UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

     For the quarterly period ended April 3, 2004

     [ ]  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: 0-27598

                               IRIDEX CORPORATION

             (Exact name of registrant as specified in its charter)

                     Delaware                           77-0210467
          -------------------------------          -------------------
          (State or other jurisdiction of            (I.R.S. employer
           incorporation or organization)          identification No.)

                             1212 TERRA BELLA AVENUE
                      MOUNTAIN VIEW, CALIFORNIA 94043-1824
          (Address of principal executive offices, including zip code)

                                 (650) 940-4700
              (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 [ ]

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).  Yes [ ]  No [X]

                        APPLICABLE TO CORPORATE ISSUERS:

The  number of shares of common stock, $.01 par value, issued and outstanding as
of  May  14,  2004  was  7,208,635.


<PAGE>
                               IRIDEX CORPORATION

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

PART I.   FINANCIAL INFORMATION

ITEM 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

               Condensed Consolidated Balance Sheets as of April 3,
               2004 and January 3, 2004                                      3

               Condensed Consolidated Statements of Operations for the
               three months ended April 3, 2004 and March 29, 2003           4

               Condensed Consolidated Statements of Cash Flows for
               the three months ended April 3, 2004 and March 29, 2003       5

               Condensed Consolidated Statements of Comprehensive
               Loss for the three months ended April 3, 2004 and
               March 29, 2003                                                6

               Notes to Condensed Consolidated Financial Statements          7

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS                                         11

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        25

ITEM 4.   CONTROLS AND PROCEDURES                                           26


PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS                                                 27

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS                         27

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES                                   27

ITEM 4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                 27

ITEM 5.   OTHER INFORMATION                                                 27

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                  27

SIGNATURE                                                                   28

CERTIFICATIONS                                                              29

Exhibit 31.1    Certification of Chief Executive Officer pursuant to
                Securities Exchange Act Rules 13a-14(a) and 15d-14(a)

Exhibit 31.2    Certification of Chief Financial Officer pursuant to
                Securities Exchange Act Rules 13a-14(a) and 15d-14(a)

Exhibit 32.1    Certification of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002.


                                        2
<PAGE>
<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements
----------------------------------------------------


                               IRIDEX CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                  (UNAUDITED)


                                                    APRIL 3,     JANUARY 3,
                                                  ------------  ------------
                                                      2004          2004
                                                  ------------  ------------
<S>                                               <C>           <C>

                            ASSETS
                            ------
Current assets:
   Cash and cash equivalents . . . . . . . . . .  $     9,477   $    10,541
   Available-for-sale securities . . . . . . . .        7,438         5,751
   Accounts receivable, net. . . . . . . . . . .        5,825         6,548
   Inventories . . . . . . . . . . . . . . . . .        8,470         8,721
   Prepaids and other current assets . . . . . .        1,374           934
   Current deferred income taxes . . . . . . . .          972           972
                                                  ------------  ------------
      Total current assets . . . . . . . . . . .       33,556        33,467
   Property and equipment, net . . . . . . . . .          796           850
   Deferred income taxes . . . . . . . . . . . .        1,522         1,522
                                                  ------------  ------------
      Total assets . . . . . . . . . . . . . . .  $    35,874   $    35,839
                                                  ============  ============

           LIABILITIES AND STOCKHOLDERS' EQUITY
           ------------------------------------
Current liabilities:
   Accounts payable. . . . . . . . . . . . . . .  $       708   $     1,029
   Accrued expenses. . . . . . . . . . . . . . .        3,005         3,380
   Deferred revenue. . . . . . . . . . . . . . .          645           596
                                                  ------------  ------------
      Total liabilities. . . . . . . . . . . . .        4,358         5,005
                                                  ------------  ------------
Stockholders' equity:
   Common stock. . . . . . . . . . . . . . . . .           73            70
   Additional paid-in capital. . . . . . . . . .       24,603        23,900
   Accumulated other comprehensive loss. . . . .           (8)           (1)
   Treasury stock. . . . . . . . . . . . . . . .         (430)         (430)
   Retained earnings . . . . . . . . . . . . . .        7,278         7,295
                                                  ------------  ------------
      Total stockholders' equity . . . . . . . .       31,516        30,834
                                                  ------------  ------------
      Total liabilities and stockholders' equity  $    35,874   $    35,839
                                                  ============  ============
<FN>


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


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                   IRIDEX CORPORATION
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                       (UNAUDITED)


                                                                   THREE MONTHS ENDED
                                                                  APRIL 3,    MARCH 29,
                                                                    2004        2003
                                                                 ----------  -----------
<S>                                                              <C>         <C>

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   7,392   $    7,226
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . .      4,177        3,988
                                                                 ----------  -----------
      Gross profit. . . . . . . . . . . . . . . . . . . . . . .      3,215        3,238
                                                                 ----------  -----------

Operating expenses:
  Research and development  . . . . . . . . . . . . . . . . . .      1,107          950
  Sales, general and administrative . . . . . . . . . . . . . .      2,193        2,464
                                                                 ----------  -----------
Total operating expenses. . . . . . . . . . . . . . . . . . . .      3,300        3,414
                                                                 ----------  -----------

Loss from operations. . . . . . . . . . . . . . . . . . . . . .        (85)        (176)
  Interest and other income, net  . . . . . . . . . . . . . . .         60           54
                                                                 ----------  -----------
Loss before benefit from income taxes . . . . . . . . . . . . .        (25)        (122)
   Benefit from income taxes. . . . . . . . . . . . . . . . . .          8           40
                                                                 ----------  -----------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     (17)  $      (82)
                                                                 ==========  ===========

Net loss per share - basic and diluted. . . . . . . . . . . . .  $  ( 0.00)  $   ( 0.01)
                                                                 ==========  ===========

Shares used in computing net loss per share - basic and diluted      7,076        6,913
                                                                 ==========  ===========
<FN>


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


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                             IRIDEX CORPORATION
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (IN THOUSANDS)
                                                (UNAUDITED)


                                                                                      THREE MONTHS ENDED
                                                                                     APRIL 3,    MARCH 29,
                                                                                       2004        2003
                                                                                    ----------  -----------
<S>                                                                                 <C>         <C>

Cash flows from operating activities:
   Net loss                                                                         $     (17)  $      (82)
   Adjustments to reconcile net loss to net cash provided by operating activities:
      Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . .        137          202
      Provision for inventories. . . . . . . . . . . . . . . . . . . . . . . . . .         11           (2)
      Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . .         (4)          (1)
      Changes in operating assets and liabilities:
         Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .        727        1,652
         Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        240          111
         Prepaids and other current assets . . . . . . . . . . . . . . . . . . . .       (440)        (379)
         Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (321)         339
         Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (375)        (110)
         Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         49           94
                                                                                    ----------  -----------
      Net cash provided by operating activities. . . . . . . . . . . . . . . . . .          7        1,824
                                                                                    ----------  -----------

Cash flows from investing activities:
   Purchases of available-for-sale securities. . . . . . . . . . . . . . . . . . .     (3,539)           -
   Proceeds from of maturity of available-for-sale securities. . . . . . . . . . .      1,845          937
   Acquisition of property and equipment . . . . . . . . . . . . . . . . . . . . .        (83)         (80)
                                                                                    ----------  -----------
      Net cash provided by (used in) investing activities. . . . . . . . . . . . .     (1,777)         857
                                                                                    ----------  -----------

Cash flows from financing activities:
   Issuance of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .        706           21
                                                                                    ----------  -----------
      Net cash provided by financing activities. . . . . . . . . . . . . . . . . .        706           21
                                                                                    ----------  -----------
      Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . .     (1,064)       2,702

Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . .     10,541        9,186
                                                                                    ----------  -----------

Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . .  $   9,477   $   11,888
                                                                                    ==========  ===========


      SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
         Change in unrealized losses on available-for-sale securities               $      (7)  $       (1)
<FN>


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


                                        5
<PAGE>
<TABLE>
<CAPTION>
                               IRIDEX CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


                                                        THREE MONTHS ENDED
                                                      APRIL 3,    MARCH 29,
                                                        2004        2003
                                                     ----------  -----------
<S>                                                  <C>         <C>
Net loss . . . . . . . . . . . . . . . . . . . . .   $     (17)  $      (82)
Other comprehensive loss:
  Change in unrealized loss on
    available-for-sale securities. . . . . . . . .          (7)          (1)
                                                     ----------  -----------

Comprehensive loss . . . . . . . . . . . . . . . .   $     (24)  $      (83)
                                                     ==========  ===========
<FN>


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


                                        6
<PAGE>
                               IRIDEX CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The  accompanying  unaudited condensed consolidated financial statements of
IRIDEX  Corporation  have  been  prepared  in accordance with generally accepted
accounting  principles  in  the  United  States of America for interim financial
information  and  pursuant to the instructions to Form 10-Q and Article 10-01 of
Regulation  S-X.  Accordingly,  they  do  not include all of the information and
footnotes  required  by  accounting  principles generally accepted in the United
States  of  America  for  complete  financial  statements.  In  the  opinion  of
management,  all  adjustments,  consisting  of  normal  recurring  adjustments,
considered  necessary  for  a  fair  presentation  have  been  included.

