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 SEPTEMBER 30, 2000

                                       OR

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

                  For the transition period from ____ to _____

                         Commission File Number 0-11635
                                                -------

                                PHOTOMEDEX, INC.
                                ----------------
             (Exact name of registrant as specified in its charter)

             DELAWARE                                   59-2058100
             --------                                   ----------
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                     Identification No.)

       Five Radnor Corporate Center, Suite 470, Radnor, Pennsylvania 19087
       -------------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                 (610) 971-9292
                                 --------------
              (Registrant's telephone number, including area code)


Indicated by check mark whether the registrant: (i) 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 (ii) has been subject to such
filing requirements for the past 90 days.
                                 Yes _X_ No ___

The number of shares outstanding of the issuer's Common Stock as of November 9,
2000, was 17,256,254 shares.

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
<TABLE>

                                  PHOTOMEDEX, INC. AND SUBSIDIARIES
                                  ---------------------------------
                                  (FORMERLY LASER PHOTONICS, INC.)
                                  --------------------------------

                                     CONSOLIDATED BALANCE SHEETS
                                     ---------------------------
                                             (Unaudited)
                                             -----------
<CAPTION>
                                                                         September 30,   December 31,
                                 ASSETS                                      2000            1999
                                 ------                                  -------------   -------------
<S>                                                                      <C>             <C>
CURRENT ASSETS:
      Cash and cash equivalents                                          $ 11,045,274    $  4,535,557
      Accounts receivable                                                     155,281               -
      Inventories                                                           1,380,639       1,170,472
      Prepaid expenses and other current assets                               215,393          34,685
                                                                         -------------   -------------
         Total current assets                                              12,796,587       5,740,714

PROPERTY AND EQUIPMENT, net                                                 1,723,564         152,965

PATENT COSTS, net of accumulated amortization of $46,936
      and $40,671                                                              37,862          44,127
LICENSE FEE, net of accumulated amortization of $1,416,667
      and $1,041,667                                                        2,583,333       2,958,333
GOODWILL, net of accumulated amortization of $35,287 and $0                 4,199,128               -
OTHER ASSETS                                                                   40,411          45,346
NET ASSETS OF DISCONTINUED OPERATIONS                                               -         764,179
                                                                         -------------   -------------
                                                                         $ 21,380,885    $  9,705,664
                                                                         =============   =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
                  ------------------------------------
CURRENT LIABILITIES:
      Current portion of notes payable and long term debt                $    127,981    $    353,710
      Accounts payable                                                      1,156,677       2,034,371
      Accrued payroll and related expenses                                    190,681         376,967
      Other accrued liabilities                                               901,617       1,372,668
      Deferred revenues                                                       180,000         250,000
                                                                         -------------   -------------
         Total current liabilities                                          2,556,956       4,387,716
                                                                         -------------   -------------

NOTES PAYABLE AND LONG TERM DEBT                                               24,937          43,620
                                                                         -------------   -------------

STOCKHOLDERS' EQUITY:
      Common Stock, $.01 par value, 25,000,000 shares authorized
         17,123,072 and 13,267,918 shares issued and outstanding              171,231         132,679
      Additional paid-in capital                                           53,426,062      30,759,186
      Accumulated deficit                                                 (34,734,682)    (25,617,537)
      Deferred compensation                                                   (63,619)              -
                                                                         -------------   -------------
         Total stockholders' equity                                        18,798,992       5,274,328
                                                                         -------------   -------------
                                                                         $ 21,380,885    $  9,705,664
                                                                         =============   =============
The accompanying notes are an integral part of these statements.

                                                          2
</TABLE>

<PAGE>
<TABLE>

                                        PHOTOMEDEX, INC. AND SUBSIDIARIES
                                        ---------------------------------
                                        (FORMERLY LASER PHOTONICS, INC.)
                                        --------------------------------

                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                      -------------------------------------
                                                   (Unaudited)
                                                   -----------
<CAPTION>

                                                            Three Months Ended             Nine Months Ended
                                                               September 30,                 September 30,
                                                       ----------------------------   ---------------------------
                                                            2000           1999           2000           1999
                                                       -------------   ------------   ------------   ------------
<S>                                                    <C>             <C>            <C>            <C>
REVENUES                                               $     59,271    $         -    $    629,271   $         -

COSTS AND EXPENSES:
     Cost of revenues                                             -              -         325,000             -
     Selling, general and administrative                  2,588,173      1,042,229       7,103,505     2,072,699
     Research and development                               542,934        578,440       1,970,564     1,176,233
     Depreciation and amortization                          209,820        266,956         491,824       792,856
                                                       -------------   ------------   ------------   ------------
        Loss from continuing operations before
           interest and other (expense) income, net      (3,281,656)    (1,887,625)    (9,261,622)    (4,041,788)

INTEREST (EXPENSE) INCOME, net                              178,668        (77,952)       445,653     (1,757,581)

OTHER INCOME, net                                            18,104         49,101        345,366         52,915
                                                       -------------   ------------   ------------   ------------

           Loss from continuing operations               (3,084,884)    (1,916,476)    (8,470,603)    (5,746,454)

           Loss from discontinued operations                      -       (672,066)      (369,141)    (1,276,680)

           Loss on sale of discontinued operations                -              -       (277,401)             -
                                                       -------------   ------------   ------------   ------------

NET LOSS                                               $ (3,084,884)   $(2,588,542)   $(9,117,145)   $(7,023,134)
                                                       =============   ============   ============   ============

BASIC AND DILUTED LOSS PER SHARE:
     Continuing operations                             $      (0.19)   $     (0.16)   $     (0.56)   $     (0.55)
     Discontinued operations                           $          -    $     (0.06)   $     (0.04)   $     (0.12)
                                                       -------------   ------------   ------------   ------------
        Basic and diluted net loss per share           $      (0.19)   $     (0.22)   $     (0.60)   $     (0.67)
                                                       =============   ============   ============   ============

SHARES USED IN COMPUTING BASIC AND DILUTED NET
     LOSS PER SHARE                                      16,527,065     11,828,780     15,178,975     10,547,130
                                                       =============   ============   ============   ============


The accompanying notes are an integral part of these statements.

