FORM 10-Q

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   (Mark one)

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For quarterly period ended March 31, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to ________

                         Commission file number: 0-22340

                       PALOMAR MEDICAL TECHNOLOGIES, INC.
                       ----------------------------------
               (Exact name of issuer as specified in its charter)

             Delaware                                   04-3128178
-------------------------------            -------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


              82 Cambridge Street, Burlington, Massachusetts 01803
              ----------------------------------------------------
                    (Address of principal executive offices)

                                 (781) 993-2300
               ---------------------------------------------------
                (Issuer's telephone number, including area code)

         Check whether the issuer:  (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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
    -------     -------

         As of April 30, 2000, 10,200,614 shares of common stock, $.01 par value
per share, were outstanding.

Transitional Small Business Disclosure Format (check one): Yes      No  X
                                                             -----    -----



<PAGE>




                                       -i-

               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                      INDEX

PART I  - FINANCIAL INFORMATION
<TABLE>
<S>      <C>        <C>                                                                                     <C>

         ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                           Consolidated Condensed Balance Sheets                                               1

                           Consolidated Statements of Operations                                               2

                           Consolidated Statements of Stockholders' Equity                                     3

                           Consolidated Statements of Cash Flows                                               4

                           Notes to Consolidated Financial Statements                                          5



         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS                                                          10

                  RISK FACTORS                                                                                 13

         ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
                  ABOUT MARKET RISK                                                                            16

PART II - OTHER INFORMATION                                                                                    17

         ITEM 1.  LEGAL PROCEEDINGS                                                                            17

         ITEM 2.  CHANGES IN SECURITIES                                                                        17

         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                                              17

         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE                                                              17
                  OF SECURITY HOLDERS

         ITEM 5.  OTHER INFORMATION                                                                            17

         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                             18

SIGNATURES                                                                                                     20
</TABLE>





<PAGE>
PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (Unaudited).
         ----------------------------------------------
               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            CONDENSED BALANCE SHEETS
<TABLE>
<S>   <C>                                                               <C>                   <C>
                                                                            December 31,           March 31,
                                                                                1999                 2000
                                                                         -------------------- --------------------
                                                                                                  (Unaudited)
ASSETS

Current Assets:

      Cash and cash equivalents                                                   $2,712,466          $ 3,063,351
      Available-for-sale investments, at market value                             22,505,996           17,029,254
      Accounts receivable, net                                                     1,879,612            1,985,998
      Inventories                                                                  1,899,591            1,367,027
      Receivable from sale of subsidiary                                           3,330,976            3,385,299
      Other current assets                                                           729,301              666,501
                                                                         -------------------- --------------------
            Total current assets                                                  33,057,942           27,497,430
                                                                         -------------------- --------------------
Property and Equipment, Net                                                          991,432            1,034,765
                                                                         -------------------- --------------------
Other Assets:

      Cost in excess of net assets acquired, net                                     631,026              567,921
      Other non-current assets                                                       162,468              151,108
                                                                         -------------------- --------------------
            Total other assets                                                       793,494              719,029
                                                                         -------------------- --------------------
                                                                                 $34,842,868          $29,251,224
                                                                         ==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

      Current portion of long-term debt                                           $1,122,008           $1,683,012
      Accounts payable                                                               659,280              652,828
      Accrued liabilities                                                          6,371,553            6,113,073
      Accrued income taxes                                                         2,500,000              426,131
      Current portion of deferred revenue                                            918,642              494,810
      Deferred gain from sale of subsidiary                                        3,139,556            3,139,556
                                                                         -------------------- --------------------
            Total current liabilities                                             14,711,039           12,509,410
                                                                         -------------------- --------------------

Long-Term Debt, Net of Current Portion                                             1,622,008            1,061,004
                                                                         -------------------- --------------------

Accrued Dividends and Interest on Preferred Stock                                  1,417,184            1,507,000
                                                                         -------------------- --------------------
Stockholders' Equity:
      Preferred stock, $.01 par value-
            Authorized - 1,500,000 shares
            Issued and outstanding -
            6,000 shares at December 31, 1999 and March 31, 2000                          60                   60
       Common stock, $.01 par value-
            Authorized - 45,000,000 shares
            Issued - 11,034,493 shares and 11,074,393 shares
            at December 31, 1999 and March 31, 2000, respectively                    110,345              110,744
      Additional paid-in capital                                                 162,275,613          162,296,320
      Accumulated deficit                                                       (141,550,040)        (144,591,226)
      Unrealized loss on available-for-sale investments                              (67,943)             (46,226)
      Less: Treasury stock - 1,002,615 and 980,943 shares at cost
      at December 31, 1999 and March 31, 2000, respectively                       (3,675,398)          (3,595,862)
                                                                         -------------------- --------------------
            Total stockholders' equity                                            17,092,637           14,173,810
                                                                         -------------------- --------------------

                                                                                 $34,842,868          $29,251,224
                                                                         ==================== ====================

 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>                                       1
<PAGE>



               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<S>     <C>                                                            <C>                      <C>
                                                                                    Three Months Ended
                                                                                        March 31,
                                                                               1999                    2000
                                                                       ----------------------   --------------------
Product Revenues                                                                 $13,478,609             $1,603,103
Royalty Revenues                                                                           -              1,175,829
                                                                       ----------------------   --------------------
        Total Revenues                                                            13,478,609              2,778,932


Cost of Product Revenues                                                           4,969,976              2,050,046
Cost of Royalty Revenues                                                                   -                470,332
                                                                       ----------------------   --------------------
        Total Cost of Revenues                                                     4,969,976              2,520,378
                                                                       ----------------------   --------------------
        Gross Margin                                                               8,508,633                258,554
                                                                       ----------------------   --------------------

Operating Expenses
        Research and development                                                   2,125,983              2,077,971
        Sales and marketing                                                        4,098,422                481,755
        General and administrative                                                 1,672,254              1,257,954
                                                                       ----------------------   --------------------
                    Total operating expenses                                       7,896,659              3,817,680
                                                                       ----------------------   --------------------

                    Income (loss) from operations                                    611,974             (3,559,126)

Interest Income                                                                        5,697                413,636
Interest Expense                                                                    (170,947)               (50,468)