      The  condensed  consolidated  financial  statements  should  be  read  in
conjunction  with  the  audited financial statements and notes thereto, together
with  management's discussion and analysis of financial condition and results of
operations,  contained  in  our Annual Report on Form 10-K, which was filed with
the  Securities  and  Exchange  Commission  on  April  2,  2004.  The results of
operations  for  the  three month period ended April 3, 2004 are not necessarily
indicative  of  the  results  for  the year ending January 1, 2005 or any future
interim  period.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The  Company's  significant accounting policies are disclosed in our Annual
Report  on Form 10-K for the year ended January 3, 2004 which was filed with the
Securities  and Exchange Commission on April 2, 2004.  The Company's significant
accounting policies have not materially changed as of April 3, 2004.

Deferred  Revenue

     Deferred  revenue related to warranty contracts is recognized on a straight
line  basis  over  the  period of the applicable contract. Cost is recognized as
incurred. A reconciliation of changes in the Company's deferred revenue balances
for the three months ending April 3, 2004 follows (in thousands) :

          Balance, January 3, 2004                      $ 596

          Additions to deferral                           223

          Revenue recognized                             (174)
                                                        ------

          Balance, April 3, 2004                        $ 645
                                                        ======



Warranty

     The  Company  accrues  for  an  estimated  warranty  cost  upon shipment of
products  in accordance with SFAS No. 5, "Accounting for Contingencies."  Actual
warranty  costs  incurred  have not materially differed from those accrued.  The
Company's warranty policy is effective for shipped products which are considered
defective  or  fail  to  meet  the  product  specifications.  Warranty costs are
reflected  in  the income statement as a cost of sales.  A reconciliation of the
changes in the Company's warranty liability for the three months ending April 3,
2004  follows  (in  thousands):


                                        7
<PAGE>
                               IRIDEX CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Balance, January 3, 2004                           $ 801

          Accruals for warranties issued during the quarter    182

          Settlements made in kind during the quarter         (138)
                                                             ------

          Balance, April 3, 2004                             $ 845
                                                             ======



Accounting for Stock-Based Compensation

     The  Company  accounts  for  stock-based  compensation  arrangements  in
accordance  with  provisions  of Accounting Principles Board Opinion ("APB") No.
25,  "Accounting for Stock Issued to Employees" and complies with the disclosure
provisions  of  SFAS  No.  123,  "Accounting  for  Stock-Based Compensation," as
amended  by  SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and  Disclosure  -  an  Amendment  of  FASB  Statement  No.  123."

     Under  APB 25, compensation expense for grants to employees is based on the
difference,  if  any,  on  the  date of the grant, between the fair value of the
Company's  stock  and  the  option's  exercise  price.  SFAS 123 defines a "fair
value" based method of accounting for an employee stock option or similar equity
investment.  The  pro  forma  disclosure  of the difference between compensation
expense  included  in  net  loss and the related cost measured by the fair value
method  is  presented  below.

     The  following table provides a reconciliation of net loss to pro forma net
loss  as  if  the  fair value method had been applied to all employee awards (in
thousands,  except  per  share  data):

<TABLE>
<CAPTION>
                                                   Three Months Ended    Three Months Ended
                                                     April 3, 2004         March 29, 2003
<S>                                               <C>                   <C>

Net loss, as reported                             $               (17)  $               (82)

Add:  Total stock based compensation expense
determined under fair value based method for all
awards to employees                                              (144)                 (114)
                                                  --------------------  --------------------

Pro forma net loss                                $              (161)  $              (196)
                                                  ====================  ====================

Basic and diluted net loss per share:

As reported                                       $             (0.00)  $             (0.01)
                                                  ====================  ====================

Pro forma                                         $             (0.02)  $             (0.03)
                                                  ====================  ====================
</TABLE>

     The  determination  of  fair  value  of  all options granted by the Company
includes  assumptions  on expected volatility, risk free interest rate, expected
term  and  expected  dividends.


                                        8
<PAGE>
                               IRIDEX CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.   INVENTORIES

     Inventories  are  stated  at the lower of cost or market.  Cost is based on
actual  sales  computed  on  a  first  in,  first  out basis.  The components of
inventories  consist  of  the  following  (in  thousands):

<TABLE>
<CAPTION>
                                                    APRIL 3,    JANUARY 3,
                                                      2004         2004
                                                  ------------  -----------

<S>                                               <C>           <C>
Raw materials and work in progress . . . . . . .  $      4,572  $     4,426
Finished goods . . . . . . . . . . . . . . . . .         3,898        4,295
                                                  ------------  -----------
Total inventories. . . . . . . . . . . . . . . .  $      8,470  $     8,721
                                                  ============  ===========
</TABLE>

4.   COMPUTATIONS OF NET LOSS PER COMMON SHARE

     Basic  and diluted net loss per share are computed by dividing net loss for
the  period by the weighted average number of shares of common stock outstanding
during  the  period.  The  calculation  of  diluted  net loss per share excludes
potential  common stock if their effect is antidilutive.  Potential common stock
consists  of  incremental  common  shares  issuable  upon  the exercise of stock
options.  Basic  and  diluted  net loss per share are equivalent for all periods
presented  due  to  the  Company's  net  loss  position.

     During  the three months ended April 3, 2004 and March 29, 2003, options to
purchase  1,853,016  and  1,713,563  shares  of common stock at weighted average
exercise  prices  of  $5.44  and  $5.26 per share were outstanding, but were not
included  in  the  computations  of diluted net loss per common share because it
would  have  an  antidilutive  effect.  These  options could dilute earnings per
share  in  future  periods.

5.  BUSINESS  SEGMENTS

     We  operate  in  two  reportable segments: the ophthalmology medical device
segment  and  the  dermatology  medical  device  segment.  In  both segments, we
develop,  manufacture  and  market medical devices.  Our revenues arise from the
sale  of  consoles,  delivery  devices,  disposables  and  service  and  support
activities.

     Information on reportable segments for the three months ended April 3, 2004
and  March  29,  2003  is  as  follows  (in  thousands):


                                        9
<PAGE>
<TABLE>
<CAPTION>
                               IRIDEX CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                Three Months Ended April 3, 2004         Three Months Ended March 29, 2003

               Ophthalmology   Dermatology             Ophthalmology   Dermatology
                  Medical        Medical                  Medical        Medical
                  Devices        Devices      Total       Devices        Devices      Total
<S>            <C>             <C>           <C>       <C>             <C>           <C>

Sales          $        6,243  $      1,149  $ 7,392   $        5,724  $      1,502  $ 7,226

Direct Cost
of Goods
Sold                    2,241           648    2,889            1,966           706    2,672
               --------------  ------------  --------  --------------  ------------  --------

Direct Gross
Margin                  4,002           501    4,503            3,758           796    4,554

Total
Unallocated
Costs                                         (4,528)                                 (4,676)
                                             --------                                --------

Pre-tax  loss                                $   (25)                                $  (122)
                                             ========                                ========
</TABLE>

     Indirect  costs  of  manufacturing,  research and development, and selling,
general  and  administrative  costs  are  not  allocated  to  the  segments.

     The  Company's assets and liabilities are not evaluated on a segment basis.
Accordingly,  no  disclosure  on  segment  assets  and  liabilities is provided.


                                       10
<PAGE>
ITEM  2.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     This  Quarterly  Report  on  Form  10-Q  contains  trend analysis and other
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as  amended, such as statements relating to levels of future sales and operating
results,  actual  order rate and market acceptance of our products; expectations
for  future  sales growth, generally, including expectations of additional sales
from  our  new  products  and  new  applications  of  our existing products; the
potential for production cost decreases and higher gross margins; our ability to
develop and introduce new products through strategic alliances; favorable Center
for  Medicare  and Medicaid coverage decisions regarding AMD procedures that use
our products; results of clinical studies and risks associated with bringing new
products  to  market;  general  economic conditions; and levels of international
sales.  In  some  cases,  forward-looking  statements  can  be  identified  by
terminology, such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes,"  "estimates," "predicts," "intends," "potential," "continue," or the
negative  of  such  terms  or  other  comparable  terminology.  These statements
involve known and unknown risks, uncertainties and other factors which may cause
our  actual results, performance or achievements to differ materially from those
expressed  or  implied by such forward-looking statements, including as a result
of  the  factors  set  forth  under  "Factors  That  May Affect Future Operating
Results"  and  other risks detailed in our Annual Report on Form 10-K filed with
the  Securities  and Exchange Commission on April 2, 2004 and detailed from time
to  time  in our reports filed with the Securities and Exchange Commission.  The
reader  is  cautioned  not  to  place  undue  reliance  on these forward-looking
statements, which reflect management's analysis only as of the date of this Form
10-Q.  We  undertake  no obligation to update such forward-looking statements to
reflect  events  or  circumstances  occurring  after  the  date  of this report.

RESULTS OF OPERATIONS

     The  following  table  sets forth certain operating data as a percentage of
sales  for  the  periods  indicated.