                                                        3
</TABLE>

<PAGE>
<TABLE>


                                        PHOTOMEDEX, INC. AND SUBSIDIARIES
                                        ---------------------------------
                                        (FORMERLY LASER PHOTONICS, INC.)
                                        --------------------------------

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      -------------------------------------
                                                   (Unaudited)
                                                  -----------
<CAPTION>

                                                                         Nine Months Ended September 30,
                                                                         -------------------------------
                                                                             2000               1999
                                                                         -------------     -------------
<S>                                                                      <C>               <C>
OPERATING ACTIVITIES:
      Net loss                                                           $ (9,117,145)     $ (7,023,134)
      Adjustments to reconcile net loss to net cash used
         in operating activities -
              Depreciation and amortization                                   472,484           826,895
              Stock options issued to consultants for services                554,645             4,251
              Compensation recognized upon issuance of stock options           20,381           299,650
              Amortization of debt issuance costs                                   -            67,004
              Acceleration of options issued to employees                      47,500                 -
              Acceleration of options issued to consultants                   808,766                 -
              Interest related to beneficial conversion feature                     -         1,512,292
      Changes in assets and liabilities -
         Decrease (increase) in current assets                                (27,542)           17,599
         Increase (decrease) in current liabilities                        (2,014,446)          452,253
                                                                         -------------     -------------

                      Net cash used in operating activities                (9,255,357)       (3,843,190)
                                                                         -------------     -------------

INVESTING ACTIVITIES:
      Purchases of property and equipment                                    (206,423)          (36,988)
      Proceeds from sale of discontinued operations                           250,500                 -
      Lasers in process                                                      (617,828)                -
      Lasers placed into service                                             (802,280)                -
                                                                         -------------     -------------

                      Net cash used in investing activities                (1,376,031)          (36,988)
                                                                         -------------     -------------

FINANCING ACTIVITIES:
      Principal payments on debt                                             (380,484)         (473,213)
      Proceeds from issuance of notes payable                                 136,072            86,485
      Payments on payable to related party                                          -           (72,162)
      Advances from related parties                                                 -            11,340
      Proceeds from exercise of options                                     2,333,690                 -
      Proceeds from exercise of warrants                                      792,336                 -
      Proceeds from issuance of convertible notes payable and warrants              -         2,398,750
      Payment for debt issuance costs                                               -          (166,600)
      Proceeds from issuance of common stock, net                          14,259,491         8,540,544
                                                                         -------------     -------------
                      Net cash provided by financing activities            17,141,105        10,325,144
                                                                         -------------     -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   6,509,717         6,444,966

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                              4,535,557           174,468
                                                                         -------------     -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                 $ 11,045,274         6,619,434
                                                                         =============     =============

The accompanying notes are an integral part of these statements.

                                                        4

</TABLE>

<PAGE>

                        PHOTOMEDEX, INC. AND SUBSIDIARIES
                        (FORMERLY LASER PHOTONICS, INC.)

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------

THE COMPANY:

Background
----------

         PhotoMedex, Inc. and subsidiaries ("the Company") changed its name from
Laser Photonics, Inc. on August 8, 2000. The Company is engaged in the
development, manufacturing and marketing of proprietary excimer laser and fiber
optic equipment and techniques directed toward the treatment of psoriasis and
cardiovascular and vascular disease. The Company anticipates developing such
equipment and technologies to treat other medical problems and for non-medical
applications.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Quarterly Financial Information and Results of Operations
---------------------------------------------------------

         The financial statements as of September 30, 2000 and for the three and
nine months ended September 30, 2000 and 1999, are unaudited and, in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position as of September
30, 2000, and the results of operations and cash flows for the three and nine
months ended September 30, 2000 and 1999. The results for the three and nine
months ended September 30, 2000 are not necessarily indicative of the results to
be expected for the entire year. While the Company believes that the disclosures
presented are adequate to make the information not misleading, these
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.

Principles of Consolidation
---------------------------

         The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

Management's Use of Estimates
-----------------------------

         The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

                                        5

<PAGE>

Cash and Cash Equivalents
-------------------------

         For the purposes of the consolidated statements of cash flows, the
Company considers investment instruments with an original maturity of three
months or less to be cash equivalents. Cash equivalents are primarily comprised
of investments in various money market funds.

Inventories
-----------

         Inventories are stated at the lower of cost or market, determined by
the first-in, first-out method and consist of the following:

                                             September 30,     December 31,
                                                  2000            1999
                                             -------------    -------------
         Raw materials                       $  1,380,639     $    613,032
         Work-in-process                                -          557,440
         Finished goods                                 -                -
                                             -------------    -------------
                                             $  1,380,639     $  1,170,472
                                             =============    =============

         As of September 30, 2000, due to the commercialization of the Company's
excimer laser equipment for the treatment of psoriasis, the Company has made
certain changes to its inventory classifications. The Company's psoriasis
treatment equipment will be placed in a physician's office and remain the
property of the Company. The Company will earn its revenues each time the laser
is used for patient treatment. Accordingly, once the manufacturing process
commences for a given psoriasis treatment laser, the related inventory costs are
transferred to Lasers in process within property and equipment. When
construction of a given psoriasis treatment laser is completed, the cost is
transferred from Lasers in process to Lasers in service within property and
equipment. The Company's coronary heart disease laser equipment is sold
directly. Accordingly, the costs associated with these lasers are maintained in
work-in-process and finished goods within inventory.

