                                                                         6,170,000                    0
  Proceeds from sale of investments                                                  6,527,452                    0 
  Transfer to restricted cash account                                              (4,200,000)                    0 
  Proceeds from restricted cash account                                              4,228,000                    0
  Purchase of managed care contract                                                          0             (150,000)
                                                                              -----------------    ------------------

NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES
                                                                                    12,436,010             (500,593)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of stock options                                               31,600                49,088
  Repurchase of preferred stock                                                    (10,512,000)                    0
  Proceeds from issuance of notes payable, net                                               0             3,414,142
  Repayments of notes payable                                                       (2,000,000)           (1,000,000)
  Repayments of capital lease obligation                                                     0               (99,888)
  Proceeds from issuance of preferred stock, net                                    15,819,555                     0
                                                                              -----------------    ------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                            3,339,515             2,363,342
                                                                              -----------------    ------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                8,586,456             1,087,668

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

CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $ 12,444,856           $ 3,091,169
                                                                              =================    ==================

   See accompanying notes to the condensed consolidated financial statements.
</TABLE>
                         
                                       5
<PAGE>

                              



                    LASERSIGHT INCORPORATED AND SUBSIDIARIES
                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
            STATEMENTS Six Month Periods Ended June 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 June 30, 1998,  and for the three and six month
                  periods  ended June 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
                  six month  periods  ended  June 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                 Six Months Ended
                                                     June 30, 1998    June 30, 1997    June 30, 1998  June 30, 1997

<S>                                                   <C>               <C>              <C>              <C>        
                    Net loss                          ($1,750,873)      (2,442,510)      (3,714,380)      (3,090,532)

                    Other comprehensive loss:

                         Reversal of unrealized
                         gain on marketable
                         securities (net of 
                         tax of $353,675 and
                         $353,675, respectively)          (577,048)               0         (577,048)               0

                         Reclassification
                          adjustment for losses
                         (gains) included in net
                         loss (net of tax of
                         $(59,172) and $16,825,
                         respectively)                     96,543                0          (27,452)               0     
                                                      ------------      -----------      -----------      ----------- 

                    Comprehensive loss                ($2,231,378)      (2,442,510)      (4,318,880)      (3,090,532)
                                                      ============      ===========      ===========      ===========
</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
                  June 30, 1998 and December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>                                                    
                                                                   June 30, 1998           December 31, 1997
                                                                   -------------           -----------------

<S>                                                                   <C>                        <C>      
                    Raw materials - excimer related                   $3,715,488                 3,058,782
                    Raw materials - erbium related                       716,114                         0
                    Work-in-process - excimer related                    160,579                   263,353
                    Work-in-process - erbium related                     459,424                         0
                    Finished goods - excimer related                     675,045                   862,775
                    Finished goods - erbium related                       99,000                         0
                    Test equipment-clinical trials                       187,497                   263,325
                    Training/show units - erbium related                 273,395                         0
                                                                 ---------------           ---------------
                                                                       6,286,542                 4,448,235
                    Less reserve for obsolescence                        321,260                   100,000
                                                                 ---------------           ---------------
                                                                      $5,965,282                 4,348,235
                                                                 ===============           ===============
</TABLE>


NOTE 5            MARKETABLE EQUITY SECURITIES

                  Through  June 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 June 30, 1998, the Company realized a gain on the sale
                  of such stock of $27,452.  The  Company is pursuing  mediation
                  and, if necessary,  binding  arbitration related to 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

                  On February 10, 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.
                  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 will be 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

                  In  conjunction  with the Company's  acquisition of a laser in
                  situ   keratomileusis   (LASIK)   Pre-Market   Approval  (PMA)
                  application from Photomed, Inc. (Photomed), several contingent
                  payment  obligations  included in the transaction are based on
                  U.S. Food and Drug Administration  (FDA) approval.  If the FDA
                  approved the acquired PMA  application and the commercial sale
                  in the U.S. of the laser device covered by the PMA by July 29,
                  1998,  the  Company  would  have been  obligated  to pay $1.75
                  million to the sellers.  The FDA approved the laser for single
                  site use, though not for commercial sale, on July 30, 1998. If
                  the  FDA  approves  the  use  of any  Company  laser  for  the
                  treatment of hyperopia,  the Company may be obligated to issue
                  to the sellers unregistered Common Stock valued at $1 million.
                  If the Company's  scanning  laser had been approved by the FDA
                  for  commercial  sale in the U.S. on or before  April 1, 1998,
                  the Company would have been obligated to pay $1 million to the
                  sellers.   Approval   after   such  date  will   result  in  a
                  correspondingly smaller obligation until January 1, 1999, when
                  no payment will be required.  Based on the timing and scope of
                  the FDA approval of the acquired PMA application,  the Company
                  and   representatives  of  Photomed  have  agreed  to  discuss
                  restructuring   these   payment   obligations.   Such  revised
                  structure has not been finalized as of August 13, 1998.