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED
                                                 APRIL 3,   MARCH 29,
                                                   2004        2003
                                                 ---------  ----------
<S>                                              <C>        <C>
     Sales . . . . . . . . . . . . . . . . . .      100.0%      100.0%
     Cost of sales . . . . . . . . . . . . . .       56.5        55.2
                                                 ---------  ----------
        Gross profit . . . . . . . . . . . . .       43.5        44.8
                                                 ---------  ----------
     Operating expenses:
        Research and development . . . . . . .       15.0        13.1
        Sales, general and administrative. . .       29.6        34.1
                                                 ---------  ----------
           Total operating expenses. . . . . .       44.6        47.2
                                                 ---------  ----------

     Loss from operations. . . . . . . . . . .       (1.1)       (2.4)
     Interest and other income, net. . . . . .        0.8         0.7
                                                 ---------  ----------
     Loss before benefit from income taxes . .       (0.3)       (1.7)
     Benefit from income taxes . . . . . . . .        0.1         0.6
                                                 ---------  ----------
     Net loss. . . . . . . . . . . . . . . . .      (0.2)%      (1.1)%
                                                 =========  ==========
</TABLE>

     The  following  table  sets  forth  for the periods indicated the amount of
sales  for  our  operating  segments  and  sales as a percentage of total sales.


                                       11
<PAGE>
<TABLE>
<CAPTION>
                                               Three Months Ended

                                     April 3, 2004            March 29, 2003

                                Amount     Percentage     Amount     Percentage
                                         of total sales            of total sales
<S>                             <C>      <C>              <C>      <C>

    Domestic                    $ 4,156            56.2%  $ 4,541            62.8%

    International                 3,236            43.8%    2,685            37.2%
                                -------  ---------------  -------  ---------------

Total                           $ 7,392           100.0%  $ 7,226           100.0%
                                -------  ---------------  -------  ---------------

Ophthalmology:

    Domestic                    $ 3,366            45.5%  $ 3,423            47.4%

    International                 2,877            38.9%    2,301            31.8%
                                -------  ---------------  -------  ---------------

Total                           $ 6,243            84.4%  $ 5,724            79.2%
                                -------  ---------------  -------  ---------------

Dermatology:

    Domestic                    $   790            10.7%  $ 1,118            15.5%

    International                   359             4.9%      384             5.3%
                                -------  ---------------  -------  ---------------

Total                           $ 1,149            15.6%  $ 1,502            20.8%
                                -------  ---------------  -------  ---------------
</TABLE>

     Ophthalmology  Sales

     Ophthalmology  sales  increased  9.1%  to $6.2 million for the three months
ended April 3, 2004 from $5.7 million for the three months ended March 29, 2003.
For  the  three  month  periods ended April 3, 2004 and March 29, 2003, domestic
ophthalmology sales remained relatively constant at $3.4 million. An increase of
$0.5  million in unit sales of delivery devices and service was offset by a $0.5
million  decrease  in  unit  sales  of  visible  laser  consoles.  International
ophthalmology  sales  increased 25.0% to $2.9 million for the three months ended
April  3,  2004 from $2.3 million for the three months ended March 29, 2003. The
increase  in  international  ophthalmology sales during this period was due to a
$0.3  million  increase  in unit sales of visible laser consoles, a $0.2 million
increase in unit sales of infrared laser consoles and a $0.1 million increase in
unit  sales  of  delivery  devices.

     Dermatology  Sales

     Dermatology  sales  decreased  23.5%  to  $1.1 million for the three months
ended April 3, 2004 from $1.5 million for the three months ended March 29, 2003.
For  the  three  month  period  ended  April  3, 2004 domestic dermatology sales
decreased  29.3% to $0.8 million from $1.1 million for the comparable prior year
three  month period. Domestic dermatology sales decreased during this period due
primarily  to  a  $0.3 million decrease in unit sales of the DioLite laser which
resulted,  in  part,  from increased competition and some turnover in our direct
sales  personnel.  International  dermatology  product sales remained relatively
constant  at  $0.4  million  for the three month periods ended April 3, 2004 and
March  29,  2003.  Our  dermatology  product  sales,  both  domestically  and
internationally,  continue  to  be affected by economic conditions. Additionally
dermatology  procedures  are  typically  elective  procedures  that are deferred


                                       12
<PAGE>
by  patients  in  difficult economic times. See "-Factors that May Affect Future
Results  -  Our  Business  Has Been Adversely Impacted by the Worldwide Economic
Slowdown  and  Related  Uncertainties."

     Gross  Profit.  Our  gross profit decreased by $23,000 to $3.21 million for
the  three  month  period  ended April 3, 2004 compared to $3.24 million for the
three months ended March 29, 2003. Gross profit as a percentage of sales for the
three  months  ended  April  3,  2004  decreased  to  43.5%  from  44.8% for the
comparable  prior  year  three  month  period.  The total 1.3% decrease in gross
profit  as  a percentage of sales during this period included a decrease of 1.2%
relating  to  increased  inventory  reserves,  a  decrease of 0.9% for increased
manufacturing overhead costs primarily related to the overhead charge associated
with  a  reduction  in  overall  inventory offset by an increase of 0.7% for the
combined  impact  of  product  mix and average selling prices and an increase of
0.1%  for  lower  product  costs including warranty charges. Although increasing
competition  has  continued  to  result  in  a downward trend in average selling
prices  for  some products, we intend to continue our efforts to reduce the cost
of  components  and  manufacturing  and  thereby  mitigate  the  impact of price
reductions  on  our  gross  profit. In addition, as we evaluate gross margins on
each of our product lines, we may choose to place greater focus on product lines
with better margins. See "-Factors That May Affect Future Results - If We Cannot
Increase Our Sales Volumes, Reduce Our Costs or Introduce Higher Margin Products
to  Offset  Anticipated  Reductions  in  the  Average  Unit Selling Price of our
Products,  Our Operating Results May Suffer." We expect our gross profit margins
to  continue to fluctuate due to changes in the relative proportions of domestic
and  international  sales,  mix  of sales of existing products, pricing, product
costs  and  a  variety  of  other  factors. See "-Factors That May Affect Future
Results  -  Our Operating Results May Fluctuate from Quarter to Quarter and Year
to  Year."

     Research  and Development.  Our research and development expenses increased
by  16.5%  to  $1.1  million  for the three months ended April 3, 2004 from $1.0
million  for  the  three  months ended March 29, 2003.  Research and development
expenses  increased as a percentage of sales to 15.0% for the three months ended
April  3, 2004 from 13.1% for the comparable prior year three-month period.  The
increase  in  research  and  development  expense  in  absolute dollars and as a
percentage  of  sales  for  the  three  month period ended April 3, 2004 was due
primarily  to  $0.1  million  in  increased  research  and  development  project
spending.

     Sales,  General  and  Administrative. Our sales, general and administrative
expenses  decreased by 11.0% to $2.2 million for the three months ended April 3,
2004  from  $2.5  million  for  the  three  months  ended  March  29, 2003. As a
percentage  of  sales,  sales,  general and administrative expenses decreased to
29.6%  for  the  three  months ended April 3, 2004 from 34.1% for the comparable
prior year three-month period. The decrease in sales, general and administrative
expense  in  absolute  dollars  and as a percentage of sales for the three month
period  ended  April  3,  2004  was  due  primarily to $0.2 million in decreased
spending  by  our  direct  sales force due to open positions and $0.1 million in
decreased  spending  on  marketing  programs.

     Interest and Other Income, net. For the three months ended April 3, 2004 we
had  net  other  income of $60,000 as compared with net other income of $ 54,000
for  the  three  months ended March 29, 2003. The change in net other income for
this  period was due primarily to an increase in interest income associated with
increased cash, cash equivalents and available for sale securities.

     Income  Taxes.  The  effective  income tax rate for the three month periods
ending  April 3, 2004 and March 29, 2003 was 32%. The tax rate for these periods
was  lower  than the Federal and State combined statutory rate of 40% because of
certain  tax  benefits  associated with tax credits for research and development
activities.

LIQUIDITY AND CAPITAL RESOURCES

     At  April  3, 2004, our primary sources of liquidity included cash and cash
equivalents  and  available-for-sale securities in the aggregate amount of $16.9
million.  In  addition, we have available $4 million under our unsecured line of
credit  which  bears  interest  at  the bank's prime rate and expires in October
2004.  As  of


                                       13
<PAGE>
April  3,  2004,  no  borrowings were outstanding under this credit facility. We
expect  to  renew  the  line  of credit in October 2004, assuming that the terms
continue  to  be  acceptable.

     During  the three months ended April 3, 2004, operating activities provided
$7,000 of cash. The primary sources of cash from operating activities included a
decrease in net accounts receivable of $0.7 million, a decrease in net inventory
of  $0.3  million  and depreciation of $0.1 million offset by uses of cash which
included a $0.3 million decrease in accounts payable, a $0.4 million decrease in
accrued expenses and an increase in prepaid expenses and other current assets of
$0.4  million.  The  decrease  in  accounts  receivable  resulted primarily from
continued focus on collection efforts. The decrease in inventory and in accounts
payable related primarily to decreased inventory purchases due to implementation
of an inventory reduction program, whereby inventory purchases were reduced. The
decrease  in  accrued  expenses related mainly to the timing of salary payments.
The  increase  in  prepaid  expenses  and other current assets related mainly to
increased  trade  show  spending  and  to the accumulation of costs on behalf of
Miravant  related  to  their  March  31,  2004  FDA  submission.