Property and Equipment
----------------------

         Property and equipment are stated at cost. Depreciation is calculated
on a straight-line basis over the estimated useful lives of the assets, which
range from 3 to 7 years. Improvements and betterments are capitalized, and
maintenance and repair costs are charged to expense as incurred. Upon retirement
or disposition, the applicable property amounts are relieved from the accounts
and any gain or loss is recorded in the consolidated statement of operations.
Property and equipment consists of the following:

                                             September 30,     December 31,
                                                 2000             1999
                                             -------------    -------------
         Machinery and equipment             $     11,584     $     11,584
         Furniture and fixtures                    90,273           45,102
         Computer hardware and software           230,912           67,485
         Leasehold improvements                    78,716           78,716
         Lasers in service                        808,280                -
         Lasers in process                        617,828                -
                                             -------------    -------------
                                                1,837,593          202,887
         Accumulated depreciation and
          amortization                           (114,029)         (49,922)
                                             -------------    -------------
                                             $  1,723,564     $    152,965
                                             =============    =============

         Lasers in service as of September 30, 2000, represent psoriasis
treatment equipment currently located in physician offices. However, as of
September 30, 2000, the Company has not generated any revenues from these
lasers. Lasers in service are depreciated over their estimated useful life,
which is three years. No depreciation is taken on Lasers in process.

                                        6

<PAGE>

Intangible Assets
-----------------

         Intangible assets consist of goodwill, patents and license fees which
are carried at cost less accumulated amortization. Patents and license fees are
amortized on a straight-line basis over the estimated useful lives of the asset,
which is 8 to 12 years for patents and eight years for license fees. Goodwill
relates to the purchase of the minority interest of Acculase, Inc. (see Note 2)
and is being amortized over 10 years on a straight-line basis.

         The Company evaluates the realizability of intangible assets based on
estimates of undiscounted future cash flows over the remaining useful life of
the asset. If the amount of such estimated undiscounted future cash flows is
less than the net book value of the asset, the asset is written down to its net
realizable value. As of September 30, 2000, no such write-down was required.

Revenue Recognition
-------------------

         Revenues are recognized upon shipment of products or delivery of
services to customers. Deferred revenue relates to customer payments received in
advance of the delivery of the related products or services.

Loss Per Share
--------------

         The Company computes loss per share in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 requires dual presentation of basic and diluted earnings (loss) per share
for complex capital structures on the face of the statements of operations.
According to SFAS No. 128, basic earnings (loss) per share is calculated by
dividing net income (loss) available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings
(loss) per share reflects the potential dilution from the exercise or conversion
of securities into common stock, such as stock options.

         Diluted net loss per share is the same as basic net loss per share for
the periods presented as no additional shares for the potential dilution from
the exercise of securities into common stock are included in the denominator as
the result is anti-dilutive due to the Company's losses.

Reclassifications
-----------------

         The consolidated financial statements for prior periods have been
reclassified to conform with the current period's presentation.

New Accounting Pronouncements
-----------------------------

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contacts and for hedging activities and is
effective for all fiscal years beginning after June 15, 2000. Management
believes that the adoption of SFAS No. 133 will have no impact on its operating
results or financial position.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
No. 101"). SAB No. 101 summarizes certain of the Staff's views in applying
generally accepted accounting principles to recognition, presentation and
disclosure of revenue in financial statements. Implementation of SAB No. 101 is
required no later than the fourth quarter of fiscal years beginning after
December 15, 1999. The Company has determined that its accounting policies for
revenue recognition are currently in compliance with the provisions of SAB No.
101.

                                       7
<PAGE>

2. ACQUISITION:
---------------

         Effective August 31, 2000, the Company issued 300,000 shares of its
Common stock for the remaining 23.9% of Acculase, Inc., which the Company did
not already own. The transaction was accounted for as a purchase. The Company
has historically consolidated the results of Acculase, Inc. in its financial
statements and has recognized 100% of Acculase, Inc.'s losses as the Company has
historically funded its operations. In addition, due to the significant
historical losses of Acculase, Inc., the Company did not have any investment
recorded for its 76.1% ownership of Acculase, Inc. Accordingly, the total
purchase price of $4,234,415, including transaction costs, was preliminarily
allocated to goodwill and is being amortized over 10 years on a straight-line
basis.

3. PRIVATE STOCK OFFERING:
--------------------------

         In March 2000, the Company completed a private offering of 1,409,092
shares of common stock at $11.00 per share. The Company received net cash
proceeds of $14,259,491 from this private offering.

4. DISCONTINUED OPERATIONS:
---------------------------

         Due to the limited financial resources of the Company, the Company's
business strategy changed in 1997 to focus its efforts on excimer laser
technology in order to develop excimer laser and excimer laser delivery products
for medical applications. To facilitate the Company's focus on excimer laser
technology, as of May 4, 2000, the Company sold its non-excimer laser
businesses, which were located at its Orlando, Florida and Wilmington,
Massachusetts facilities.

         The Company closed a transaction with respect to the sale of certain
assets, including certain patents related to non-excimer lasers related to the
Company's Florida business operations, to Lastec Inc. ("Lastec"), for a purchase
price of $375,000. Lastec is unaffiliated with the Company. Lastec has paid the
Company a deposit of $37,500, and has executed a secured promissory note in the
principal amount of $337,500, payable in three (3) installments, as follows: (i)
$37,500 due on or before May 20, 2000, (ii) $100,000 due on or before July 14,
2000, and (iii) the balance plus accrued interest due on or before October 6,
2000. The promissory note accrues interest at the rate of 8% per annum. The
promissory note is secured by the assets assigned by the Company to Lastec in
connection with the transaction, and is personally guaranteed by the principals
of Lastec. As of the date of this filing, the Company has not received the May
20, 2000, July 14, 2000 or the October 6, 2000 payments due under the promissory
note. See "Legal Proceedings." The Company is currently involved in litigation
with Lastec, as well as its principals. Accordingly, the balance of the
promissory note ($337,500) has been written off and included in the loss on
disposal of this operation. Any gain resulting from future payments received by
the Company will be recognized as received.