NOTE 8            STOCKHOLDERS' EQUITY

                  TLC Private Placement

                  On  June  5,  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 5, 2001, on which date all shares
                  of   Series  C   Preferred   Stock   then   outstanding   will
                  automatically be converted into 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 its  Series B  Convertible  Participating  Preferred  Stock
                  (Series B Preferred  Stock) on June 5, 1998 for  approximately
                  $6.3 million, including a 20% premium.


                                      8
<PAGE>


                  Pequot Private Placement

                  On June  12,  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 12,  2001,  on which  date all shares of
                  Series D Preferred Stock then outstanding  will  automatically
                  be  converted  into  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 12,  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

                  On June 5, 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,   Series  B  Preferred
                  shareholders 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).

                  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 three and six month periods ended June 30, 1998.

NOTE 9            ACQUISITION

                  On April 15, 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

                                       9
<PAGE>

                  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
                  are issued in April 1999,  the entry will be to record the par
                  value of  shares  issued in 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

                  On June 5,  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 six
month periods ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>

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

                                           Revenue           % of Total                 Revenue          % of Total
                                           -------           ----------                 -------           ----------

<S>                                       <C>                       <C>                 <C>                      <C>
Technology                                $4,781,319                97%                 $2,130,698               39%
Health care services                         167,661                 3%                  3,277,874               61%
                                          ----------               ----                 ----------              ----

Total revenue                             $4,948,980               100%                 $5,408,572              100%
                                          ==========               ====                 ==========              ====


                                             For the Six Month                            For the Six Month
                                                Period Ended                                 Period Ended
                                               June 30, 1998                                June 30, 1997
                                               -------------                                -------------

                                            Revenue          % of Total                  Revenue           % of Total
                                            -------          ----------                  -------           ----------

Technology                                $8,826,002                96%                 $5,684,543               48%
Health care services                         366,197                 4%                  6,242,171               52%
                                          -----------              ----                -----------              ----

Total revenue                             $9,192,199               100%                $11,926,714              100%
                                          ==========               ====                ===========              ====
</TABLE>

Revenue in the second  quarter of 1998 was  $4,948,980,  compared to  $5,408,572
(for a decrease  of  $459,592)  over the same  period in 1997.  Revenue  for the
six-month period ended June 30, 1998,  respectively,  decreased by $2,734,515 to
$9,192,199  from  the  same  period  in  1997.   Technology  revenues  increased
$2,650,621 and $3,141,459  during the three and six month periods ended June 30,
1998,  respectively,  compared  to the  same  periods  in  1997.  These  revenue
increases  were a result of (i) a higher  level of laser system sales during the
three and six month periods ended June 30, 1998;  (ii) a seven 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.  Fifteen laser systems were sold in the second
quarter of 1998  compared to eight  system  sales  during the second  quarter of
1997. Twenty-nine laser systems were sold during the six-month period ended June
30, 1998, compared to 23 systems sold during the same period in 1997.

More than  offsetting  the  increases in technology  revenues were  decreases in
health care services  revenue  ($3,110,213  and $5,875,974 for the three and six
month periods  ended June 30, 1998 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 $2,857,684
and $5,590,103 in revenues during the three and six month periods ended June 30,

                              
                                       11
<PAGE>


1997,  respectively.  All of the Company's  health care services revenue for the
first six months of 1998 was  provided  by MRF,  Inc.,  d/b/a The  Farris  Group
(TFG).  Net revenue for TFG in the second quarter of 1998 was $167,661  compared
to $420,190  (for a decrease  of  $252,529)  over the same period in 1997.  This
decrease was accompanied by a $224,449 reduction in expenses over the same three
month period in 1997. Net revenue for TFG during the six month period ended June
30, 1998,  was $366,197  compared to $652,068 (for a decrease of $285,871)  over
the same period in 1997. That decrease was  accompanied by a $370,578  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
six month periods ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>