     Investing  activities used $1.8 million in cash and cash equivalents during
the  three  months  ended  April  3,  2004,  primarily  due  to net purchases of
available  for  sale securities of $1.7 million and purchases of fixed assets of
$0.1  million.

     Net  cash  provided  by  financing activities during the three months ended
April  3,  2004 was $0.7 million which consisted of the issuance of common stock
under  employee  option  plans  and  the  employee  stock  purchase  plan.

     We believe that, based on current estimates, our cash, cash equivalents and
available-for-sale  securities  together with cash generated from operations and
our credit facility will be sufficient to meet our anticipated cash requirements
for  the next 12 months. Our liquidity could be negatively affected by a decline
in  demand  for  our  products, the need to invest in new product development or
reductions  in  spending by our customers as a result of the continuing economic
downturn  or  other  factors.  There can be no assurance that additional debt or
equity  financing  will  be  available  when  required  or, if available, can be
secured  on  terms  satisfactory  to  us.  See  "-Factors That May Affect Future
Results  -  We  May Need Additional Capital, which May Not Be Available, and Our
Ability  to  Grow  May  Be  Limited  as  a  Result."

     In  December  1998,  we instituted a stock repurchase program whereby up to
150,000  shares  of  our  common stock may be repurchased in the open market. We
plan  to  utilize all of the reacquired shares for reissuance in connection with
employee  stock  programs.  No  shares  were repurchased during the three months
ended  April  3,  2004.  To date, we have purchased 103,000 shares of our common
stock  under  this  program.

CRITICAL ACCOUNTING POLICIES

     The  Company's  significant accounting policies are disclosed in our Annual
Report  on Form 10-K for the year ended January 3, 2004 which was filed with the
Securities  and  Exchange  Commission  on  April  2,  2004.

FACTORS THAT MAY AFFECT FUTURE RESULTS

     We  Rely  on  Continued  Market Acceptance of Our Existing Products and Any
Decline  in  Sales  of Our Existing Products Would Adversely Affect Our Business
and  Results  of  Operations.  We  currently  market  visible and infrared light
semiconductor-based  photocoagulator  medical  laser  systems  to the ophthalmic
market.  We  also  market  visible  and  infrared  light  semiconductor-based
photocoagulator medical laser systems to the dermatology market. We believe that
continued  and  increased  sales,  if  any,  of  these  medical laser systems is
dependent  upon  a  number  of  factors  including  the  following:


                                       14
<PAGE>
     -    Product  performance,  features,  ease  of  use,  scalability  and
          durability;

     -    Recommendations  and  opinions  by  ophthalmologists,  dermatologists,
          other  clinicians,  plastic  surgeons  and  their  associated  opinion
          leaders;

     -    Price  of  our  products  and  prices  of  competing  products  and
          technologies;

     -    Availability  of  competing  products,  technologies  and  alternative
          treatments;

     -    Willingness  of  ophthalmologists  and  dermatologists  to  convert to
          semiconductor-based  or  infrared  laser  systems  from  alternative
          technologies;  and

     -    Level  of reimbursement for treatments administered with our products.

In  addition,  we  derive  a meaningful portion of our revenues from the sale of
delivery  devices.  Our  ability  to increase revenues from the sale of delivery
devices  will  depend primarily upon the features, ease of use and prices of our
products,  including  the  relationship to prices of competing delivery devices.
The level of service revenues will depend on our quality of care, responsiveness
and  the  willingness  of  our  customers  to  request  our services rather than
purchase  competing  products  or  services.  Any  significant decline in market
acceptance  of  our  products  or  our  revenues derived from the sales of laser
consoles,  delivery  devices or services would have a material adverse effect on
our  business,  results  of  operations  and  financial  condition.

     We  Face  Strong  Competition  in  Our  Markets  and  Expect  the  Level of
Competition  to  Grow  in  the Foreseeable Future. Competition in the market for
devices  used for ophthalmic and dermatology treatment procedures is intense and
is expected to increase. Our competitive position depends on a number of factors
including  product  performance, characteristics and functionality, ease of use,
scalability, durability and cost. Our principal competitors in ophthalmology are
Lumenis  Ltd.,  Carl  Zeiss,  Inc.,  Alcon, Quantel and Nidek, Inc. All of these
companies  currently  offer  a  competitive  semiconductor-based laser system in
ophthalmology.  Our principal competitors in dermatology are Laserscope, Candela
Corporation,  Palomar  Technologies,  Lumenis  Ltd.  and  Cutera,  Inc.  Some
competitors  have  substantially  greater  financial,  engineering,  product
development,  manufacturing,  marketing and technical resources than we do. Some
companies  also  have  greater  name  recognition  than  we do and long-standing
customer  relationships.  In  addition  to  other  companies  that  manufacture
photocoagulators,  we compete with pharmaceuticals, other technologies and other
surgical techniques. Some medical companies, academic and research institutions,
or  others, may develop new technologies or therapies that are more effective in
treating  conditions  targeted  by  us or are less expensive than our current or
future  products.  Any such developments could have a material adverse effect on
our  business,  financial  condition  and  results  of  operations.

     Our  Future  Success  Depends  on  Our  Ability to Develop and Successfully
Introduce  New  Products  and  New Applications. Our future success is dependent
upon, among other factors, our ability to develop, obtain regulatory approval or
clearance  of,  manufacture  and  market  new  products.  In  June 2003 we began
shipment  of  two  new  products,  a  50 micron slit lamp adaptor and a 25 gauge
single-use Endoprobe. In October 2002, we announced the introduction of a number
of  new  products,  specifically  the  OcuLight  Symphony multi-wavelength laser
delivery  system,  an expanded EndoProbe product line and a 5 mm Large Spot Slit
Lamp Adapter. We also announced the Millennium Endolase module in 2002, which we
manufacture  to  be included in Bausch & Lomb's Millennium Microsurgical System.
Successful  commercialization  of  these  and  other  new  products  and  new
applications will require that we effectively transfer production processes


                                       15
<PAGE>
from  research  and development to manufacturing and effectively coordinate with
our  suppliers.  In  addition,  we  must  successfully  sell  and achieve market
acceptance  of  new  products and applications and enhanced versions of existing
products.  The  extent  of, and rate at which, market acceptance and penetration
are achieved by future products is a function of many variables. These variables
include  price,  safety, efficacy, reliability, marketing and sales efforts, the
development  of  new  applications  for  these  products,  the  availability  of
third-party reimbursement of procedures using our new products, the existence of
competing  products  and  general  economic  conditions  affecting  purchasing
patterns.  Our  ability  to  market and sell new products may also be subject to
government regulation, including approval or clearance by the United States Food
and Drug Administration, or FDA, and foreign government agencies. Any failure in
our  ability  to  successfully  develop  and  introduce new products or enhanced
versions  of existing products and achieve market acceptance of new products and
new  applications  could have a material adverse effect on our operating results
and  would  cause  our  net  revenues  to  decline.

     Our Business Has Been Adversely Impacted By the Worldwide Economic Slowdown
and  Related Uncertainties.  The overall weak economic conditions worldwide have
resulted in reduced demand for some of our products, particularly demand for our
dermatology  products.  Political  and  social  turmoil  in various parts of the
world  or terrorist acts may adversely impact global economic conditions.  These
political,  social  and  economic  conditions and related economic uncertainties
make  it difficult for us, our customers and our distributors to forecast orders
and  sales  of  our  products and, accordingly, plan future business activities.
This  level of uncertainty strongly challenges our ability to operate profitably
or grow our business.  If economic or market conditions do not improve, this may
have  a  material adverse impact on our financial position, results of operation
and  cash  flows.

     If  We  Cannot  Increase  Our  Sales Volumes, Reduce Our Costs or Introduce
Higher  Margin  Products  to  Offset  Anticipated Reductions in the Average Unit
Price  of  Our  Products,  Our Operating Results May Suffer. We have experienced
declines  in  the  average  unit price of our products and expect to continue to
suffer  from  declines in the future. The average unit price of our products may
decrease  in  the  future  in  response  to  changes in product mix, competitive
pricing  pressures,  new  product  introductions  by  our  competitors  or other
factors.  If  we  are  unable  to offset the anticipated decrease in our average
selling  prices  by  increasing  our  sales  volumes,  or  through  new  product
introductions, our net revenues will decline. In addition, to maintain our gross
margins,  we  must continue to reduce the manufacturing cost of our products. If
we  cannot  maintain  our gross margins, our business could be seriously harmed,
particularly  if  the  average  selling  price  of  our  products  decreases
significantly  without  a  corresponding  increase  in  sales.

     We Face Risks of Manufacturing. The manufacture of our infrared and visible
light  photocoagulators and the related delivery devices is a highly complex and
precise  process.  We  assemble  critical  subassemblies  and  all  of our final
products  at  our  facility  in  Mountain  View,  California.  We may experience
manufacturing  difficulties,  quality  control  issues  or assembly constraints,
particularly  with  regard  to new products that we may introduce. We may not be
able  to  manufacture  sufficient  quantities of our products, which may require
that  we  qualify  other  manufacturers  for  our  products. Furthermore, we may
experience delays, disruptions, capacity constraints or quality control problems
in  our  manufacturing  operations  and,  as  a result, product shipments to our
customers could be delayed, which would negatively impact our net revenues.