Other Income                                                                          22,346                244,690
                                                                       ----------------------   --------------------
                    Net Income (Loss)                                              $ 469,070          $  (2,951,268)
                                                                       ======================   ====================
Basic Net Income (Loss) Per Share                                                     $ 0.04               $  (0.30)
                                                                       ======================   ====================

Basic Weighted Average Number of Shares Outstanding                               10,194,145             10,047,183
                                                                       ======================   ====================

Diluted Net Income (Loss) Per Share                                                   $ 0.04               $  (0.30)
                                                                       ======================   ====================

Diluted Weighted Average Number of Shares Outstanding                             10,633,551             10,047,183
                                                                       ======================   ====================


 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       2
<PAGE>



               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                   (Unaudited)

<TABLE>
<S><C>                                   <C>        <C>       <C>         <C>            <C>             <C>
                                           Preferred Stock        Common Stock              Treasury Stock

                                         -----------------------------------------------------------------------------------------
                                          Number     $0.01      Number      $0.01         Number
                                         of Shares Par Value  of Shares   Par Value      of Shares        Cost

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

Balance, December 31, 1999                6,000      $ 60      $11,034,493    110,345     (1,002,615)   $(3,675,398)

    Costs incurred related to the
      issuance of common stock                -         -                -          -              -              -
    Issuance of treasury stock for
      Employee Stock Purchase Plan            -         -                -          -          2,672          9,806
    Exercise of Stock Options                 -         -           39,900        399         19,000         69,730
    Unrealized loss on
      available-for-sale Investments          -         -                -          -              -              -
    Preferred stock dividends                 -         -                -          -              -              -
    Net loss                                  -         -                -          -              -              -
                                         -----------------------------------------------------------------------------------------

Balance, March 31, 2000                   6,000      $ 60       11,074,393   $110,744       (980,943)   $(3,595,862)
                                         =========================================================================================






                                             Additional                       Unrealized Loss                 Total
                                               Paid-in       Accumulated      on Available-for             Stockholders'
                                               Capital         Deficit        Sale Investments           Equity (Deficit)
                                         -----------------------------------------------------------------------------------------

Balance, December 31, 1999                $162,275,613       $(141,550,040)          $(67,943)              $ 17,092,637


    Costs incurred related to the
      issuance of common stock                 (90,800)                  -                  -                    (90,800)
    Issuance of treasury stock for
      Employee Stock Purchase Plan              (7,108)                  -                  -                      2,698
    Exercise of Stock Options                  118,615                   -                  -                    188,744
    Unrealized loss on
      available-for-sale Investments                 -                   -             21,717                     21,717
    Preferred stock dividends                        -             (89,918)                 -                    (89,918)
    Net loss                                         -          (2,951,268)                 -                 (2,951,268)
                                         -----------------------------------------------------------------------------------------

Balance, March 31, 2000                   $162,296,320       $(144,591,226)          $(46,226)               $14,173,810
                                         =========================================================================================



 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
                                       3
<PAGE>
               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<S>   <C>                                                                                      <C>              <C>
                                                                                           Three Months Ended March 31,
                                                                                              1999               2000
                                                                                        -----------------  -----------------
Cash Flows from Operating Activities:

      Net Income (Loss)                                                                         $469,070         $(2,951,268)

      Adjustments to reconcile net income (loss) to net cash
         used in operating activities-
         Depreciation and amortization                                                           444,772             176,559
         Changes in assets and liabilities
             Accounts receivable                                                                (712,472)           (106,386)
             Inventories                                                                        (764,631)            532,564
             Receivable from sale of subsidiary                                                        -             (54,323)
             Other current assets                                                                386,749              62,800
             Accounts payable                                                                   (483,152)             (6,452)
             Accrued expenses                                                                    982,914            (258,582)
             Accrued income taxes                                                                      -          (2,073,869)
             Deferred revenue                                                                   (442,295)           (423,832)
                                                                                        -----------------  -----------------
                    Net cash used in operating activities                                       (119,045)         (5,102,789)
                                                                                        -----------------  -----------------

Cash Flows from Investing Activities
      Purchases of property and equipment                                                       (191,651)           (156,787)
      Proceeds of available-for-sale investments                                                       -           5,498,459
      Decrease in other assets                                                                    24,230              11,360
                                                                                        -----------------  -----------------
                    Net cash provided by (used in) investing activities                         (167,421)          5,353,032
                                                                                        -----------------  -----------------

Cash Flows from Financing Activities:
      Net proceeds from the issuance of notes payable and advances from distributor              480,584                   -
      Proceeds from exercise of warrants, stock options
         and Employee Stock Purchase Plan                                                         12,213             191,442
      Costs incurred related to issuance of common stock                                        (106,000)            (90,800)
                                                                                        -----------------  -----------------
                    Net cash provided by financing activities                                    386,797             100,642
                                                                                        -----------------  -----------------
Net increase in cash and cash equivalents                                                        100,331             350,885
Cash and cash equivalents, beginning of the period                                             1,874,718           2,712,466
                                                                                        -----------------  -----------------
Cash and cash equivalents, end of the period                                                 $ 1,975,049          $3,063,351

Supplemental Disclosure of Cash Flow Information:
       Cash paid for interest                                                                $   148,149          $   10,847
                                                                                        =================  =================
 Supplemental Disclosure of Noncash Financing and Investing Activities:
       Conversion of convertible debentures and related accrued
       interest, net of financing fees                                                       $ 1,018,728          $        -
                                                                                        =================  =================
       Conversion of preferred stock                                                         $    63,411          $        -
                                                                                        =================  =================
       Issuance of common stock for 1998 and 1999 employer 401(k)
          matching contribution                                                              $   206,659          $        -
                                                                                        =================  =================
       Unrealized gain (loss) on available-for-sale investments                              $         -          $   21,717
                                                                                        =================  =================
       Accrued dividends and interest on preferred stock                                     $    97,226          $   89,918
                                                                                        =================  =================
       Redemption of preferred stock                                                         $   557,417          $        -

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


The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>
                                       4
<PAGE>



               PALOMAR MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.       BASIS OF PRESENTATION
         ---------------------

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
information.  Accordingly,  they  do not  include  all of  the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. The results of operations for the interim periods shown in
this report are not  necessarily  indicative of expected  results for any future
interim period or for the entire fiscal year. Palomar Medical Technologies, Inc.
and its  subsidiaries  (the "Company" or "Palomar")  believes that the quarterly
information presented includes all adjustments (consisting of normal,  recurring
adjustments)  necessary for a fair  presentation  in accordance  with  generally
accepted accounting principles.  The accompanying financial statements and notes
should be read in  conjunction  with the Company's  Form 10-K for the year ended
December 31, 1999.