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

<S>                                               <C>                        <C>                   <C>        
Product cost                                      $   1,713,301              109 %                 $   821,705
Cost of services                                         73,771              (97 %)                  2,129,318
Gross profit                                          3,161,908               29 %                   2,457,549
Gross profit percentage                                    64 %                                           45 %

Products only                                         3,068,018              134 %                   1,308,993
                                                           64 %                                           61 %

                                               For the Six Month                              For the Six Month
                                                  Period Ended                                   Period Ended
                                                 June 30, 1998          Percent Change          June 30, 1997
                                                 -------------          --------------          -------------

Product cost                                         $2,889,621              55 %                   $1,865,503
Cost of services                                        161,127             (96 %)                   4,303,705
Gross profit                                          6,141,451              (7 %)                   5,757,506
Gross profit percentage                                    67 %                                           48 %

Products only                                         5,936,381               55 %                   3,819,040

                                                           67 %                                           67 %

</TABLE>
   
Gross  profit  margins  were 64% of net  sales  in the  second  quarter  of 1998
compared to 45% for the same  period in 1997.  For the six month  periods  ended
June 30, 1998 and 1997, gross profit margins were 67% and 48%, 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 29% and 27% for the three and six
month periods ended June 30, 1998 and 1997, respectively.

                                  
                                       12
<PAGE>



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

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

<S>                                             <C>                         <C>                   <C>   
Research, development
   and regulatory                               $  743,788                   35 %                  $  550,427

As a percentage of technology
   revenues                                           16 %                                               26 %


                                           For the Six Month                                  For the Six Month
                                              Period Ended                                       Period Ended
                                             June 30, 1998             Percent Change           June 30, 1997
                                             -------------             --------------           -------------

Research, development
   and regulatory                             $  1,561,344                    71 %                 $  912,631

As a percentage of technology
   revenues                                           18 %                                               16 %
</TABLE>

Research,  development  and  regulatory  expenses for the second quarter of 1998
were $743,788,  an increase of $193,361,  or 35%, from such expenditures  during
the same period in 1997.  Research,  development and regulatory expenses for the
six month period ended June 30, 1998 increased by $648,713 from $912,631 for the
same  period  in  1997,  or 71%.  The  increase  in  research,  development  and
regulatory  expenses during the three and six month periods ended June 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 LSX, the Company has solicited and received input from clinical users and
prospective  customers.  This  has  resulted  in  modifications  to the  system,
necessitating  additional development and testing for clinical validation.  As a
result of a continuation of the efforts described, the Company expects research,
development  and regulatory  expenses  during the remainder of 1998 to remain at
levels  consistent  with  those  incurred  during  the first six months 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.


                                       13
<PAGE>


Selling,  General and  Administrative  Expenses.  The following tables present a
comparative  analysis of selling,  general and  administrative  expenses for the
three and six month periods ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>

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

<S>                                         <C>                           <C>                     <C>    
Selling, general and
   Administrative                           $4,185,434                     9 %                     $3,851,210

Percentage of revenues                            85 %                                                   71 %

                                      For the Six Month                                       For the Six Month
                                         Period Ended                                            Period Ended
                                        June 30, 1998               Percent Change              June 30, 1997
                                        -------------               --------------              -------------

Selling, general and
   Administrative                          $7,932,483                      7 %                     $7,424,706

Percentage of revenues                          86  %                                                    62 %
</TABLE>

Selling,general and administrative expenses increased by $334,224 for the second
quarter of 1998  compared  to the same period in 1997.  The primary  reasons for
this increase  include  increased  amortization  costs  resulting  from acquired
patents, license agreements and other intangibles ($410,000), related legal fees
and royalty fees based on the higher  number of laser systems sold. In addition,
other 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  service,  field  service,  quality  assurance and
engineering  departments.  These  increases  in operating  costs were  partially
offset by the sale of MEC and LSIA  ($613,000)  and a reduction  in the selling,
general,  and  administrative  expenses of TFG ($193,000) and corporate  offices
($51,000).