     We  Depend  on  Sole  Source or Limited Source Suppliers.  We rely on third
parties to manufacture substantially all of the components used in our products,
including  optics,  laser diodes and crystals.  We have some long term or volume
purchase  agreements  with  our suppliers and currently purchase components on a
purchase  order  basis.  Some  of  our  suppliers  and manufacturers are sole or
limited  source.  In  addition,


                                       16
<PAGE>
some  of  these  suppliers  are  relatively  small  private  companies  that may
discontinue  their  operations  at any time. There are risks associated with the
use  of  independent  manufacturers,  including  the  following:

     -    Unavailability  of,  shortages or limitations on the ability to obtain
          supplies  of  components  in  the  quantities  that  we  require;

     -    Delays  in  delivery  or  failure  of  suppliers  to  deliver critical
          components  on  the  dates  we  require;

     -    Failure  of suppliers to manufacture components to our specifications,
          and  potentially  reduced  quality;  and

     -    Inability  to  obtain  components  at  acceptable  prices.

     Our  business and operating results may suffer from the lack of alternative
sources  of supply for critical sole and limited source components.  The process
of  qualifying  suppliers  is  complex,  requiring  extensive  testing  with our
products,  and may be lengthy, particularly as new products are introduced.  New
suppliers  would  have to be educated in our production processes.  In addition,
the  use  of alternate components may require design alterations to our products
and  additional product testing under FDA and relevant foreign regulatory agency
guidelines,  which  may delay sales and increase product costs.  Any failures by
our  vendors  to adequately supply limited and sole source components may impair
our ability to offer our existing products, delay the submission of new products
for  regulatory  approval  and market introduction, materially harm our business
and  financial condition and cause our stock price to decline.  Establishing our
own  capabilities  to  manufacture these components would be expensive and could
significantly  decrease  our  profit  margins.  We  do  not  currently intend to
manufacture  any  of  these components.  Our business, results of operations and
financial  condition would be adversely affected if we are unable to continue to
obtain  components in the quantity and quality desired and at the prices we have
budgeted.

     We Depend on International Sales for a Significant Portion of Our Operating
Results.  We  derive,  and  expect to continue to derive, a large portion of our
revenue from international sales.  For the three months ended April 3, 2004, our
international  sales  were  $3.2 million or 43.8% of total sales.  We anticipate
that  international  sales will continue to account for a significant portion of
our  revenues in the foreseeable future.  None of our international revenues and
costs  has  been denominated in foreign currencies.  As a result, an increase in
the  value  of the U.S. dollar relative to foreign currencies makes our products
more expensive and thus less competitive in foreign markets.  The factors stated
above  could have a material adverse effect on our business, financial condition
or results of operations.  Our international operations and sales are subject to
a  number  of  risks  including:

     -    Longer  accounts  receivable  collection  periods;

     -    Impact  of  recessions  in  economies  outside  of  the United States;

     -    Foreign certification requirements, including continued ability to use
          the  "CE"  mark  in  Europe;


                                       17
<PAGE>
     -    Reduced  or  limited  protections  of  intellectual property rights in
          jurisdictions  outside  the  United  States;

     -    Potentially  adverse  tax  consequences;  and

     -    Multiple protectionist, adverse and changing foreign governmental laws
          and  regulations.


Any  one  or  more  of  these factors stated above could have a material adverse
effect  on  our  business,  financial  condition  or results of operations.  For
additional  discussion  about  our  foreign  currency  risks,  see  Item  3,
"Quantitative  and  Qualitative  Disclosures  about  Market  Risk."

     We  Depend on Sales of Our Ophthalmology Products for a Significant Portion
of  Our  Operating Results. We derive, and expect to continue to derive, a large
portion of our revenue and profits from sales of our ophthalmology products. For
the  three  months ended April 3, 2004 our ophthalmology sales were $6.2 million
or  84.4% of total sales. We anticipate that sales of our ophthalmology products
will  continue  to  account  for  a  significant  portion of our revenues in the
foreseeable  future as we continue to introduce new ophthalmology products, such
as  the 50 micron slit lamp adapter and our expanded EndoProbe product line, and
support  clinical  trials  in  the field of ophthalmology, including the TTT4CNV
clinical  trial  for  the  treatment  of  wet  AMD.

     Our  Operating  Results May be Adversely Affected by Changes in Third Party
Coverage  and  Reimbursement  Policies  and any Uncertainty Regarding Healthcare
Reform  Measures. Our ophthalmology products are typically purchased by doctors,
clinics,  hospitals and other users, which bill various third-party payers, such
as  governmental  programs  and  private  insurance  plans,  for the health care
services  provided  to  their  patients.  Third-party  payers  are  increasingly
scrutinizing  and  challenging  the  coverage  of  new products and the level of
reimbursement  for covered products. Doctors, clinics, hospitals and other users
of  our  products  may not obtain adequate reimbursement for use of our products
from  third-party  payers.  While we believe that the laser procedures using our
products  have  generally  been  reimbursed,  payers  may  deny  coverage  and
reimbursement  for  our  products  if  they  determine  that  the device was not
reasonable  and  necessary  for the purpose used, was investigational or was not
cost-effective. In addition, third party payers may not initiate coverage of new
procedures  using  our products for a significant period. In September 2000, the
Center  for  Medicare  and  Medicaid  Services,  or CMS, advised that claims for
reimbursement  for  certain  age  related  macular degeneration (AMD) procedures
which  use  our OcuLight SLx laser system, could be submitted for reimbursement,
with  coverage  and  payment  to  be determined by the local medical carriers at
their  discretion.  To  date  five  carriers representing 17 states have written
reimbursement  coverage  policies  on  TTT.  The  states reimbursing for TTT are
Alaska,  Arizona,  California, Colorado, Hawaii, Iowa, Idaho, Mississippi, North
Carolina,  North  Dakota, Nevada, Oregon, Pennsylvania, South Dakota, Tennessee,
Washington  and  Wyoming.  Domestic  sales  of the OcuLight SLx laser system may
continue  to  be  limited  until  more  local  medical  carriers  reimburse  for
performing  such  AMD  procedures  or  until  CMS  advises that claims for these
procedures  may  be  submitted  directly  to  CMS  at  the  national  level.

     Changes  in  government legislation or regulation or in private third-party
payers'  policies toward reimbursement for procedures employing our products may
prohibit  adequate  reimbursement.  There  have been a number of legislative and
regulatory  proposals  to  change  the  healthcare  system,  reduce the costs of
healthcare  and  change  medical  reimbursement  policies.  Doctors,  clinics,
hospitals  and  other users of our products may decline to purchase our products
to the extent there is uncertainty regarding reimbursement of medical procedures
using  our  products  and  any  healthcare  reform  measures.  Further  proposed
legislation,  regulation  and policy changes affecting third party reimbursement
are  likely.  We  are  unable to predict what legislation or regulation, if any,
relating  to  the health care industry or third-party coverage and


                                       18
<PAGE>
reimbursement  may  be enacted in the future, or what effect such legislation or
regulation  may have on us. However, denial of coverage and reimbursement of our
products  would  have  a  material  adverse  effect  on our business, results of
operations  and  financial  condition.

     We  are  Dependent  on  the  Successful  Outcome  of Clinical Trials of Our
Products  and  New  Applications  Using Our Products. Our success will depend in
part  on  the  successful  outcome  of  clinical  trials of our products and new
applications  using  our  products.  Clinical  trials  are  long,  expensive and
uncertain  processes.  We  are  currently  supporting  several  ongoing clinical
trials, including, for example, the TTT4CNV clinical trial. The TTT4CNV clinical
trial  is  a  multi-center,  prospective,  double-masked,  placebo-controlled,
randomized  trial  conducted  at  22 centers in the United States. This clinical
trial  is a post marketing study performed within the FDA cleared indications of
the OcuLight SLx and is being conducted to determine whether TTT laser treatment
using  our  OcuLight  SLx infrared laser system and Large Spot Slit Lamp Adapter
can  reduce  the  risk  of  vision  loss for patients with wet AMD compared to a
randomized  control, which should reflect the natural history of the disease. We
believe  that  a favorable outcome from the TTT4CNV clinical trial will increase
laser  sales although this process may take a number of years. In March 2003, we
announced  that  the Executive Committee for the TTT4CNV clinical trial accepted
the recommendations of the independent Data and Safety Monitoring Committee that
an  adequate  number  of  patients were enrolled to detect a clinically relevant
difference  between outcomes in TTT-treated eyes and patients not being treated.
We believe that results of the TTT4CNV study for wet AMD will likely be released
during the fourth quarter of 2004. In June 2003, we announced the publication of
two additional clinical studies, which also support the effectiveness of TTT for
the  treatment  of  wet  age-related  macular  degeneration.  Both  studies were
prospective,  non-randomized,  non-masked  case series that were performed using
our  OcuLight  SLx laser and Large Spot Size Slit Lamp Adapter. We cannot assure
you that results from the TTT4CNV clinical trial will prove to be successful. If
the  future  results  of  the TTT4CNV clinical trial or any other clinical trial
regarding  our  products  fails  to  demonstrate improved outcomes of treatments
using  our  products,  our ability to generate revenues from new products or new
applications  using  our  products  would be adversely affected and our business
would  be  harmed.