         The Company closed the transaction with respect to the sale of certain
assets and the grant of an exclusive license for certain patents related to
non-excimer lasers related to the Company's Massachusetts business operations to
Laser Components GmbH for a purchase price of $213,000. Laser Components GmbH is
unaffiliated with the Company. In addition, Laser Components GmbH assumed the
Company's prospective obligations under the Company's Massachusetts office
lease.

         Accordingly, these two operations are being accounted for together as
discontinued operations with a measurement date of May 4, 2000. The accompanying
consolidated financial statements reflect the operating results and balance
sheet items of the discontinued operations separately from continuing
operations. The Company has recognized a loss of $277,401 on the sale of these
discontinued operations in the quarter ended June 30, 2000. Prior periods have
been restated.

                                        8

<PAGE>

         Revenues and loss from discontinued operations on the accompanying
consolidated statement of operations were:

                     Three Months Ended              Nine Months Ended
                         September 30,                  September 30,
                -----------------------------   -----------------------------
                     2000            1999            2000           1999
                -------------------------------------------------------------
Revenues        $          -    $    225,955    $    188,838    $    906,726
                =============   =============   =============   =============
Loss            $          -    $   (672,066)   $   (369,141)   $ (1,276,680)
                =============   =============   =============   =============

The assets and liabilities of these operations have been reclassified on the
accompanying consolidated balance sheets to separately identify them as net
assets of discontinued operations. A summary of these net assets is as follows:

                                                                  December 31,
                                                                      1999
                                                                 -------------
         Accounts receivable, net                                $    176,179
         Inventories                                                  428,415
         Prepaid expenses and other current assets                     19,800
         Property and equipment, net                                  139,785
                                                                 -------------
                                                                 $    764,179
                                                                 =============

5. NOTES PAYABLE AND LONG-TERM DEBT:
------------------------------------

Notes payable and long-term debt consists of the following:

                                                   September 30,    December 31,
                                                       2000            1999
                                                   -------------   -------------
      Notes payable - unsecured creditors,
      interest at prime rate, quarterly
      interest only payments beginning October
      1, 1995, principal due October 1, 1999,
      unsecured. Settled in March 2000.            $          -    $    165,298

      Note payable - creditor, interest at 10%,
      monthly interest only payments through
      May 5, 1997, thereafter monthly interest
      and principal payments of $6,384 through
      May 1999, unsecured. Settled in March 2000.             -         127,860

      Note payable - U.S. Treasury, interest
      at 9%, payable in monthly principal and
      interest installments through July 2000.
      Settled in March 2000.                                  -          14,873

      Notes payable - various creditors, interest
      at 9%, payable in various monthly principal
      and interest installments through July 2000.
      Settled in March 2000.                                  -          10,101

      Notes payable - various creditors, interest
      at 9%, payable in various monthly principal
      and interest installments through July 2000.
      Settled in March 2000.                                  -          10,101

                                        9

<PAGE>

                                                   September 30,    December 31,
                                                       2000            1999
                                                   -------------   -------------

      Note payable - creditor, interest at 9%,
      payable in monthly principal and interest
      installments of $1,258 through January 2001,
      collateralized by personal property of the
      Company. Settled in March 2000.                         -          16,670

      Note payable - creditor, interest at 13.5%,
      payable in monthly principal and interest
      installments of $1,552 through May 2000.
      Settled in March 2000.                                  -           7,507

      Note payable - lessor, interest at 10%,
      payable in monthly principal and interest
      installments of $1,775 through  December
      31, 2002, unsecured.                               42,767          55,021

      Note payable - unsecured creditor, interest
      at 8.5%, payable in monthly  principal and
      interest installments of $9,563 through
      April 2001.                                        76,508               -

      Note payable - unsecured creditor, interest
      at 8.3%, payable in monthly principal and
      interest installments of $16,821 through
      November 2000.                                     33,643               -
                                                   -------------   -------------
                                                        152,918         397,330
      Less current maturities                          (127,981)       (353,710)
                                                   -------------   -------------
                                                   $     24,937    $     43,620
                                                   =============   =============


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

         THIS QUARTERLY REPORT ON FORM 10-Q (THE "REPORT"), INCLUDING THE
DISCLOSURES BELOW, CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES. WHEN USED HEREIN, THE TERMS "ANTICIPATES,"
"EXPECTS," "ESTIMATES," "BELIEVES" AND SIMILAR EXPRESSIONS, AS THEY RELATE TO US
OR OUR MANAGEMENT, ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS.
FORWARD-LOOKING STATEMENTS IN THIS REPORT OR HEREAFTER INCLUDED IN OTHER
PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION"), REPORTS TO THE STOCKHOLDERS OF PHOTOMEDEX, INC., A DELAWARE
CORPORATION, (THE "COMPANY" OR "US," "OUR" OR "WE") AND OTHER PUBLICLY AVAILABLE
STATEMENTS ISSUED OR RELEASED BY US INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE OUR ACTUAL RESULTS,
PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON
MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT
RESULTS OF OPERATIONS. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS
SET FORTH HEREIN AND IN SUCH OTHER DOCUMENTS FILED WITH THE COMMISSION, EACH OF
WHICH COULD ADVERSELY AFFECT OUR BUSINESS AND THE ACCURACY OF THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. OUR ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS.

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE
IN THIS REPORT.

                                       10

<PAGE>

OVERVIEW OF BUSINESS OPERATIONS

         We are engaged in the development, manufacturing and marketing of
proprietary excimer laser and fiber optic equipment and techniques directed
toward the treatment of psoriasis and cardiovascular and vascular disease.