Selling,  general and administrative  expenses increased by $507,777 for the six
months  ended June 30, 1998  compared  to the same  period in 1997.  The primary
reasons for this increase include  increased  amortization  costs resulting from
acquired patents,  license agreements and other intangibles ($865,000),  royalty
fees and a higher level of warranties incurred on the sale of its laser systems.
In addition, other increases were necessary to fund the strategic initiatives of
the Company and the development of its products and services as described above.
These increases in operating costs were partially  offset by the sale of MEC and
LSIA ($1,216,000) and a reduction in the selling,  general,  and  administrative
expenses of TFG ($319,000) and corporate offices ($109,000).

Loss From  Operations.  There was an operating  loss of $1,767,314 in the second
quarter of 1998 compared to an operating  loss of $1,944,088 for the same period
in 1997,  including TFG's losses (including  goodwill  amortization) of $134,476
and $106,446,  respectively.  The improved  results are attributed to the higher
level of technology  sales,  partially offset by the sale of MEC and LSIA, which
generated  income  from  operations  of  $220,007  during the 1997  period.  The
operating  loss for the six month  period  ended  June 30,  1998 was  $3,352,376
compared  to an  operating  loss of  $2,579,831  for the  same  period  in 1997,
including  TFG's  losses  (including  goodwill  amortization)  of  $340,729  and
$425,486,  respectively.  The  decrease in  operating  results for the six month


                                       14
<PAGE>

period ended June 30, 1998, can be attributed to the sale of MEC and LSIA, which
generated  income from  operations  of $282,870,  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 $111,442 in the
second quarter of 1998 compared to interest and dividend  income of $100,507 for
the same period in 1997.  Interest and dividend  income for the six month period
ended June 30, 1998 was $226,298  compared to interest  and  dividend  income of
$197,871 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
$324,020 in the second quarter of 1998 compared to interest  expense of $368,529
for the same period in 1997.  Interest  expense for the six month  period  ended
June 30, 1998 was $720,541 compared to interest expense of $428,172 for the same
period in 1997.  Interest  expense  incurred by the Company during the three and
six month periods  ended June 30, 1998 and 1997 related  primarily to the credit
facility  established  with Foothill on April 1, 1997 and repaid in full on June
5, 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 sales of Vision 21
common stock and MEC and LSIA.

Income Taxes.  For the three months ended June 30, 1998, the Company recorded an
income tax  benefit of $78,943  compared to no income tax benefit or expense for
the same period in 1997.  For the six months  ended June 30,  1998,  the Company
recorded  income tax  expense of  $232,213  compared to no income tax benefit or
expense  over the same period in 1997.  The net expense for the six month period
is primarily the result of realized gains and  $1,200,000 in royalties  received
for the  non-exclusive  license of  certain  patents,  the income  from which is
deferred for accounting purposes.

Net Loss. Net loss for the second  quarter of 1998 was $1,750,873  compared to a
net loss of $2,442,510  for the same period in 1997.  Net loss for the six month
period ended June 30, 1998, was $3,714,380  compared to a net loss of $3,090,532
for the same period in 1997.  The decrease in net loss for the second quarter of
1998 can be attributed to an increase in technology  revenues,  partially offset
by the effects of the sale of MEC and LSIA. The increase in net loss for the six
month period ended June 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.

Loss  Attributable to Common  Shareholders.  For the three months ended June 30,
1998, the Company's loss attributable to common shareholders was impacted by the
premium paid on the repurchase of the 525 remaining shares of Series B Preferred
Stock ($1,050,000),  the accretion of the financing costs related to such shares
($603,832),  and the value of the conversion  discount on the Series C Preferred
Stock and Series D Preferred Stock  ($833,500).  The loss attributable to common
shareholders  for the six months ended June 30, 1998 also includes the impact of
the premium paid on the first quarter 1998  repurchase of 351 shares of Series B
Preferred  Stock  ($702,000) and the accretion of the financing costs related to
such shares ($396,121).

Loss Per Share.  Loss per basic and diluted  share  increased to ($0.34) for the
second quarter of 1998 compared to ($0.26) for the same period in 1997. The loss
per basic and diluted share  increased to ($0.64) for the six month period ended
June 30, 1998, compared to ($0.34) for the same period in 1997. Of the basic and
diluted  losses  per share for the three and six month  periods  ended  June 30,
1998,  ($0.20)  and  ($0.31),  respectively,  were a result  of the value of the

                                       15
<PAGE>

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 outstanding increased primarily due to the conversion of
419 shares of Series B Preferred  Stock into Common  Stock during the six months
ended June 30, 1998.