     Our  Operating  Result  May  Fluctuate  from Quarter to Quarter and Year to
Year.  Our  sales  and  operating results may vary significantly from quarter to
quarter  and from year to year in the future. Our operating results are affected
by  a  number  of  factors,  many  of  which  are  beyond  our  control. Factors
contributing  to  these  fluctuations  include  the  following:

     -    General  economic  uncertainties  and  political  concerns;

     -    The  timing of the introduction and market acceptance of new products,
          product  enhancements  and  new  applications;

     -    Changes  in demand for our existing line of dermatology and ophthalmic
          products;

     -    The  cost  and availability of components and subassemblies, including
          the  ability  of  our  sole  or  limited  source  suppliers to deliver
          components  at  the  times  and  prices  that  we  have  planned;

     -    Our  ability  to maintain sales volumes at a level sufficient to cover
          our  fixed  manufacturing  and  operating costs.

     -    Fluctuations  in  our  product  mix between dermatology and ophthalmic
          products  and  foreign  and  domestic  sales;

     -    The effect of regulatory approvals and changes in domestic and foreign
          regulatory  requirements;


                                       19
<PAGE>
     -    Introduction  of  new  products,  product  enhancements  and  new
          applications  by  our  competitors,  entry of new competitors into our
          markets,  pricing  pressures  and  other  competitive  factors;


     -    Our long and highly variable sales cycle;

     -    Changes in the prices at which we can sell our products;


     -    Changes  in customers' or potential customers' budgets as a result of,
          among  other things, reimbursement policies of government programs and
          private  insurers  for  treatments  that  use  our  products;  and


     -    Increased  product  development  costs.


In  addition to these factors, our quarterly results have been, and are expected
to  continue  to  be,  affected  by  seasonal  factors.

Our expense levels are based, in part, on expected future sales. If sales levels
in  a  particular  quarter  do not meet expectations, we may be unable to adjust
operating  expenses quickly enough to compensate for the shortfall of sales, and
our  results  of  operations  may  be  adversely  affected. In addition, we have
historically made a significant portion of each quarter's product shipments near
the  end  of  the  quarter. If that pattern continues, any delays in shipment of
products  could have a material adverse effect on results of operations for such
quarter.  Due to these and other factors, we believe that quarter to quarter and
year  to  year  comparisons of our past operating results may not be meaningful.
You  should  not rely on our results for any quarter or year as an indication of
our  future  performance. Our operating results in future quarters and years may
be below expectations, which would likely cause the price of our common stock to
fall.

     We Rely on Our Direct Sales Force and Network of International Distributors
to  Sell  Our  Products  and  any Failure to Maintain Our Direct Sales Force and
Distributor  Relationships  Could  Harm  Our  Business.  Our ability to sell our
products  and  generate  revenue  depends upon our direct sales force within the
United States and relationships with independent distributors outside the United
States.  As  of  April  3, 2004 our direct sales force consisted of 11 employees
with  3  open  positions  and  we  maintained  relationships with 66 independent
distributors  internationally  selling  our  products  into  107  countries.  We
generally  grant  our  distributors  exclusive  territories  for the sale of our
products in specified countries. The amount and timing of resources dedicated by
our  distributors  to  the  sales of our products is not within our control. Our
international  sales  are  entirely  dependent  on  the  efforts  of these third
parties. If any distributor breaches or fails to generate sales of our products,
we may be forced to replace the distributor and our ability to sell our products
into  that  exclusive  sales  territory  would  be  adversely  affected.

We do not have any long-term employment contracts with the members of our direct
sales  force.  We may be unable to replace our direct sales force personnel with
individuals  of  equivalent  technical  expertise  and qualifications, which may
limit  our  revenues  and  our ability to maintain market share. The loss of the
services  of  these  key  personnel  would  harm  our  business.  Similarly, our
distributorship  agreements are generally terminable at will by either party and
distributors  may  terminate their relationships with us, which would affect our
international  sales  and  results  of  operations.

     We  Depend  on Collaborative Relationships to Develop, Introduce and Market
New  Products,  Product  Enhancements  and  New  Applications. We depend on both
clinical  and  commercial  collaborative  relationships.  We  have  entered into
collaborative  relationships  with  academic  medical  centers and physicians in
connection  with  the  research  and  development  and  clinical  testing of our


                                       20
<PAGE>
products.  Commercially,  we  currently collaborate with Bausch & Lomb to design
and  manufacture  a  solid-state green wavelength (532 nm) laser photocoagulator
module, called the Millennium Endolase module. The Millennium Endolase module is
designed  to be a component of Bausch & Lomb's ophthalmic surgical suite product
offering  and  is not expected to be sold as a stand-alone product. Sales of the
Millennium  Endolase  module  are  dependent upon the actual order rate from and
shipment  rate to Bausch & Lomb, which depends on the efforts of our partner and
is  beyond our control. We cannot assure you that our relationship with Bausch &
Lomb  will  result  in  further sales of our Millennium Endolase module. We also
collaborate  with  Miravant Medical Technologies, a maker of photodynamic drugs,
on a device that emits a laser beam to activate a photodynamic drug developed by
Miravant  for the treatment of wet AMD. In January 2002, Miravant announced that
the top line results of their Phase III clinical trial indicated that SnET2, the
photodynamic  drug  developed, did not meet the primary efficacy endpoint in the
study  population.  As  we  could  not  be assured that SnET2 would be timely or
successfully  pursued through clinical trials by Miravant, we charged to expense
in the fourth quarter of 2001, $0.3 million of inventory related to the OcuLight
664,  the  laser used by Miravant in the Phase III clinical trials. Miravant has
since initiated discussions with the FDA regarding patients treated per protocol
in  a  subset  of the Phase III clinical trials and in late March 2004 announced
that  it  has  submitted an NDA/PMA (New Drug Application/Premarket Approval) to
the  FDA seeking marketing approval of SnET2-PDT as a new treatment for patients
with  wet  AMD. SnET2-PDT has been granted Fast Track product status by the FDA.
As  a  result,  within  60  days  of the NDA/PMA submission, the FDA will make a
determination  to  accept  or  refuse to file the NDA/PMA and, if accepted, will
designate its review status. Approval by the FDA of the SnET2-PDT product may be
obtained,  in  the  best  case, by October 2003. Successful commercialization of
this  product  will depend on Miravant's ability to successfully market and sell
this  therapy.

     We  face  risks  associated  with  our  collaborative  relationships.  Our
collaborators  may  not  pursue  further  development  and  commercialization of
products  resulting  from  collaborations  with  us or may not devote sufficient
resources to the marketing and sale of such products. Our reliance on others for
clinical  development, manufacturing and distribution of our products may result
in  unforeseen  problems.  Further,  our  collaborative  partners may develop or
pursue  alternative  technologies  either  on their own or in collaboration with
others. If a collaborator elects to terminate its agreement with us, our ability
to develop, introduce, market and sell the product may be significantly impaired
and  we  may  be forced to discontinue altogether the product resulting from the
collaboration.  We  may  not  be  able  to  negotiate  alternative collaboration
agreements  on acceptable terms, if at all. The failure of any current or future
collaboration  efforts  could  have  a material adverse effect on our ability to
introduce  new  products  or  applications  and  therefore could have a material
adverse  effect  on our business, results of operations and financial condition.

     We  Rely  on  Patents  and  Proprietary  Rights to Protect our Intellectual
Property  and Business.  Our success and ability to compete is dependent in part
upon  our  proprietary  information.  We rely on a combination of patents, trade
secrets,  copyright  and  trademark  laws,  nondisclosure  and other contractual
agreements  and  technical measures to protect our intellectual property rights.
We  file  patent applications to protect technology, inventions and improvements
that  are  significant  to the development of our business.  We have been issued
fourteen  United  States  patents  and  two  foreign patents on the technologies
related  to  our  products  and  processes.  We  have approximately four pending
patent  applications  in  the  United  States  and  eight foreign pending patent
applications that have been filed.  Our patent applications may not be approved.
Any  patents  granted  now  or  in  the future may offer only limited protection
against  potential  infringement and development by our competitors of competing
products.  Moreover,  our  competitors, many of which have substantial resources
and  have  made  substantial  investments in competing technologies, may seek to
apply  for  and  obtain  patents  that will prevent, limit or interfere with our
ability  to  make,  use  or  sell our products either in the United States or in
international  markets.

     In  addition  to patents, we rely on trade secrets and proprietary know-how
which  we  seek  to protect, in part, through proprietary information agreements
with  employees,  consultants  and  other  parties.  Our proprietary information
agreements  with  our  employees  and  consultants  contain  industry  standard
provisions  requiring  such  individuals  to  assign  to  us  without additional
consideration  any  inventions  conceived  or  reduced to practice by them while
employed  or  retained  by  us,  subject  to  customary exceptions.  Proprietary
information  agreements  with employees, consultants and others may be breached,


                                       21
<PAGE>
and  we  may  not have adequate remedies for any breach. Also, our trade secrets
may  become  known  to  or  independently  developed  by  competitors.