         Our former business strategy consisted of the development of a wide
range of laser products using different solid-state lasers. Between 1986 and the
date of this prospectus, we sold over 1,000 lasers, usually on a private label
basis, to other manufacturers. We also considered pursuing a strategy of using
our excimer laser technology for a photolithography product, which was
abandoned. Our former strategies proved to be unsuccessful, in the opinion of
then current management. Although we generated revenues from the sale of our
products, former management believed that we would never be able to operate
profitably in the markets where we were then doing business. We currently
believe that our excimer laser technology provides the basis for reliable
cost-effective systems that will increasingly be used in connection with a
variety of applications. Accordingly, we have discontinued our business
operations related to our former business strategy and are focused solely on
excimer laser products for various medical applications.

         On May 13, 1994, we filed a Petition for Reorganization under Chapter
11 of the Federal Bankruptcy Code. On May 22, 1995, the bankruptcy court
confirmed our Third Amended Plan of Reorganization and subsequently authorized
us to conduct our business operations as a debtor-in-possession subject to the
jurisdiction of the bankruptcy court. Under the terms of the plan, we issued
shares of our common stock to unsecured creditors in exchange for the
forgiveness of certain debt such that, following the issuance of all common
stock to be issued under the plan, the unsecured creditors owned 1,000,000
shares of common stock, representing 20% of the issued and outstanding common
stock. The 7,500,000 shares of common stock owned by our prior existing
stockholders were canceled and reissued into 250,000 shares of common stock,
which represented 5% of the then total issued and outstanding shares of common
stock.

         The bankruptcy plan further provided that Helionetics, Inc., a former
principal stockholder, transfer to us 76.1% of the common stock of Acculase,
Inc., our principal operating subsidiary. Further, during the pendency of the
bankruptcy proceeding, Helionetics contributed $1,000,000 in cash to us, which
funds were utilized for cash payments under the Plan, and Helionetics loaned us
$300,000 to fund the cost of research and development of our excimer lasers,
which we have repaid. Under the plan, Helionetics received 3,750,000 shares of
our common stock, which represented 75% of the then total issued and outstanding
shares of common stock.

         During April 1997, Helionetics filed a voluntary petition of
reorganization for protection under Chapter 11 of the United States Bankruptcy
Code. In connection with its bankruptcy reorganization, Helionetics disposed of
all of its holdings of our common stock. No persons who owned our stock
immediately before the Helionetics reorganization have at present any
controlling interest in us. On September 30, 1997, Pennsylvania Merchant Group
("PMG"), our then existing investment banker, purchased from the Helionetics
bankruptcy estate, a note payable from Acculase to Helionetics in the amount of
$2,159,708, including accrued interest. During October, 1997, PMG sold the note
to us for 800,000 shares of common stock.

         Effective August 31, 2000 , we acquired the remaining shares of common
stock of Acculase, Inc. ("Acculase") from its minority stockholders in exchange
for 300,000 shares of our common stock. Acculase is now our wholly-owned
subsidiary.

         Acculase was formed in 1985 for the purpose of commercializing products
that utilize its proprietary excimer laser and fiber optic technologies.
Acculase has focused primarily on the development of medical products for the
treatment of coronary heart disease.

                                       11
<PAGE>

         The Acculase excimer laser power source was developed to perform a
variety of material processing applications. The Acculase overall system,
designated the pulsed excimer laser, was approved by the United States Food and
Drug Administration under an investigational device exemption for use in the
treatment of occlusive coronary artery disease, as an adjunct to coronary artery
bypass grant surgery. Acculase chose not to pursue completion of the exemption
due to the lack of funds to pay the costs of, and to recruit patients into, the
necessary studies.

         In connection with our current business plan, our initial medical
applications for our excimer laser technology are intended to be used in the
treatment of psoriasis and cardiovascular disease.

         Between March 1998 and November 1999, we entered into five clinical
trial agreements with Massachusetts General Hospital to compare the effects of
excimer laser light using our excimer laser technology to the current
Ultraviolet "B" treatment being used to treat psoriasis and other skin
disorders. We provided prototype laser equipment for pre-clinical dose response
studies. We have agreed to support the clinical trials with research grants of
approximately $954,000, of which we have paid approximately $610,000 as of the
date of this filing. The final data from the first of these clinical trial
agreements was collected in December, 1998, and formed the basis for a 510(k)
submission to the FDA on August 4, 1999. The four remaining studies are ongoing
and have not yet been completed. On January 27, 2000, FDA the FDA issued a
510(k) to us, establishing that our laser psoriasis system has been determined
to be substantially equivalent to currently marketed devices for the treatment
of psoriasis. During the third quarter of 2000, we shipped 21 XTRAC excimer
laser systems to dermatologists for commercial use. As of September 30, 2000, we
have generated no revenues from the psoriasis treatment system. We anticipate
that we will not sell the psoriasis treatment laser equipment to dermatologists,
but will place it in dermatologists' offices and receive a fee for usage.

         In connection with the cardiovascular and vascular uses of the our
excimer laser technology, on August 19, 1997, Acculase and Baxter Healthcare
Corporation ("Baxter") entered into a strategic alliance for the manufacture and
marketing of excimer laser products for an experimental procedure known as
transmyocardial revascularization, or TMR. Acculase granted to Baxter an
exclusive worldwide right and license to manufacture and sell our excimer laser
technology products relating to the treatment of cardiovascular and vascular
disease and the disposable products associated therewith. We agreed to
manufacture the TMR systems purchased by Baxter to the specifications of Baxter
at a schedule of prices based upon the volume of TMR systems purchased by
Baxter. During the second quarter of 2000, Baxter spun off the segment of its
business with which we had these agreements. The new entity is known as Edwards
Lifesciences Corp., to which we have continued to provide services under the
existing agreements.