2.       CASH AND CASH EQUIVALENTS
         -------------------------

         Cash  equivalents   consist   principally  of  corporate  notes,   U.S.
government-agency  securities,  commercial paper,  money market funds, and other
marketable  securities  purchased  with an original  maturity of three months or
less. These investments are carried at cost, which approximates market value.

3.       INVESTMENTS
         -----------

         The Company  accounts for  marketable  securities  in  accordance  with
Statement of Financial  Accounting  Standards  ("SFAS") No. 115,  Accounting for
Certain  Investments  in Debt and Equity  Securities.  The Company's  marketable
equity   securities  with  maturities   greater  than  90  days  are  considered
available-for-sale investments in the accompanying balance sheet and are carried
at market  value,  with the  difference  between cost and market  value,  net of
related tax effects,  recorded as a separate component of stockholders'  equity.
The  aggregate  market  value,  cost  basis,  and  gross  unrealized  losses  of
available-for-sale investments are as follows:


                                           December 31,            March 31,
                                               1999                   2000
                                         ------------------     ----------------

      Market Value                             $22,505,996          $17,029,254
                                         ==================     ================

      Cost Basis                               $22,573,939          $17,075,480
                                         ==================     ================

      Gross Unrealized Loss                    $   (67,943)         $   (46,226)
                                         ==================     ================



         Available-for-sale  investments  in the  accompanying  balance sheet at
March 31, 2000 include debt  securities of  $17,029,254.  Actual  maturities may
differ from  contractual  maturities as a result of the Company's intent to sell
these  securities  prior to  maturity  and as a result of call  features  of the
securities that enable either the Company,  the issuer,  or both to redeem these
securities at an earlier date. Unrealized holding gains totaling $21,717 on such
debt securities were recorded in stockholders'  equity during three months ended
March 31, 2000.



                                       5
<PAGE>




4.       INVENTORIES

         Inventories are stated at lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<S>                        <C>                                    <C>                  <C>

                                                                    December 31,           March 31,
                                                                        1999                 2000
                                                                  ------------------   -----------------
                           Raw materials                               $1,403,001             $984,267
                           Work-in-process                                496,590              323,242
                           Finished goods                                       -               59,518
                                                                  ------------------   -----------------
                                                                       $1,899,591           $1,367,027
                                                                  ==================   =================
</TABLE>

5.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

<TABLE>
<S>                        <C>                                   <C>                   <C>
                                                                      December 31,        March 31,
                                                                         1999               2000
                                                                  ------------------   -----------------
                           Machinery and equipment                     $1,062,774           $1,081,039
                           Furniture and fixtures                       1,006,125            1,113,573
                           Leasehold improvements                         139,046              170,120
                                                                  ------------------   -----------------
                                                                        2,207,945            2,364,732
                           Less:  Accumulated depreciation
                                  and amortization                      1,216,513            1,329,967
                                                                  ------------------   -----------------
                                                                         $991,432           $1,034,765
                                                                  ==================   =================
</TABLE>

6.       NOTES PAYABLE

         Notes payable consist of the following:
<TABLE>
<S>                                                                              <C>                 <C>

                                                                                   December 31,          March 31,
                                                                                       1999                2000
                                                                                 -----------------   ------------------
  Dollar denominated convertible debentures                                            $500,000             $500,000
  Swiss franc denominated convertible debentures                                      2,244,016            2,244,016
                                                                                 -----------------   ------------------
                                                                                      2,744,016            2,744,016
  Less - current maturities                                                          (1,122,008)          (1,683,012)
                                                                                 -----------------    -----------------
                                                                                     $1,622,008           $1,061,004
                                                                                 =================   ==================


</TABLE>


                                       6
<PAGE>



7.      SEGMENT AND GEOGRAPHIC INFORMATION
        ----------------------------------

         Product revenue from  international  sources were $6.3 million and $0.7
million  for the three  months  ended  March 31,  1999 and 2000.  The  Company's
revenue  from  international  sources was  primarily  generated  from  customers
located in Japan, Asia/Pacific and Europe/Middle East.

         The following  table  represents the  percentage of product  revenue by
geographic  region from  customers  for the three month  periods ended March 31,
1999 and 2000:

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

         United States                            52.8%              53.3%
         Japan                                    15.6%              41.5%
         Asia/Pacific                              2.8%               4.7%
         Canada/Australia                          0.9%               0.3%
         Europe/Middle East                       25.8%               0.1%
         Latin America                             2.1%               0.1%

                                     --------------------------------------
         Total                                   100.0%             100.0%
                                     ======================================

8.       STOCKHOLDERS' EQUITY
         --------------------

(a)      Options to Purchase Common Stock

         During the three  months  ended March 31,  2000,  the  Company  granted
options to purchase  927,500  shares of the  Company's  common stock at exercise
prices  ranging  from $1.38 to $5.06 per share.  During the three  months  ended
March 31, 2000, 58,900 options were exercised at $3.19.  During the three months
ended March 31, 2000,  options to purchase 88,330 shares of the Company's common
stock at exercise prices ranging from $3.19 to $10.50 per share expired.

(b)      Warrants to Purchase Common Stock

         During the three  months  ended March 31,  2000,  the  Company  granted
warrants to purchase 60,000 shares of the Company's  common stock at an exercise
price of $1.97 per share. No warrants were exercised or expired during the three
months ended March 31, 2000.