Liquidity and Capital Resources.

Working capital  increased  $10,400,134 from $12,729,700 at December 31, 1997 to
$23,129,834  as of June 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 $7,188,709 during the
first six months of 1998,  compared to $775,081 of net cash used during the same
period in 1997. This increase is primarily  attributable to a six month 1998 net
loss of $3,714,380  compared to a net loss of $3,090,532 over the same period in
1997, an increase in accounts  receivable  and notes  receivable  (primarily the
result of slower  collections of outstanding  receivables and increased payments
due at or before installation (including letters of credit) versus upon shipment
on first and second quarter sales),  significant  decreases in accounts payable,
accrued liabilities,  and 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  six  months of 1998 was
$12,436,010  compared to $500,593 in net cash used in investing  activities over
the same period in 1997.  Net cash provided by investing  activities  during the
first six 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 $3,339,155 during the first six months of
1998,  compared to  $2,363,342  over the same period in 1997.  Net cash provided
from financing  activities during the first six months of 1998 resulted from the
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 six months of 1997  consisted of 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  collection of  receivables.  A failure to timely collect a material
portion of current  receivables  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 (file no. 333-59369) filed on July
17, 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 (12,970,135 shares as of August 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  All shares issued from the conversion of Series B Preferred Stock (the
          "Series  B  Shares")  are  freely   saleable,   subject  only  to  the
          satisfaction of a prospectus delivery requirement.

       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  A warrant to purchase 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   prospective   delivery
          requirement.  As of August 13,  1998,  140,625  such  shares 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 581,825  shares of Common Stock (the "Foothill  Shares")  issuable
          upon  the  exercise  of  the  warrants  issued  to  Foothill   Capital
          Corporation  ("Foothill")  are  the  subject  of  certain  demand  and
          piggy-back registration

       o  The 581,825  shares of Common Stock (the "Foothill  Shares")  issuable
          upon  the  exercise  of  the  warrants  issued  to  Foothill   Capital
          Corporation  ("Foothill")  are  the  subject  of  certain  demand  and
          piggy-back registration.

       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;  --TFG; --SEO Medical;  --Series D
          Preferred Stock."
                          
       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-LaserSightCenters   and   Florida   Laser   Partners;--TFG;--SEO
          Medical;--Series D Preferred Stock."

Sales, or the possibility of sales,  of the Series B Shares,  Shoreline  Shares,
Photomed  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 $3.7 million for the six months ended June 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 $7.2 million,  $4.4 million,  and $4.2

                                       17
<PAGE>

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 June
30, 1998, the Company had an accumulated  deficit of $15.6 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.  There  can be no  assurance  that the
Company can regain or sustain profitability or positive operating cash flow.

Uncollectible Receivables Could Exceed Reserves. At June 30, 1998, the Company's
trade accounts and notes receivable aggregated approximately  $13,135,820 net of
allowances  for  collection  losses  and  returns of  approximately  $2,162,000.
Accrued commissions, the payment of which generally depends on the collection of
such  net  trade  accounts  and  notes  receivable,   aggregated   approximately
$1,735,230 at June 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  93% and 90% of net  receivables  at June 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 ($1,962,000
at June 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 June 30, 1998, the Company had  restructured
laser customer accounts in the aggregate amount of approximately  $860,450 (5.6%
of the gross  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 will 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 June 30, 1998, the
Company  experienced a $7.2 million deficit in cash flow from operations largely
resulting  from the loss  incurred  during the  period,  an increase in accounts
receivable and a decrease 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 and its A*D*K  product on a  commercial  basis.  Beginning  in the third
quarter of 1998,  the LSX laser  system is expected  to make a more  significant
contribution to the Company's operating results. 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 third  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  anticipated   collection  of
receivables.  However,  if the Company  does not  collect a material  portion of
current receivables in a timely manner,  experiences  significant further delays
in the shipment of its A*D*K  product,  experiences  less market demand for such
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.