DISCONTINUED OPERATIONS

         To facilitate our focus on excimer laser technology, we have sold
certain of our non-excimer laser assets, which are related to our business
operations at our Orlando, Florida and Wilmington, Massachusetts facilities. As
of May 4, 2000, we closed the transactions with respect to the sale of certain
assets, including certain patents related to non-excimer lasers related to our
Florida business operations to Lastec, Inc. ("Lastec") for a purchase price of
$375,000. Lastec is unaffiliated with us. Lastec has paid us a deposit of
$37,500, and has executed a secured promissory note in the principal amount of
$337,500, payable in three (3) installments, as follows: (i) $37,500 due on or
before May 20, 2000, (ii) $100,000 due on or before July 14, 2000, and (iii) the
balance plus accrued interest due on or before October 6, 2000. The promissory
note accrues interest at the rate of 8% per annum. The promissory note is
secured by the assets assigned by us to Lastec in connection with the
transaction, and is guaranteed by John Yorke and Raymond Thompson, who are
principals of Lastec. As of the date of this Report, we have not received any
payments due under the secured promissory note. We have filed an action against
Lastec and its principals to collect on the secured promissory note and for
breach of the related asset purchase agreement. See "Legal Proceedings."
Further, we closed the transactions with respect to the sale of certain assets
and the grant of an exclusive license for certain patents related to non-excimer
lasers related to our Massachusetts business operations to Laser Components GmbH
("Laser Components") for a purchase price of $213,000. Laser Components is
unaffiliated with us. In addition, Laser Components assumed our prospective
obligations under our Massachusetts office lease.

                                       12
<PAGE>

         Accordingly, the former operations at our Florida and Massachusetts
facilities are being accounted in our Consolidated Financial Statements included
elsewhere in this Report as "discontinued operations," with a measurement date
of May 4, 2000. The Consolidated Financial Statements reflect the operating
results and balance sheet items of the discontinued operations separately from
continuing operations. We recognized a loss of $277,401 from the sale of these
discontinued operations in the quarter ended June 30, 2000.

         Management's decision to suspend these business operations is
consistent with our new business strategy and has resulted in the discontinuance
of business operations, which generated approximately 76% of our revenues for
1998 and 1999. Revenues from discontinued operations during the nine months
ended September 30, 2000 and 1999 were $188,838 and $906,726, respectively. Loss
from discontinued operations during the nine months ended September 30, 2000 and
1999 was $369,141 and $1,276,680, respectively. At September 30, 2000 and
December 31, 1999, net assets of the discontinued operations were $0 and
$764,179, respectively.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

         We generated revenues of $59,271 during the three months ended
September 30, 2000, which were related to certain upgrades of the laser
equipment previously sold in connection with the Baxter Agreement. We did not
generate any revenues from continuing operations during the three months ended
September 30, 1999. During the third quarter of 2000, we shipped 21 excimer
laser systems to dermatologists for commercial use. As of September 30, 2000, we
have generated no revenues from the psoriasis treatment system.

         There were not any significant costs associated with the upgrades of
the laser equipment sold in connection with the Baxter Agreement.

         Selling, general and administrative expenses during the three months
ended September 30, 2000 increased to $2,588,173 from $1,042,229 during the
three months ended September 30, 1999. The increase primarily related to our
building of our infrastructure to enable us to implement our business plan to
commercialize our psoriasis laser treatment system. Specifically, these
increases from 1999 included increases in consulting and professional fees
related to marketing expenses with respect to our excimer laser systems,
increased salaries and related costs associated with our newly retained
executive officers, increased personnel and overhead expenses with respect to
the infrastructure, which we are building to commercialize our excimer laser
operations.

         Research and development during the three months ended September 30,
2000 was $542,934 compared to $578,440 during the three months ended September
30, 1999. Research and development expenses in the three months ended September
30, 2000 primarily related to the development of our excimer laser systems for
our psoriasis and TMR products. Research and development expenses in the three
months ended September 30, 1999 primarily related to the development of our
psoriasis laser systems and also included expenses related to additional testing
to meet CE Mark and Underwriter's Laboratory ("UL") standards for our excimer
lasers.

         Depreciation and amortization during the three months ended September
30, 2000 decreased to $209,820 from $266,956 during the three months ended
September 30, 1999. These amounts primarily related to the amortization of the
license fee from Baxter and the depreciation of equipment acquired in 1998. As a
result of our purchase of the remaining 23.9% of Acculase, Inc. on August 31,
2000, the 2000 amount includes one month of amortization associated with the
goodwill related to this transaction. The 1999 amount also includes amortization
of goodwill from the initial acquisition of Acculase, Inc. in 1995.

         Net interest income during the three months ended September 30, 2000
was $178,668, as compared to interest expense during the three months ended
September 30, 1999 of $77,952. Net interest income during the three months ended
September 30, 2000 primarily related to interest earned on invested cash
balances from the proceeds of private placements of our securities. Net interest
expense during the three months ended September 30, 1999 primarily related to
interest charges associated with our note payables and long-term debt, which
were repaid in the first quarter of 2000.

                                       13
<PAGE>

         Other income during the three months ended September 30, 2000 was
$18,104 as compared to $49,101 for the three months ended September 30, 1999.

         As a result of the foregoing, we incurred a net loss of $3,084,884
during the three months ended September 30, 2000, as compared to a net loss of
$2,588,542 during the three months ended September 30, 1999. We incurred a loss
from continuing operations of $3,084,884 during the three months ended September
30, 2000, as compared to a loss from continuing operations of $1,916,476 during
the three months ended September 30, 1999.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

         We generated revenues of $629,271 during the nine months ended
September 30, 2000, which were related to the sale of laser equipment in
connection with the Baxter Agreement. We did not generate any revenues from
continuing operations during the nine months ended September 30, 1999. During
the third quarter of 2000, we shipped 21 excimer laser systems to dermatologists
for commercial use. As of September 30, 2000, we have generated no revenues from
the psoriasis treatment system.