                                       7
<PAGE>




9.       NET INCOME (LOSS) PER COMMON SHARE

         Basic net income (loss) per share was determined by dividing net income
(loss) by the weighted  average  common  shares  outstanding  during the period.
Diluted net income (loss) per share was determined by dividing net income (loss)
by diluted weighted average shares outstanding.  Diluted weighted average shares
reflect the  dilutive  effect,  if any,  of common  stock  options  based on the
treasury  stock method and the assumed  conversion of all debt  obligations  and
convertible  preferred stock and the elimination of related interest expense and
preferred  stock  dividends.  The  calculations  of basic and  diluted  weighted
average shares outstanding are as follows:

<TABLE>
<S>                                                       <C>            <C>
                                                               Three Months Ended
                                                                   March 31,
                                                           --------------------------
                                                              1999           2000
                                                           ------------- ------------

  Basic weighted average common
    Shares outstanding                                      10,194,145     10,047,183
  Potential common shares pursuant to:
    Convertible preferred stock                                373,662              -
    Convertible debentures                                      65,744              -
                                                           ------------- ------------
  Diluted weighted average common
    shares outstanding                                      10,633,551     10,047,183
                                                           ============= ============

</TABLE>

         The  Company's  net income  (loss) per share for the three months ended
March 31, 1999 and 2000 is as follows:
<TABLE>
<S>                                                    <C>                  <C>

                                                                 Three Months Ended
                                                                     March 31,
                                                       ---------------------------------------

                                                             1999                 2000
                                                       ------------------   ------------------
  Net income (loss) from continuing operations                  $469,070          $(2,951,268)
  Preferred stock dividends                                      (97,226)             (89,918)
                                                       ------------------   ------------------
  Income (loss) attributable to common stockholders             $371,844          $(3,041,186)
                                                       ==================   ==================

  Basic net income (loss) per common share                         $0.04               $(0.30)
                                                       ==================   ==================

  Basic weighted average number of shares
  outstanding                                                 10,194,145           10,047,183
                                                       ==================   ==================

  Diluted net income (loss) per common share                       $0.04               $(0.30)
                                                       ==================   ==================

  Diluted weighted average number of shares
  outstanding                                                 10,633,551           10,047,183
                                                       ==================   ==================
</TABLE>

         For the three  months  ended  March 31,  1999 and  2000, 3,868,613 and
 4,214,814, respectively, of potential  common shares related to outstanding
stock options,  stock  warrants and  convertible  securities  were not included
in the diluted weighted average shares outstanding as they were antidilutive.


                                       8
<PAGE>



10.     COMPREHENSIVE INCOME (LOSS)
        ---------------------------

         The Company adopted SFAS 130, Reporting Comprehensive Income, effective
January 1, 1998.  SFAS 130  established  standards  for reporting and display of
comprehensive income (loss) and its components in the financial statements.  The
Company's only item of other  comprehensive  income (loss) relates to unrealized
losses on its available-for-sale  investments and is presented separately on the
balance sheet as required. A reconciliation of comprehensive income (loss) is as
follows:

<TABLE>
<S>                                    <C>                  <C>
                                                Three Months Ended
                                                     March 31,
                                       --------------------------------------
                                             1999                 2000
                                       -----------------    -----------------
Net income (loss)                              $469,070          $(2,951,268)
Unrealized gain on available-for-sale
   investments                                  ---                   21,717
                                       -----------------    -----------------
Comprehensive income (loss)                    $469,070          $(2,929,551)
                                       =================    =================

</TABLE>



























                                       9
<PAGE>






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

(a)      Overview

We are a researcher and developer of proprietary  laser systems for hair removal
and other cosmetic  laser systems and are the first company to obtain  clearance
using laser systems from the FDA for  "permanent  hair  reduction."  Hundreds of
Palomar laser hair removal  systems have been  installed in physician  practices
worldwide.  Through Palomar's research  partnership with  Massachusetts  General
Hospital's  Wellman  Laboratories,  new  indications are being tested to further
advance the laser hair  removal  market and other  cosmetic  laser  applications
including fat reduction and acne treatment.

On  December  7,  1998,  the  Company  entered  into an  Agreement  and  Plan of
Reorganization  with Coherent to sell all of the issued and  outstanding  common
stock of Palomar's Star Medical Technologies,  Inc. ("Star") subsidiary. For the
years ended December 31, 1998 and 1999,  gross revenues  associated  with Star's
LightSheer(TM)  system  comprised  80% and 60%,  respectively,  of the Company's
total  revenues.  The Company  completed the sale of Star on April 27, 1999. The
total purchase price for all of the issued and outstanding capital stock of Star
was $65 million,  paid in cash. The purchase price was paid to the  stockholders
of Star in proportion to their  holdings of Star capital  stock.  On the date of
sale,   Palomar  owned  82.46%  of  Star.   Palomar  received  net  proceeds  of
$49,736,023. As a result of the above transaction,  the Company believes it will
be able to fund  its  operations  for the  short-term.  However,  revenues  have
declined significantly over the last three-quarters, and will continue to remain
low in the near term.  The Company  believes  the  successful  introduction  and
marketing  of new  products  will  become  critical to the  Company's  long-term
success.  Broad market acceptance of laser hair removal and specific  acceptance
of the  Company's  new hair  removal  laser,  the  SLP1000,  is  critical to the
Company's success.  The Company has traditionally  spent a significant amount of
its resources in developing  new technology  and products.  The Company  expects
this trend will continue for the foreseeable future.

(b)      Results of Operations

         (i)      REVENUES AND GROSS PROFIT: Three Months Ended March 31, 2000,
                  Compared to Three Months Ended March 31, 1999

         For the three  months  ended March 31,  2000,  the  Company's  revenues
decreased  to $2.8  million,  as compared to $13.5  million for the three months
ended March 31, 1999.  The decrease in the Company's  revenues of $10.7 million,
or 79% from the  three  months  ended  March 31,  1999,  was  mainly  due to the
reduction in sales volume of $11.1 million  associated  with the  LightSheer(TM)
diode laser manufactured by Star. The Company sold Star to Coherent on April 27,
1999.  This  decrease  was offset by an  increase of $1.2  million in  royalties
received  by the  Company  and a  decrease  of $0.8  million  in  other  product
revenues.

         Gross profit for the three months ended March 31, 2000 was $259,000 (9%
of revenues)  compared to $8.5  million  (63% of revenues)  for the three months
ended March 31, 1999.  The decrease in gross profit and gross profit  percentage
was  mainly  due  to  the  reduction  in  sales  volume   associated   with  the
LightSheer(TM)  diode laser  manufactured  by Star and sold to Coherent on April
27, 1999. The decrease in gross profit dollars was partially offset by royalties
earned.