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<PAGE>

       o  Certain  cash  payment  obligations  under  the  Company's  LASIK  PMA
          application  acquisition  agreement of July 1997 with  Photomed.  Such
          contingent cash payment obligations currently include (i) an amount to
          be   determined   payable  if  the  Company   decides  to  pursue  the
          commercialization  of the  LASIK  laser  (Originally,  the  contingent
          obligation was $1.75 million payable if the FDA approved the LASIK PMA
          application for commercial sale before July 29, 1998. The FDA, on July
          30,  1998,  approved the single site PMA, but has not yet approved the
          commercial  sale of such laser.),  and (ii) an amount to be determined
          if the FDA approves the Company's  scanning laser for commercial  sale
          in the U.S.  before  January  1,  1999.  (Originally,  the  contingent
          obligation was $3,633 for each day (or approximately $110,000 for each
          month) between the date of such approval and January 1, 1999,  subject
          to a maximum  payment of $509,000  (calculated as of August 13, 1998).
          The Company is currently assessing the opportunity, cost and timing of
          proceeding  with the  development  of the LASIK laser.  The Company is
          also  discussing  the   restructuring   of  the  payment   obligations
          associated with  commercialization of the LASIK laser and FDA approval
          of the Company's scanning laser.

       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 after receiving
          FDA approval.  (The Company  believes  these  expenses may begin to be
          incurred in the second half of 1998.)

       o  Additional  working capital necessary to more fully develop the 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  (the  "Centers
          Contingent  Shares") based on the Company's  pre-tax  operating income
          through

                                       19
<PAGE>
                               


          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 (the "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.

As of August 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--TFG. To the extent that TFG achieves
certain  pre-tax  income  levels  during  1998,  the earnout  provisions  of the
Company's agreement for the acquisition of TFG in 1994 would require the Company
to issue to the  former  owner of such  company  (Mr.  Michael  R.  Farris,  the
President  and Chief  Executive  Officer  of the  Company)  up to  approximately
343,000 shares of Common Stock (the "Farris Contingent Shares"). There can be no
assurance that any issuance of the Farris  Contingent Shares will be accompanied
by an increase in the Company's per share operating results.

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)  after having  approved for  commercial  sale the
LASIK PMA  application  to which the Company  acquired  rights in July 1997, the
Company  would be required  to issue  additional  shares of Common  Stock with a
market value of $1.0 million  (based on the average  closing price of the Common
Stock during the preceding  10-day period) to the former Photomed  stockholders.
If such  market  value had been  computed as of August 12,  1998,  the number of
additional shares issuable would have been approximately  174,000.  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  Medical. In connection with the
acquisition  of certain  assets of SEO Medical in April 1998, the Company agreed
to issue up to 223,280 additional shares of Common Stock if the five day average
price of Common  Stock on 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


                                       20
<PAGE>


                               
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 approximately  581,825,  and (ii) a
reduction to the exercise price of the Foothill  Warrant shares to approximately
$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
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 August 13, 1998,
140,625 such shares 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 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


                                       21
<PAGE>

the Common  Stock.  Such dilution may be increased by 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 its 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, 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 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
June 30, 1998,  approximately  $15.7 million (31 %) were intangible  assets,  of
which  approximately  $6.8 million  reflects  goodwill (which is being amortized
using an estimated life ranging from 12 to 20 years), approximately $4.7 million
reflects the cost of patents  (which is being  amortized  over a period  ranging
from  approximately 8 to 17 years),  and approximately $4.2 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

                                       22
<PAGE>

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.  If TFG is  unsuccessful  in  continuing to improve its financial
performance, some or all of the carrying amount of goodwill recorded ($3,852,000
at June 30, 1998) may be subject to an impairment adjustment.

Year 2000  Concerns.  The Company  believes  that,  other than its financial and
accounting  software  already planned to be replaced in late 1998 or early 1999,
it has prepared its computer  systems and related  applications  to  accommodate
date-sensitive  information  relating  to the Year 2000;  however,  the  Company
continues to assess its systems and  applications.  The Company expects that any
additional costs related to ensuring such systems to be Year 2000-compliant will
not be material  to the  financial  condition  or results of  operations  of the
Company.  Such costs will be expensed as incurred.  In addition,  the Company is
discussing  with its vendors the  possibility of any interface  difficulties  or
other disruptions that may affect the Company. To date, no significant  concerns
have  been  identified.  However,  there  can  be  no  assurance  that  no  Year
2000-related  operating  problems  or  expenses  will arise  with the  Company's
computer  systems and software or in their  interface with the computer  systems
and software of the Company's vendors.