         Cost of revenues during the nine months ended September 30, 2000
increased to $325,000 from $0 during the nine months ended September 30, 1999,
due to the costs of the laser equipment sold in connection with the Baxter
Agreement.

         Selling, general and administrative expenses during the nine months
ended September 30, 2000 increased to $7,103,505 from $2,072,699 during the nine
months ended September 30, 1999. Included in selling, general and administrative
expenses for the nine months ended September 30, 2000 were $808,766 related to a
charge associated with the acceleration of vesting of certain options granted to
the Chairman of our Scientific Advisory Board, as well was $279,101 related to
charges associated with the granting of options to certain of our outside
consultants, including certain other members of our Scientific Advisory Board.
Excluding this charge, the increase primarily related to our building of our
infrastructure to enable us to implement our business plan to commercialize our
psoriasis laser treatment system. Specifically, these increases from 1999
included increases in consulting and professional fees related to marketing
expenses with respect to our excimer laser systems, increased salaries and
related costs associated with our newly retained executive officers, increased
personnel and overhead expenses with respect to the infrastructure, which we are
building to commercialize our excimer laser operations.

         Research and development during the nine months ended September 30,
2000 increased to $1,970,564 from $1,176,233 during the nine months ended
September 30, 1999. This increase primarily related to the increased amount of
funds available for research expenses during 2000. Research and development
expenses in the nine months ended September 30, 2000 primarily related to the
development of our excimer laser systems for our psoriasis and TMR products.
Research and development expenses in the nine months ended September 30, 1999
primarily related to the development of our psoriasis laser systems and also
included expenses related to additional testing to meet CE Mark and
Underwriter's Laboratory ("UL") standards for our excimer lasers.

         Depreciation and amortization during the nine months ended September
30, 2000 decreased to $491,824 from $792,856 during the nine months ended
September 30, 1999. These amounts primarily related to the amortization of the
license fee from Baxter and the depreciation of equipment acquired in 1998. As a
result of our purchase of the remaining 23.9% of Acculase, Inc. on August 31,
2000, the 2000 amount includes one month of amortization associated with the
goodwill related to this transaction. The 1999 amount also includes amortization
of goodwill from the initial acquisition of Acculase, Inc. in 1995.

                                       14
<PAGE>

         Net interest income during the nine months ended September 30, 2000 was
$445,653, as compared to net interest expense during the nine months ended
September 30, 1999 of $1,757,581. Net interest income during the nine months
ended September 30, 2000 primarily related to interest earned on invested cash
balances from the proceeds of private placements of our securities. Net interest
expense during the nine months ended September 30, 1999 primarily related to
interest charges associated with the recognition of a beneficial conversion
feature on certain of our then outstanding convertible notes payable, as well as
our various notes payable and long-term debt, which were repaid in the first
quarter of 2000.

         Other income during the nine months ended September 30, 2000 increased
to $345,366 from $52,915 during the nine months ended September 30, 1999. Other
income for the nine months ended September 30, 2000 primarily related to the
forgiveness of certain payables by certain of our creditors.

         As a result of the foregoing, we incurred a net loss of $9,117,145
during the nine months ended September 30, 2000, as compared to a loss of
$7,023,134 during the nine months ended September 30, 1999. We incurred a loss
from continuing operations of $8,470,603 during the nine months ended September
30, 2000, as compared to a loss from continuing operations of $5,746,454 during
the nine months ended September 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         We have historically financed our operations through the use of working
capital provided from loans and equity and debt financing.

         Due to our limited financial resources, our strategy changed in 1997 to
focus our efforts on our excimer laser technology and expertise in order to
develop a broad base of excimer laser and excimer laser delivery products for
both medical and non-medical applications.

         From September, 1997 through March, 2000, we issued certain securities,
including shares of our common stock and other derivative securities convertible
or exercisable into shares of common stock, in order to finance our business
operations. All of the shares of common stock and the shares of common stock
underlying such derivative securities have been registered in a registration
statement dated May 12, 2000.

         As of March 16, 2000, we completed a financing to ten (10)
institutional investors of an aggregate of 1,409,092 shares of common stock at a
purchase price of $11.00 per share, resulting in aggregate gross proceeds to us
of approximately $15,500,000. The market price of the common stock on the date
that the transaction was negotiated was $13.50 and on the closing date of the
transaction was approximately $15.88. We paid ING Barings LLC a commission of 6%
of the gross proceeds, or approximately $930,000. We intend to use and have used
the proceeds of this financing to pay for the marketing of our products
(including our psoriasis treatment products) and research and development
expenses, and to use as working capital.

         At September 30, 2000, the ratio of current assets to current
liabilities was 5.0 to 1.00 compared to 1.3 to 1.00 at December 31, 1999. As of
September 30, 2000, we had $10,239,631 of working capital.

         Cash and cash equivalents were $11,045,274, as of September, 2000, as
compared to $4,535,557, as of September 30, 2000 and 1999. This increase was
primarily attributable to the receipt of $14,259,491 in net cash proceeds from
the March 16, 2000 financing. Subsequent to September 30, 2000, certain of our
warrant and option holders exercised warrants and options to purchase
approximately 480,000 shares of our common stock and we received approximately
$2,200,000 in proceeds. We believe that our existing cash balance will be
sufficient to meet our cash requirements for at least the next 9 to 12 months.
However, depending upon our rate of growth and other operating factors, we may
require additional equity or debt financing to meet our working capital
requirements or capital expenditure needs. There can be no assurance that
additional financing, if needed, will be available when required or, if
available, on terms satisfactory to us.