        (ii) OPERATING AND OTHER EXPENSES:  Three Months Ended March 31, 2000,
             Compared to Three Months Ended March 31, 1999

         Research and  development  costs remained  constant at $2.1 million for
the three months ended March 31, 2000, as compared to $2.1 million for the three
months ended March 31, 1999.  Research and development  expenses as a percentage
of revenue totaled 75% for the three months ended March 31, 2000 and 16% for the
three  months ended March 31,  1999.  The  increase as a percentage  of sales is
directly  attributable  to the  reduction  in sales volume  associated  with the
LightSheer(TM)  diode laser  manufactured by Star while the Company continued to
spend on research  and  development.  The  continued  spending  on research  and
development  reflects the Company's  commitment to research and  development for
devices and  delivery  systems for  cosmetic  and medical  applications  using a
variety of lasers, while continuing dermatology research utilizing the Company's
laser platforms.  The research and development  goals in the field of laser hair
removal  are to design  systems  that (1) permit more rapid

                                       10
<PAGE>

treatment of large areas, (2) have high gross margins,  and (3) are manufactured
at a lower cost, thus addressing broader markets. Further, the Company is aiming
to address dermatology and cosmetic procedure markets other than hair, including
the fields of fat reduction and acne treatment  covered in its expanded research
agreement with Massachusetts General Hospital.

         Selling  and  marketing  expenses  decreased  to  $482,000,  or  17% of
revenues for the three months ended March 31, 2000, from $4.1 million, or 30% of
revenues for the three months ended March 31, 1999.  The decrease in selling and
marketing  expenses is directly  attributable  to the reduction in sales volumes
due to the sale of Star to Coherent and related  commissions paid to Coherent as
the former exclusive distributor for the LightSheer(TM) diode laser manufactured
by Star.

         General and administrative  expenses decreased to $1.3 million,  or 45%
of  revenues  for the three  months  ended March 31,  2000,  as compared to $1.7
million,  or 12% of revenues for the three  months  ended March 31,  1999.  This
decrease in general and  administrative  expenses is attributable to the sale of
the  Company's  Star  subsidiary  and  due to the  Company's  restructuring  and
consolidation of administrative functions at the end of 1999.

         Interest expense  decreased to $50,000 for the three months ended March
31, 2000,  compared to $171,000 for the three months ended March 31, 1999.  As a
result of the sale of Star,  which  generated $49.7 million in cash, the Company
paid  substantially all of its outstanding debt which has resulted in a decrease
of interest expense.

         Interest income  increased to $414,000 for the three months ended March
31, 2000,  compared to $6,000 for the three  months  ended March 31, 1999.  This
amount represents  interest earned on the balance of the funds received from the
sale of Star which are invested in high-grade corporate and government notes and
bonds  and will be used to fund  future  ongoing  operations  and  research  and
development efforts.

         Other  income increased to  approximately  $245,000 for the three
months ended March 31, 2000. This amount compares to $22,000 for the three
months ended March 31, 1999.

(c)      Liquidity and Capital Resources

         The Company's  operations are carried out at the  subsidiary  level and
consist primarily of research and development.  To date, the Company's operating
subsidiaries  have  required  cash  advances  from  the  Company  to fund  their
operations.  As of March 31, 2000,  the Company had $20.1 million in cash,  cash
equivalents and available-for-sale  investments. With the proceeds from the Star
sale,  the Company  believes that its  financial  position will meet its ongoing
cash flow requirements and fund expected operating losses of its subsidiaries in
the near  term.  The  successful  introduction  and  marketing  of new  products
currently under development will be critical to future liquidity.

         As of March 31, 2000,  the Company's  accounts  receivable has remained
constant  totaling $2.0 million,  as compared to $1.9 million as of December 31,
1999. The Company's allowance for doubtful accounts totaled $228,000 as of March
31, 2000, compared to $207,000 as of December 31, 1999.

         As of March 31,  2000,  the  Company's  accounts  payable has  remained
constant totaling $653,000, as compared to $659,000 as of December 31, 1999.

         The Company anticipates that capital  expenditures for the remainder of
2000 will total  approximately  $300,000,  consisting  primarily  of  machinery,
equipment,  computers  and  peripherals.  The Company  expects to finance  these
expenditures with cash on hand and equipment leasing lines, if available.

<PAGE>                               11
(d)     Material Uncertainties

        Year 2000 Impact

         We have not yet  experienced  any problems  with our  computer  systems
relating to  distinguishing  twenty-first  century dates from twentieth  century
dates,  which  generally are referred to as Year 2000 problems.  We are also
not aware of any  material  Year 2000  problems  with our  clients  or  vendors.
Accordingly,  we do not anticipate  incurring  material expenses or experiencing
any material operational disruptions as a result of any Year 2000 problems.





































                                       12
<PAGE>



                                  RISK FACTORS

In addition to the other  information in this Quarterly Report on Form 10-Q, the
following cautionary statements should be considered carefully in evaluating the
Company and its  business.  Statements  contained in this Form 10-Q that are not
historical facts (including, without limitation,  statements concerning products
under development, the timing of new product introductions,  financing of future
operations,   and  the  Company's  research  partnership  with  MGH)  and  other
information  provided  by the Company  and its  employees  from time to time may
contain  certain  forward-looking  information,  as defined  by (i) the  Private
Securities Litigation Reform Act of 1995 (the "Reform Act") and (ii) releases by
the SEC. The risk factors  identified  below,  among other factors,  could cause
actual results to differ materially from those suggested in such forward-looking
statements.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking statements,  which speak only as of the date hereof. The Company
undertakes  no  obligation  to release  publicly the results of any revisions to
these  forward-looking  statements  that  may  be  made  to  reflect  events  or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated events. The cautionary statements below are being made pursuant to
the  provisions  of the  Reform  Act and with the  intention  of  obtaining  the
benefits of safe harbor provisions of the Reform Act.

Our future  revenue  depends on our  successfully  developing  and marketing new
products.

         We face rapidly  changing  technology  and continuing  improvements  in
cosmetic laser technology.  In order to be successful,  we must continue to make
significant  investments  in research and  development  in order to develop in a
timely and cost-effective manner new products that meet changing market demands,
to  enhance  existing  products,  and to  achieve  market  acceptance  for  such
products. We have in the past experienced delays in developing and marketing new
products and enhancing existing products.  Furthermore, some of our new products
under development are based on unproven  technology and/or technology with which
the  Company  has no  previous  experience.  As a result  of the sale of Star to
Coherent, our future revenue will be almost entirely dependent on sales of newly
introduced products.  Sales to date for the Company's current products have been
minimal and the Company's  future products may not achieve market  acceptance or
generate  sufficient  margins.  In  addition,  the  market for this type of hair
removal laser may already be saturated.  At present,  broad market acceptance of
laser hair  removal is  critical  to our  success.  We intend to  diversify  our
product  line by  developing  cosmetic  laser  products  other than hair removal
lasers.