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 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

                                       23
<PAGE>

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.  While the Company's  LaserScan 2000 laser
system has received CE Mark  certification,  the  Company's  LSX laser system is
currently  undergoing  the CE Mark  certification  process.  Until  the  Company
receives its CE Mark certification with the respect to its LSX laser system, the
Company is  prohibited  from  placing the LSX laser  system for use in EU member
countries.  A  lengthy  delay in CE Mark  certification  could  have a  material
adverse effect on the business,  financial condition,  and results of operations
of the Company. The Company expects to receive CE Mark certification for its LSX
laser system during 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 LaserSight Technologies'
lasers infringe upon any valid and enforceable patents in international markets,
then  LaserSight  Technologies  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 94%
and 43%,  respectively,  of the Company's  total revenues  during the six months
ended June 30, 1998 and 1997,  respectively.  In the future, the Company expects
its  percentage  of  international  sales  to be more  comparable  to the  sales
percentages which were reported for the six months ended June 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
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 LaserSight  Technologies'  lasers infringe upon any valid and enforceable
patents held by VISX or Summit in the U.S., then LaserSight  Technologies 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,  LaserSight  Technologies  might  be

                                       24
<PAGE>

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 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*oK 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 third
quarter of 1998.  In addition,  commencing  seven  months  after such date,  the
Company's  royalty  payments (50% of its defined gross profits from AoDoK 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

                                       25
<PAGE>


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
generally shipped as orders are received. Historically, the Company has received
and shipped a  significant  portion of its orders for a particular  quarter near


                                       26
<PAGE>


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. 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,  Incorporated  ("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 has been scheduled for
                  [December] 1998. 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   asserts
                  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  asks  that they be  awarded  $5  million  in actual
                  damages and $50 million in punitive damages.

                  The  Company   believes  that  the  allegations  made  by  the
                  plaintiff  against  the  Company  and Mr.  Farris are  without
                  merit, and it intends to vigorously defend the action.


                  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
                       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.
                             
                                
                                       28
<PAGE>

                    
                  c)  During the second quarter ended June 30, 1998, the Company
                      has sold or issued the following unregistered securities:

                      (1)  In April 1998,  the Company  issued 305,820 shares of
                           Common  Stock to  Schwartz  Electro-Optics,  Inc.  as
                           consideration for the purchase of certain assets, and
                           the assumption of certain liabilities, of its medical
                           products division. For further information,  see Note
                           9  of  Notes  to  Condensed   Consolidated  Financial
                           Statements.

                      (2)  As previously reported, the Company completed private
                           placements of its Series C Preferred Stock and Series
                           D Preferred Stock in June 1998. The holders of Series
                           C Preferred  Stock and Series D Preferred  Stock have
                           voting  rights  equivalent to the number of shares of
                           Common  Stock  the  outstanding  preferred  stock  is
                           convertible  into and are not entitled to receive any
                           dividends unless  dividends are concurrently  paid on
                           the Common Stock.

                           The  holder of the Series C  Preferred  Stock has the
                           right to nominate one candidate to stand for election
                           as a member of the  Company's  Board of Directors for
                           as  long as the  holder  owns  at  least  7.5% of the
                           Company's   outstanding  Common  Stock  or  Series  C
                           Preferred Stock which is convertible into 7.5% of the
                           Company's outstanding Common Stock.

                           The holders of the Series D Preferred  Stock have the
                           exclusive right, voting separately as a single class,
                           to  elect  one  director  (the  "Series  D  Preferred
                           Director")  of the  Company.  The voting  rights with
                           respect  to the  Series  D  Preferred  Director  will
                           terminate and  thereafter be of no force or effect if
                           on any date the Board of  Directors  fixes the record
                           date for a meeting of the Company's  stockholders  at
                           which  directors will be elected (the  "Determination
                           Date"),  that number of full  shares of Common  Stock
                           into  which all then  outstanding  shares of Series D
                           Preferred Stock, if any, could be converted  pursuant
                           to the term of the Series D  Preferred  Stock is less
                           than  7.5% of all then  outstanding  shares of Common
                           Stock on the Determination Date. Thereafter,  so long
                           as the holders of the Series D Preferred Stock own in
                           the aggregate at least 7.5% of the outstanding Common
                           Stock as of any  Determination  Date (for purposes of
                           this  calculation  all  shares of Series D  Preferred
                           Stock  shall be deemed to be  converted  to shares of
                           Common  Stock  pursuant  to the terms of the Series D
                           Preferred  Stock)  then the  holders  of the Series D
                           Preferred  Stock shall have the right to  designate a
                           nominee  (who  is   reasonably   acceptable   to  the
                           Company's  Board of  Directors) to stand for election
                           as a director  at the next  meeting of the  Company's
                           stockholders at which directors will be elected.