     The  laser  and  medical  device  industry  is  characterized  by  frequent
litigation  regarding  patent and other intellectual property rights.  Companies
in the medical device industry have employed intellectual property litigation to
gain  a  competitive  advantage.  Numerous patents are held by others, including
academic  institutions  and our competitors.  Until recently patent applications
were  maintained  in  secrecy  in  the  United  States until the patents issued.
Patent  applications  filed  in  the United States after November 2000 generally
will  be published eighteen months after the filing date.  However, since patent
applications  continue  to  be maintained in secrecy for at least some period of
time,  both  within  the  United States and with regards to international patent
applications,  we  cannot  assure  you that our technology does not infringe any
patents  or  patent  applications  held by third parties.  We have, from time to
time, been notified of, or have otherwise been made aware of, claims that we may
be  infringing  upon patents or other proprietary intellectual property owned by
others.  If  it  appears necessary or desirable, we may seek licenses under such
patents  or proprietary intellectual property.  Although patent holders commonly
offer  such  licenses,  licenses under such patents or intellectual property may
not  be  offered  or  the  terms  of any offered licenses may not be reasonable.

     Any  claims,  with  or  without  merit,  and  regardless  of whether we are
successful  on  the merits, would be time-consuming, result in costly litigation
and  diversion  of  technical and management personnel, cause shipment delays or
require  us  to  develop  noninfringing  technology  or to enter into royalty or
licensing agreements.   An adverse determination in a judicial or administrative
proceeding  and  failure  to  obtain  necessary  licenses  or  develop alternate
technologies could prevent us from manufacturing and selling our products, which
would  have a material adverse effect on our business, results of operations and
financial  condition.

     We  Are  Subject  To  Government  Regulation Which May Cause Us to Delay or
Withdraw  the Introduction of New Products or New Applications for Our Products.
The  medical  devices  that  we  market and manufacture are subject to extensive
regulation  by  the FDA and by foreign and state governments.  Under the Federal
Food,  Drug  and Cosmetic Act and the related regulations, the FDA regulates the
design, development, clinical testing, manufacture, labeling, sale, distribution
and  promotion  of  medical devices.  Before a new device can be introduced into
the  market,  the  product  must  undergo  rigorous  testing  and  an  extensive
regulatory  review  process  implemented  by  the FDA under federal law.  Unless
otherwise  exempt,  a  device  manufacturer must obtain market clearance through
either  the  510(k)  premarket  notification  process or the lengthier premarket
approval  application  (PMA)  process.  Depending  upon the type, complexity and
novelty  of  the device and the nature of the disease or disorder to be treated,
the  FDA  process can take several years, require extensive clinical testing and
result  in  significant  expenditures.  Even if regulatory approval is obtained,
later  discovery  of previously unknown safety issues may result in restrictions
on  the  product,  including  withdrawal  of the product from the market.  Other
countries  also have extensive regulations regarding clinical trials and testing
prior  to new product introductions.  Our failure to obtain government approvals
or  any delays in receipt of such approvals would have a material adverse effect
on  our  business,  results  of  operations  and  financial  condition.

     The FDA imposes additional regulations on manufacturers of approved medical
devices.  We  are  required  to  comply  with  the  applicable  Quality  System
regulations  and  our  manufacturing  facilities are subject to ongoing periodic
inspections  by  the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed as part of the product approval process before
being  utilized for commercial manufacturing.  Noncompliance with the applicable
requirements  can  result  in,  among  other  things,  fines, injunctions, civil
penalties,  recall  or  seizure  of  products,  total  or  partial suspension of
production,  withdrawal  of  marketing approvals, and criminal prosecution.  The
FDA  also has the authority to request repair, replacement or refund of the cost
of  any  device we manufacture or distribute.    Any of these actions by the FDA
would  materially  and  adversely  affect  our ability to continue operating our
business  and  the  results  of  our  operations.


                                       22
<PAGE>
     In  addition,  we  are also subject to varying product standards, packaging
requirements,  labeling  requirements,  tariff  regulations,  duties  and  tax
requirements.  As  a  result of our sales in Europe, we are required to have all
products  "CE"  marked,  an  international  symbol  affixed  to  all  products
demonstrating  compliance  with  the  European  Medical Device Directive and all
applicable  standards.  While  currently  all  of  our  released products are CE
marked,  continued  certification  is  based on successful review of our quality
system  by  our  European  Registrar  during  their  annual  audit.  Any loss of
certification  would  have a material adverse effect on our business, results of
operations  and  financial  condition.

     Our  products could be subject to recalls even after receiving FDA approval
or  clearance.  A  recall  would  harm  our  reputation and adversely affect our
operating  results.  The  FDA  and  similar  governmental  authorities  in other
countries in which we market and sell our products have the authority to require
the  recall  of our products in the event of material deficiencies or defects in
design  or  manufacture.  A government mandated recall, or a voluntary recall by
us,  could  occur  as  a  result  of component failures, manufacturing errors or
design  defects,  including  defects  in  labeling.  A  recall  could  divert
management's  attention,  cause  us  to  incur  significant  expenses,  harm our
reputation  with  customers  and  negatively  affect  our  future  sales.

     If  we  modify  one  of our FDA approved or cleared devices, we may need to
seek  new  approvals  or clearances which, if not granted, would prevent us from
selling  our  modified  products.

     Any  modifications  to  an  FDA-approved  or  cleared  device  that  would
significantly  affect  its  safety  or  effectiveness or that would constitute a
major  change  in  its  intended  use  would  require  a new 510(k) clearance or
possibly  a  PMA  approval.  We  may  not  be  able  to obtain additional 510(k)
clearances  or  PMA  approvals  for  new  products  or  for modifications to, or
additional  intended  uses or indications for, our existing products in a timely
fashion, or at all. Delays in obtaining future clearances would adversely affect
our  ability  to introduce new or enhanced products in a timely manner, which in
turn would harm our revenue and future profitability. We have made modifications
to  our  devices  and  the  labeling  of  our  devices  in the past and may make
additional  modifications  in  the  future  that  we  believe do not or will not
require  additional  clearances  or approvals. If the FDA disagrees and requires
new  clearances or approvals for the modifications, we may be required to recall
and  stop marketing the modified devices, which could harm our operating results
and  require  us  to  redesign  or  relabel  our  products.

     If  Product  Liability  Claims are Successfully Asserted Against Us, We may
Incur  Substantial Liabilities That May Adversely Affect Our Business or Results
of  Operations. We may be subject to product liability claims from time to time.
Our  products  are  highly complex and some are used to treat extremely delicate
eye  tissue  and  skin  conditions  on  and  near  a patient's face. Although we
maintain  product  liability insurance with coverage limits of $11.0 million per
occurrence  and  an annual aggregate maximum of $12.0 million, our coverage from
our  insurance  policies  may  not  be  adequate. Product liability insurance is
expensive.  We  might  not  be able to obtain product liability insurance in the
future  on acceptable terms or in sufficient amounts to protect us, if at all. A
successful  claim  brought  against us in excess of our insurance coverage could
have  a  material  adverse  effect  on  our  business, results of operations and
financial  condition.

     If  We  Fail  to  Accurately  Forecast Demand For Our Product and Component
Requirements For the Manufacture of Our Product, We Could Incur Additional Costs
or  Experience Manufacturing Delays and May Experience Lost Sales or Significant
Inventory  Carrying Costs. We use quarterly and annual forecasts based primarily
on  our  anticipated  product  orders  to  plan  our  manufacturing  efforts and
determine  our  requirements  for components and materials. It is very important
that  we  accurately  predict both the demand for our product and the lead times
required  to  obtain  the  necessary  components  and  materials. Lead times for
components  vary  significantly  and  depend  on numerous factors, including the
specific  supplier,  the  size  of  the order, contract terms and current market
demand  for  such  components. If we overestimate the demand for our product, we
may have excess inventory, which would increase our costs. Over the past several
quarters,  we  have  placed  a high priority on our asset management efforts to,
among  other  things,  reduce  overall  inventory  levels  and increase our cash
position.  If  we  underestimate  demand  for our product


                                       23
<PAGE>
and,  consequently,  our  component  and  materials  requirements,  we  may have
inadequate inventory, which could interrupt our manufacturing, delay delivery of
our  product  to  our customers and result in the loss of customer sales. Any of
these  occurrences  would  negatively impact our business and operating results.

     If  We  Fail  to Manage Growth Effectively, Our Business Could Be Disrupted
Which Could Harm Our Operating Results. We have experienced, and may continue to
experience  growth  in our business. We have made and expect to continue to make
significant investments to enable our future growth through, among other things,
new  product  development and clinical trials for new applications and products.
We  must  also  be  prepared to expand our work force and to train, motivate and
manage  additional  employees  as  the need for additional personnel arises. Our
personnel,  systems,  procedures and controls may not be adequate to support our
future  operations. Any failure to effectively manage future growth could have a
material  adverse  effect  on  our business, results of operations and financial
condition.