We face intense  competition from companies with superior  financial,  marketing
and other resources.

         The laser hair removal  industry is highly  competitive  and  companies
frequently introduce new products.  We compete in the development,  manufacture,
marketing and servicing of hair removal  lasers with numerous  other  companies,
some  of  which  have  substantially  greater  financial,  marketing  and  other
resources than we do. As a result, some of our competitors are able to sell hair
removal  lasers at prices  significantly  below the  prices at which we sell our
hair removal lasers. In addition,  as a result of the Star sale,  Coherent,  our
former  exclusive  distributor  and one of the largest and best  financed  laser
companies,  is now our competitor and we have to find new ways to distribute our
products.  We  currently  have no  significant  sales force in place for our new
products  under  development.  Our laser  products  also face  competition  from
alternative  medical  products and procedures,  such as electrolysis and waxing,
among others. We may not be able to differentiate our products from the products
of our  competitors,  and customers may not consider our products to be superior
to competing products or medical procedures,  especially if competitive products
and procedures are offered at lower prices. Our competitors may develop products
or new technologies that make our products obsolete or less competitive.

Our quarterly operating results have decreased as a result of the Star sale, and
that may hurt the price of our common stock.

         Almost all of our  revenues in 1999 were  attributable  to sales of the
LightSheer(TM) diode laser system manufactured by Star.  Therefore,  as a result
of the Star sale,  our revenues  have declined  significantly.  If our operating
results fall below the expectations of investors or public market analysts,  the
price of our common stock could fall.



                                       13
<PAGE>


We could be delisted from Nasdaq.

         For continued  listing on The Nasdaq  SmallCap  Market,  a company must
maintain a minimum bid price of $1.00 per share.  In March  1999,  Nasdaq held a
hearing  regarding our continued  listing on The Nasdaq SmallCap Market in light
of the fact that our common stock had traded  below the $1.00  minimum bid price
requirement  for longer than 30 trading  days.  As a result of our reverse stock
split, we regained compliance with the minimum bid price requirement before that
date, and are now in compliance with all of Nasdaq's  requirements for continued
listing on The Nasdaq SmallCap Market.  However,  there can be no assurance that
we will remain in  compliance  with Nasdaq's  criteria for continued  listing or
that we will remain  listed on Nasdaq.  The  delisting of our common stock would
likely  reduce  the  liquidity  of our  common  stock and our  ability  to raise
capital.  If our common stock is delisted from The Nasdaq  SmallCap  Market,  it
will likely be quoted on the "pink sheets"  maintained by the National Quotation
Bureau,  Inc. or Nasdaq's OTC Bulletin  Board.  These  listings can make trading
more difficult for stockholders.

We depend on a number of vendors  for  critical  components  in our  current and
future products.

         We develop laser  systems that  incorporate  third-party  components as
part of the overall  systems.  Some of these items are custom made or  otherwise
not readily  available on the market.  We purchase some of these components from
small  specialized  vendors that are not well  capitalized.  A disruption in the
delivery of these key  components  could have an adverse effect on our business.
In 2000, we anticipate  that we will be  substantially  dependent on an overseas
third-party manufacturer over whom we do not have absolute control to provide us
with critical components for a new Super Long Pulse hair removal laser.

Our lasers are subject to numerous  medical  device  regulations.  Compliance is
expensive  and  time-consuming.  Our new  products may not be able to obtain the
necessary clearances in order to sell them.

         All of our current  products are laser medical  devices.  Laser medical
devices   are  subject  to  FDA   regulations   regulating   clinical   testing,
manufacturing,  labeling,  sale,  distribution and promotion of medical devices.
Before a new laser  medical  device can be introduced  into the market,  we must
obtain  clearance  from the FDA.  Compliance  with the FDA clearance  process is
expensive and  time-consuming,  and we may not be able to obtain such clearances
in a timely  fashion or at all. Our new hair removal laser system,  the SLP1000,
has yet to receive FDA clearance.

         Our  products  are  subject  to  similar   regulations   in  our  major
international  markets.  Complying  with these  regulations is necessary for our
strategy  of  expanding  the markets  for and sales of our  products  into these
countries. These approvals may necessitate clinical testing,  limitations on the
number of sales and controls of end user purchase price,  among other things. In
certain  instances,  these  constraints can delay planned shipment  schedules as
design and engineering modifications are made in response to regulatory concerns
an requests.

We are dependent on third-party researchers.

         We are substantially  dependent upon third-party  researchers over whom
we do not have absolute control to satisfactorily  conduct and complete research
on our behalf and to grant us favorable  licensing terms for products which they
may  develop.  At  present,  our  principal  research  partner  is  the  Wellman
Laboratories of  Photomedicine  at Massachusetts  General  Hospital.  We provide
research  funding,  laser technology and optics know-how in return for licensing
rights with respect to specific medical  applications  and patents.  Our success
will be highly  dependent upon the results of this  research.  We cannot be sure
that such research  agreements will provide us with  marketable  products in the
future or that any of the  products  developed  under these  agreements  will be
profitable for us.

Our  common  stock  could  be  further  diluted  as the  result  of  outstanding
convertible securities, warrants and options.

         In the past, we have issued convertible securities, such as debentures,
preferred  stock and  warrants,  in order to raise  money.  We have also  issued
options and warrants as compensation for services and incentive compensation for
our employees and  directors.  We have a substantial  number of shares of common
stock   reserved  for  issuance  upon  the  conversion  and  exercise  of  these
securities. These outstanding convertible securities, options and warrants could
affect the rights of our  stockholders,  and could  adversely  affect the market
price of our common stock.

                                       14
<PAGE>


Our proprietary technology has only limited protections.