                           In  addition,  in the event of a  liquidation  of the
                           Company,  the holders of the Series C Preferred Stock
                           and Series D  Preferred  Stock  would be  entitled to
                           receive distributions in preference to the holders of
                           the Common  Stock.  See Note 8 of Notes to  Condensed
                           Consolidated Financial Statements.  Reference is made
                           to the Company's Form 8-K filed on June 25, 1998, for
                           additional information.

                      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,

                                       29
<PAGE>



                      (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

                  On  June  30,  1998,  at  the  Company's   annual  meeting  of
                  shareholders,  the following members were elected to the Board
                  of Directors:

<TABLE>
<CAPTION>

                                                                Votes For                 Votes Withheld
                                                                ---------                 --------------

<S>                                                             <C>                           <C>    
                  J. Richard Crowley                            7,628,694                     110,954
                  Michael R. Farris                             7,631,439                     108,209
                  Richard C. Lutzy                              7,635,189                     104,459
                  Francis E. O'Donnell, Jr., M.D.               7,635,189                     104,459
                  Thomas Quinn                                  7,635,189                     104,459
                  David T. Pieroni                              7,630,639                     109,009
                  Terry Fuller, Ph.D.                           7,631,689                     107,959
</TABLE>

                  Amendment  of  conversion  terms  of the  Company's  Series  B
                  Preferred stock and the reduction of the exercise price of the
                  warrants  issued to the Series B  Preferred  shareholders  was
                  ratified as follows:

                                    Votes For                 7,357,914
                                    Votes Against               276,278
                                    Abstain                     105,456

                  Amendment  of the 1996 Equity  Incentive  Plan was ratified as
                  follows:

                                    Votes for                 7,268,785
                                    Votes Against               386,765
                                    Abstain                      84,098

                  A proposal to appoint  KPMG Peat  Marwick LLP as auditors  was
                  ratified as follows:

                                    Votes for                 7,613,149
                                    Votes Against                73,049
                                    Abstain                      53,450



                                       30
<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 The Laser Center Inc.,  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                            Description
------                            -----------


2.1               See Exhibits 10.1, 10.6, 10.23 and 10.26.

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 of 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*).

                                       31
<PAGE>

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*).

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.

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*).

                                       32
<PAGE>


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*).

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*).

                                       33
<PAGE>


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*).

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*).

Exhibit 11        Statement of Computation of Loss Per Share

Exhibit 27        Financial Data Schedule



                  b)  Reports on Form 8-K

                  On June 8,  1998,  the  Company  filed with the  Commission  a
                  Current  Report on Form 8-K regarding the press release issued
                  by the Company  dated June 8, 1998  reporting  the issuance of
                  Series C Preferred Stock.

                  On June 16,  1998 the  Company  filed  with the  Commission  a
                  Current  Report on Form 8-K regarding the press release issued
                  by the Company  dated June 16, 1998  reporting the issuance of
                  Series D Preferred Stock.

                  On June 25,  1998 the  Company  filed  with the  Commission  a
                  Current Report on Form 8-K regarding the  Securities  Purchase
                  Agreement  and  related  documents  dated  June 5, 1998 by and
                  between LaserSight  Incorporated and TLC The Laser Center Inc.
                  and the Securities  Purchase  Agreement and related  documents
                  dated June 12, 1998 among  LaserSight  Incorporated and Pequot
                  Private Equity Fund,  L.P.,  Pequot Scout Fund,  L.P.,  Pequot
                  Offshore Private Equity Fund, Inc.









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




                                       34
<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:   August 13, 1998                              By:  /s/ Michael R. Farris
      ------------------------                           -----------------------
                                                         Michael R. Farris,
                                                         Chief Executive Officer



Dated:   August 13, 1998                              By:  /s/ Gregory L. Wilson
      ------------------------                           -----------------------
                                                         Gregory L. Wilson,
                                                         Chief Financial Officer

                                       35