     If  Our  Facilities  Were  To  Experience Catastrophic Loss, Our Operations
Would  Be Seriously Harmed. Our facilities could be subject to catastrophic loss
such  as  fire,  flood  or  earthquake.  All  of  our  research  and development
activities,  manufacturing,  our  corporate  headquarters  and  other  critical
business  operations  are located near major earthquake faults in Mountain View,
California. Any such loss at any of our facilities could disrupt our operations,
delay  production,  shipments  and revenue and result in large expense to repair
and  replace  our  facilities.

     We May Need Additional Capital, which May Not Be Available, and Our Ability
to  Grow May be Limited as a Result. We believe that our existing cash balances,
available-for-sale  securities,  credit  facilities and cash flow expected to be
generated  from  future  operations  will  be  sufficient  to  meet  our capital
requirements  at  least through the next 12 months. However, we may be required,
or  could  elect, to seek additional funding prior to that time. The development
and  marketing  of  new  products  and  associated  support personnel requires a
significant  commitment  of  resources.  If  cash  from  available  sources  is
insufficient,  we  may  need  additional  capital, which may not be available on
favorable terms, if at all. If we cannot raise funds on acceptable terms, we may
not  be  able  to  develop  or  enhance  our  products, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.
Any  inability  to  raise  additional capital when we require it would seriously
harm  our  business.

     Our  Stock Price Has Been and May Continue to be Volatile and an Investment
in  Our  Common  Stock Could Suffer a Decline in Value. The trading price of our
common  stock  has been subject to wide fluctuations in response to a variety of
factors, some of which are beyond our control, including quarterly variations in
our operating results, announcements by us or our competitors of new products or
of  significant  clinical  achievements,  changes  in market valuations of other
similar companies in our industry and general market conditions. We receive only
limited attention by securities analysts and may experience an imbalance between
supply  and  demand  for our common stock resulting from low trading volumes. In
addition,  the  stock  market has experienced extreme volatility in the last few
years  that has often been unrelated to the performance of particular companies.
These  broad  market  fluctuations could have a significant impact on the market
price  of  our  common  stock  regardless  of  our  performance.

Changes  in  Accounting Rules. We prepare our financial statements in conformity
with  accounting  principles generally accepted in the United States of America.
These  principles  are  subject to interpretation by the Securities and Exchange
Commission  (the  "SEC")  and  various  bodies  formed  to  interpret and create
appropriate  accounting  policies.  A  change  in  these  policies  can  have  a
significant  effect  on  our  reported results and may even retroactively affect
previously  reported  transactions.  In  particular,  changes to FASB guidelines
relating  to  accounting  for  stock-based compensation will likely increase our
compensation  expense,  could  make our net income less predictable in any given
reporting  period  and could change the way we compensate our employees or cause
other  changes  in  the  way  we  conduct  our  business. On March 31, 2004, the
Financial  Accounting  Standards  Board  (FASB)  issued  an  Exposure  Draft,
Share-Based Payment: an amendment of FASB statements No. 123 and 95, which would
require  a  company to recognize, as an expense, the fair value of stock options
and other stock-based compensation to employees beginning in 2005 and subsequent
reporting  periods.  If  we  elect  or are required to record an expense for our
stock-based  compensation  plans using the fair value method as described in the
Exposure  Draft, we could have significant and ongoing accounting charges, which
could  significantly  reduce  our  net  income.


                                       24
<PAGE>
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

QUANTITATIVE  DISCLOSURES

     We  are  exposed  to  market  risks  inherent  in our operations, primarily
related  to  interest  rate  risk  and  currency  risk.  These  risks arise from
transactions and operations entered into in the normal course of business. We do
not  use  derivatives  to  alter  the interest characteristics of our marketable
securities  or  our  debt  instruments.  We  have  no  holdings of derivative or
commodity  instruments.

     Interest  Rate Risk. We are subject to interest rate risks on cash and cash
equivalents,  available-for-sale  marketable securities and any future financing
requirements.  Interest  rate risks related to marketable securities are managed
by  managing  maturities  in  our  marketable  securities  portfolio. We have no
long-term  debt  as  of  April  3,  2004.

     The  fair  value of our investment portfolio or related income would not be
significantly  impacted  by  changes  in  interest  rates  since  the marketable
securities maturities do not exceed terms of 12-24 months and the interest rates
are  primarily  fixed.

QUALITATIVE  DISCLOSURES

     Interest Rate Risk. Our primary interest rate risk exposures relate to:

     -    The  available-for-sale  securities  will  fall  in  value  if  market
          interest  rates  increase.

     -    The  impact  of  interest  rate  movements  on  our  ability to obtain
          adequate  financing  to  fund  future  operations.

     We  have  the  ability  to  hold  at  least  a  portion of the fixed income
investments  until maturity and therefore would not expect the operating results
or  cash  flows  to  be affected to any significant degree by a sudden change in
market  interest  rates  on  its  short-  and  long-term  marketable  securities
portfolio.

     Management evaluates our financial position on an ongoing basis.

Currency Rate Risk.

     As  all  of  our sales transactions are denominated in U.S. currency, we do
not  hedge  any  balance  sheet  exposures  against  future movements in foreign
exchange rates. The exposure related to currency rate movements would not have a
material  impact  on  future  net  income  or  cash  flows.


                                       25
<PAGE>
ITEM 4.   CONTROLS AND PROCEDURES

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     Our  management,  with the participation of our Chief Executive Officer and
our  Chief  Financial  Officer,  evaluated  the  effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange
Act  of  1934,  as  of the end of the period covered by this Quarterly Report on
Form  10-Q.  Based on that evaluation, our Chief Executive Officer and our Chief
Financial  Officer  concluded  that  our  disclosure controls and procedures are
effective to ensure that information we are required to disclose in reports that
we  file  or  submit  under  the  Securities  Exchange  Act of 1934 is recorded,
processed,  summarized  and  reported  within  the time periods specified in the
Securities  and  Exchange  Commission  rules  and  forms.

(b) CHANGES IN INTERNAL CONTROLS

     There  was  no change in our internal control over financial reporting that
occurred  during  the  period covered by this Quarterly Report on Form 10-Q that
has  materially  affected,  or  is  reasonably  likely to materially affect, our
internal  control  over  financial  reporting.


                                       26
<PAGE>
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
     The Company is not subject to any material legal proceedings as of the date
of this report.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
In  accordance with Section 10A(i)(2) of the Securities Exchange Act of 1934, as
added  by  Section  202  of  the  Sarbanes-Oxley  Act of 2002, the Registrant is
responsible  for  disclosing  the  non-audit  services approved by the Company's
Audit  Committee  to  be  performed by PricewaterhouseCoopers LLP, the Company's
independent auditor. Non-audit services are defined in the law as services other
than  those  provided  in  connection with an audit or a review of the financial
statements  of the Company. The additional engagements of PricewaterhouseCoopers
LLP  for  the  matters  listed  below  are  each considered by the Company to be
audit-related  services that are closely related to the financial audit process.
During the quarterly period covered by this filing, the Audit Committee approved
the  additional engagements of PricewaterhouseCoopers LLP for certain tax matter
consultations  and  for the review of the Company's filings under the Securities
Act  of  1933,  as  amended.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits

     31.1 Certification of Chief Executive Officer pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.
     31.2 Certification  of  Chief  Financial Officer pursuant to Section 302 of
          the  Sarbanes-Oxley  Act  of  2002.
     32.1 Certification  of Chief  Executive Officer and Chief Financial Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

     On  May  4,  2004  the  registrant  furnished  a Current Report on Form 8-K
reporting  under  Item  12 of Form 8-K that on May 4, 2004, the Company issued a
press  release  regarding the Company's financial results for the fiscal quarter
ended  April  3,  2004.

TRADEMARK  ACKNOWLEDGMENTS

IRIDEX,  the  IRIDEX  logo, IRIS Medical, OcuLight, SmartKey, EndoProbe and Apex
are  our  registered  trademarks.  IRIDERM,  G-Probe, DioPexy, DioVet, TruFocus,
TrueCW,  UltraView,  DioLite  532,  Long  Pulse,  MicroPulse,  Scanlite Scanner,
ColdTip  Handpiece,  Varispot  Handpiece  and  EasyFit  product  names  are  our
trademarks.   All other trademarks or trade names appearing in the Form 10-Q are
the  property  of  their  respective  owners.


SIGNATURE

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


                                       27
<PAGE>
                               IRIDEX Corporation
                               (Registrant)

     Date: May 18, 2004     By:  /s/ Larry Tannenbaum
                                 --------------------
                                 Larry  Tannenbaum
                                 Chief Financial Officer and Vice President,
                                 Administration (Principal Financial, Principal
                                 Accounting Officer and Authorized Signatory)


                                       28
<PAGE>
                                  Exhibit Index

31.1    Certification of Chief Executive Officer pursuant to Securities Exchange
        Act Rules 13a-14(a) and 15d-14(a)

31.2    Certification of Chief Financial Officer pursuant to Securities Exchange
        Act Rules 13a-14(a) and 15d-14(a)

32.1    Certification of Chief Executive Officer and Chief Financial Officer
        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002.


                                       29
<PAGE>