         Our business could be materially  and adversely  affected if we are not
able to adequately protect our proprietary intellectual property rights. We rely
on a  combination  of patent,  trademark  and trade  secret  laws,  license  and
confidentiality agreements to protect our proprietary rights. We generally enter
into  non-disclosure  agreements  with our  employees and customers and restrict
access to, and distribution of, our proprietary  information.  Nevertheless,  we
may be unable to deter misappropriation of our proprietary  information,  detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.  Our competitors also may  independently  develop  technologies that are
substantially equivalent or superior to our technology. Although we believe that
our services and products do not infringe the  intellectual  property  rights of
others,  we cannot prevent someone else from asserting a claim against us in the
future for violating their intellectual property rights. In addition, costly and
time-consuming  lawsuits may be necessary to enforce  patents issued or licensed
exclusively to us, to protect our trade secrets and/or  know-how or to determine
the enforceability, scope and validity of others' intellectual property rights.

        The medical  laser  industry  is  characterized  by frequent  litigation
regarding  patent  and  other  intellectual  property  rights.   Because  patent
applications  are  maintained in secrecy in the United States until such patents
are issued and are maintained in secrecy for a period of time outside the United
States, we can conduct only limited searches to determine whether our technology
infringes any patents or patent applications. Any claims for patent infringement
could be time-consuming,  result in costly litigation and diversion of technical
and  management  personnel,   cause  shipment  delays,  require  us  to  develop
non-infringing  technology  or to enter into  royalty or  licensing  agreements.
Although patent and  intellectual  property  disputes in the laser industry have
often been settled through licensing or similar  arrangements,  costs associated
with such  arrangements  may be  substantial  and often  require  the payment of
ongoing  royalties,  which could have a negative impact on gross margins.  There
can  be no  assurance  that  necessary  licenses  would  be  available  to us on
satisfactory terms, or that we could redesign our products or processes to avoid
infringement, if necessary.  Accordingly, an adverse determination in a judicial
or  administrative  proceeding  or failure to obtain  necessary  licenses  could
prevent us from manufacturing and selling some of our products.  This could have
a material  adverse effect on our business,  results of operations and financial
condition.

Our  charter  documents  and  Delaware  law may  discourage  potential  takeover
attempts.

         Our  Second  Restated  Certificate  of  Incorporation  and our  By-laws
contain  provisions  that  could  discourage  takeover  attempts  or  make  more
difficult  the  acquisition  of a  substantial  block of our common  stock.  Our
By-laws require a stockholder to provide to the Secretary of the Company advance
notice of director  nominations  and business to be brought by such  stockholder
before  any  annual or  special  meeting  of  stockholders,  as well as  certain
information  regarding such  nomination  and/or  business,  the  stockholder and
others known to support such proposal and any material interest they may have in
the proposed business.  They also provide that a special meeting of stockholders
may be  called  only by the  affirmative  vote of a  majority  of the  Board  of
Directors. These provisions could delay any stockholder actions that are favored
by the holders of a majority of the  outstanding  stock of the Company until the
next stockholders' meeting. In addition, the Board of Directors is authorized to
issue shares of common stock and preferred  stock that, if issued,  could dilute
and  adversely  affect  various  rights of the  holders of common  stock and, in
addition,  could be used to discourage an unsolicited attempt to acquire control
of the Company.

        The Company is also subject to the  anti-takeover  provisions of Section
203 of the Delaware  General  Corporation  Law, which prohibits the Company from
engaging in a "business  combination"  with an  "interested  stockholder"  for a
period of three  years  after the date of the  transaction  in which the  person
becomes an interested  stockholder,  unless the business combination is approved
in a prescribed  manner. The application of Section 203 may limit the ability of
stockholders  to  approve a  transaction  that they may deem to be in their best
interests. These provisions of our Second Restated Certificate of Incorporation,
By-laws and the Delaware General  Corporation Law could deter certain  takeovers
or tender  offers or could  delay or  prevent  certain  changes  in  control  or
management of the Company,  including  transactions in which  stockholders might
otherwise  receive  a premium  for their  shares  over the then  current  market
prices.



                                       15
<PAGE>


As with any new products, there is substantial risk that the marketplace may not
accept or be receptive to the potential benefits of our products.

         Market  acceptance of our current and proposed products will depend, in
large part,  upon our or any marketing  partner's  ability to demonstrate to the
marketplace  the advantages of our products over other types of products.  There
can be no assurance that the  marketplace  will accept  applications or uses for
our  current  and  proposed  products  or that any of our  current  or  proposed
products will be able to compete effectively.

We may not be able to successfully collect licensing royalties.

         At present,  a material  portion of our  revenues  consist of royalties
from licensing  both our own patents and patents  licensed to us on an exclusive
basis by Massachusetts General Hospital. However, there can be no assurance that
we will be able to obtain  valuable  patent  rights.  Moreover,  there can be no
assurance  that, even if we do obtain such patent rights and are able to license
them to third  parties,  we will derive a significant  revenue  stream from such
licenses.

We face risks associated with pending litigation.

         We are involved in disputes  with third  parties.  Such  disputes  have
resulted in litigation  with such  parties.  We have  incurred,  and likely will
continue to incur, legal expenses in connection with such matters.  There can be
no assurance  that such  litigation  will result in  favorable  outcomes for us.
Although we have  reached a  settlement  agreement  with the  plaintiffs  in the
Varljen litigation,  the settlement must be approved by the court, and there can
be no assurance  that it will be approved.  An adverse result in that suit could
have a material adverse effect on our business,  financial condition and results
of operations.

We may not be able to retain our key  executives  and research  and  development
personnel.

         As a small company with less than 100 employees, our success depends on
the  services  of key  employees  in  executive  and  research  and  development
positions. The loss of the services of one or more of these employees could have
a material adverse effect on our business.

We face a risk of financial  exposure to product  liability  claims in the event
that the use of our products results in personal injury.

         Our products are and will continue to be designed with numerous  safety
features, but it is possible that patients could be adversely affected by use of
one of our products.  Further, in the event that any of our products prove to be
defective, we may be required to recall and redesign such products.  Although we
have not  experienced  any material  losses due to product  liability  claims to
date,  there can be no assurance that we will not experience  such losses in the
future. We maintain general liability  insurance in the amount of $1 million per
occurrence and $2 million in the aggregate and maintain umbrella coverage in the
aggregate  amount of $25 million;  however,  there can be no assurance that such
coverage  will  continue to be available on terms  acceptable to us or that such
coverage will be adequate for liabilities actually incurred. In the event we are
found liable for damages in excess of the limits of our insurance coverage or if
any claim or product recall results in significant adverse publicity against us,
our business,  financial condition and results of operations could be materially
and adversely  affected.  In addition,  although our products have been and will
continue to be designed to operate in a safe manner,  and although we attempt to
educate medical personnel with respect to the proper use of our products, misuse
of our  products  by medical  personnel  over whom we cannot  exert  control may
result in the  filing of  product  liability  claims or in  significant  adverse
publicity against us.

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

         Not applicable.


                                       16
<PAGE>



PART II - OTHER INFORMATION

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

         On March 11, 1999,  the United States  District  Court for the Southern
District of New York granted  plaintiffs  leave to amend their  complaint in the
action styled Varljen v. H.J.  Meyers,  Inc.,  et. al. to join the Company,  its
former  chief  executive   officer  and  current  chief  financial   officer  as
defendants.  On March 17, 1999,  the Second  Amended  Class Action  Complaint in
Varljen was served upon the Company  and its current  chief  financial  officer,
alleging  that the  Company  and the former and  current  officer  violated  the
federal  securities  laws in various  public  disclosures  that the Company made
directly  and  indirectly  during the period from  February 1, 1996 to March 26,
1997.  Palomar and the Varljen plaintiffs have reached an agreement in principle
pursuant to which  Palomar and its  insurance  carrier  would pay  plaintiffs $5
million  in  settlement  of all their  claims.  Of this  amount,  Palomar  would
contribute  up to $1  million  in stock  and  $1.375  million  in cash,  and its
insurance  carrier  the  remaining  $2.625  million  in  cash.  This  settlement
agreement must be approved by the court. There can be no assurance of such court
approval;  however,  management believes that the court approval is probable and
has accrued for its estimated loss.

     The Company is involved in other legal and  administrative  proceedings and
claims  of  various  types.   While  any  litigation   contains  an  element  of
uncertainty, management, at present believes that the outcome of each such other
proceeding or claim which is pending or known to be  threatened,  or all of them
combined, will not have a material adverse effect on the Company.

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

         Not applicable.

Item 3.  Defaults upon Senior Securities.
         --------------------------------

         Not applicable.


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

         Not applicable.


Item 5.  Other Information.
         ------------------

         Not applicable.





                                       17
<PAGE>



Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------
<TABLE>
<S><C>            <C>                                                                                     <C>

(a)          Exhibits

   ^^^3(i).1      Certificate of Designation, as filed with the Delaware Secretary of State on April 21, 1999.

    ^3(i).2       Second Restated  Certificate of  Incorporation,  as filed with
                  the Delaware Secretary of State on January 8, 1999.

   ^^^^3(ii)      Bylaws, as amended.

      ^4.1        Common Stock Certificate.

     ^^4.2.       Rights Agreement Between Palomar Medical Technologies, Inc. and American Stock Transfer & Trust
                  Company, dated as of April 20, 1999

     ##4.3        Form of 4.5% Convertible Debenture (denominated in Swiss Francs) due July 3, 2003.
    ####4.4       First Allonge and Amendment to 4.5% Subordinated Convertible Debenture
     ##4.5        Form of 6% Convertible Debenture due March 13, 2002.

      <4.6        Second Amended 1991 Stock Option Plan.
      <4.7        Second Amended 1993 Stock Option Plan.
      <4.8        Second Amended 1995 Stock Option Plan.
      <4.9        Second Amended 1996 Stock Option Plan.
     <4.10        Third Amended 1996 Employee Stock Purchase Plan.
     *4.11        Form of Stock Option Grant under the 1991, 1993 and 1995 Amended Stock Option Plans.

     ##4.12       Form of Stock Option Agreement under the 1996 Amended Stock Option Plan.

     #4.13        Form of Company Warrant to Purchase Common Stock.


</TABLE>



                                       18
<PAGE>



<TABLE>
   <S>          <C>                                                                                                              <C>

       27         Financial Data Schedule for the Period Ended March 31, 2000.

    ^           Previously filed as an exhibit to Form 8-K, filed on April 21, 1999 and incorporated herein by reference.

    ^^          Previously filed as an exhibit to Form 10-K for the period ended December 31, 1998, filed on March 30, 1999 and
                incorporated herein by reference.

    ^^^         Previously filed as an exhibit to Form 10-Q for the period ended March 31, 1999, filed on May 17, 1999 and
                incorporated herein by reference.

    ^^^^        Previously filed as an exhibit to Form 8-K, filed on December 16, 1999 and incorporated herein by reference.

    *           Previously filed as an exhibit to Amendment No. 4 to Form S-1 Registration Statement No. 33-47479 filed on October
                5, 1992, and incorporated herein by reference.

    **          Previously filed as an exhibit to the Company's Definitive Proxy Statement for the period ended December 31, 1998
                filed on March 12, 1999, and incorporated herein by reference.

    #           Previously  filed as an exhibit to the Company's  Annual Report on Form 10-KSB
                for the year ended December 31, 1995, and incorporated herein by reference.

    ##          Previously filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996,
                and incorporated herein by reference.

    ###         Previously filed as an exhibit to the Company's Annual Report on
                Form 10-K for the year ended December 31, 1998, and incorporated
                herein by reference.

    ####        Previously filed as an exhibit to the Company's Annual Report on
                Form 10-K for the year ended December 31, 1999, and incorporated
                herein by reference.

    -           Previously filed as an exhibit to Form S-8 Registration Statement No. 33-97710 filed on October 4, 1995, and
                incorporated herein by reference.

    <           Previously filed as an exhibit Form 10-Q for the period ended June 30, 1999, and incorporated herein by reference.
</TABLE>

(b)      Reports on Form 8-K

                  None



                                       19
<PAGE>



                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1934,  the
Registrant  certifies  that it has caused this Report to be signed on its behalf
by the undersigned,  thereunto duly authorized, in the Town of Burlington in the
Commonwealth of Massachusetts on May 8, 2000.

                                              PALOMAR MEDICAL TECHNOLOGIES, INC.
                                              ----------------------------------
                                              (Registrant)



DATE:  May 8, 2000                             By:/s/Louis P. Valente
                                               -----------------------
                                               Louis P. Valente
                                               Chief Executive Officer
                                               (Principal Executive Officer)




DATE:  May 8, 2000                             By:/s/Joseph P. Caruso
                                               -----------------------
                                               Joseph P. Caruso
                                               Chief Financial Officer
                                               (Principal Financial Officer
                                               and Principal Accounting Officer)

                                       20
<PAGE>