                                       15
<PAGE>

         As of September 30, 2000, we had borrowings in the aggregate amount of
$152,918. December 31, 1999, we had borrowings in the aggregate amount of
$397,330. The decrease in long-term borrowings relates to the repayment of
long-term obligations from the proceeds of private placements of our securities.

         In March 2000, we paid $950,000 to the landlord for our Florida
facility, and $700,000 to CSC Healthcare Inc., to settle certain disputes
between us and such other parties. We paid these amounts from the proceeds of a
financing in March 2000.

         Net cash used in operating activities was $9,255,357 and $3,843,190 for
the nine months ended September 30, 2000 and 1999, respectively. Net cash used
in operating activities during the nine months ended September 30, 2000 and 1999
primarily consisted of net losses, decreases in net current liabilities (2000
only), offset by depreciation and amortization, increases in interest related to
the conversion features of our convertible notes and amortization of certain
related issuance costs (1999 only), and the payment in our securities (including
common stock, options and warrants) of fees for services to consultants and the
acceleration of stock options issued to employees and consultants.

         Net cash used in investing activities was $1,376,031 and $36,988 for
the nine months ended September 30, 2000 and 1999, respectively. In the nine
months ended September 30, 2000, we utilized $206,423 to acquire equipment for
our excimer laser business operations. We also used $1,420,108 associated with
the construction of our psoriais treatment lasers. We received proceeds of
$250,500 from the sale of certain assets related to our discontinued Florida and
Massachusetts operations. In the nine months ended September 30, 1999, we
utilized $36,988 to purchase equipment and leasehold improvements to support our
excimer laser operations.

         Net cash provided by financing activities was $17,141,105 and
$10,325,144 during the nine months ended September 30, 2000 and 1999,
respectively. In the nine months ended September 30, 2000, we received
$14,259,491 from the net proceeds of the sale of 1,409,092 shares of common
stock in connection with the March 16, 2000 Financing, $136,072 from the
issuance of notes payable, $2,333,690 from the exercise of stock options and
$792,336 from the exercise of warrants, which was offset by the utilization of
$380,484 for the payment of certain debts.

         In the nine months ended September 30, 1999, we received $8,540,544 in
proceeds from the issuance of common stock, $2,398,750 in proceeds from the
offering of the convertible notes and $86,485 from the proceeds of certain notes
payable, which was offset by the utilization of $473,213 for the payment of
certain debts, $72,162 for the payment of certain related party notes payable
and $166,600 for certain costs related to the issuance of the convertible notes
and certain other securities.

         Our ability to expand business operations is currently dependent on
financing from external sources. There can be no assurance that changes in our
manufacturing and marketing research and development plans or other changes
affecting our operating expenses and business strategy will not result in the
expenditure of such resources before such time or that we will be able to
develop profitable operations prior to such date, or at all, or that we will not
require additional financing at or prior to such time in order to continue
operations. There can be no assurance that additional capital will be available
on terms favorable to us, if at all. To the extent that additional capital is
raised through the sale of additional equity or convertible debt securities, the
issuance of such securities could result in additional dilution to our
stockholders. Moreover, our cash requirements may vary materially from those now
planned because of results of marketing, product testing, changes in the focus
and direction of our marketing programs, competitive and technological advances,
the level of working capital required to sustain our planned growth, litigation,
operating results, including the extent and duration of operating losses, and
other factors. In the event that we experience the need for additional capital,
and are not able to generate capital from financing sources or from future
operations, management may be required to modify, suspend or discontinue our
business plan.

                                       16
<PAGE>


IMPACT OF INFLATION

         We have not operated in a highly inflationary period, and our
management does not believe that inflation has had a material effect on sales or
expenses.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June, 1998, the Financial Accounting Standards Board ("FASB")
recently issued Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivatives, including
certain derivative instruments embedded in other contacts and for hedging
activities, and is effective for all fiscal years beginning after June 15, 2000.
Management believes that the adoption of SFAS No. 133 will have no impact on our
operating results or financial position.

         In December 1999, the Commission issued Staff Accounting Bulletin No.
101, "Revenue Recognition in Financial Statements" ("SAB No. 101"). SAB No. 101
summarizes certain of the Staff's views in applying generally accepted
accounting principles to recognition, presentation and disclosure of revenue in
financial statements. Implementation of SAB No. 101 is required no later than
the fourth quarter of fiscal years beginning after December 15, 1999. We have
determined that our accounting policies for revenue recognition are currently in
compliance with the provisions of SAB No. 101.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

         None.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         We are not currently exposed to market risks due to changes in interest
rates and foreign currency rates and therefore, we do not use derivative
financial instruments to address risk management issues in connection with
changes in interest rates and foreign currency rates.



                                       17

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         LITIGATION WITH SURGILIGHT, INC. AND TIMOTHY J. SHEA. On or about June
20, 2000, the Company filed a Complaint for Misappropriation of Trade Secrets,
Breach of Confidentiality Agreement and Breach of Fiduciary Duty against
SurgiLight, Inc. ("SurgiLight") and Timothy J. Shea ("Shea") in the Circuit
Court of the Tenth Judicial Circuit in and for Orange County, Florida. The
Complaint alleges that SurgiLight and Shea have unlawfully misappropriated and
used trade secrets and other confidential information of the Company with
respect to the Excimer Laser Phototherapy System AL 7000 for the treatment of
psoriasis. The Complaint alleges that Shea obtained this information when he was
an employee and subject to confidentiality and employment agreements. The
Complaint further alleges that SurgiLight hired Shea to oversee its corporate
operations, clinical research and FDA regulatory submissions as part of a common
plan or scheme between SurgiLight and Shea to pirate and use the Company's trade
secrets and confidential information. Additionally, the Complaint alleges that
SurgiLight and Shea used the Company's trade secrets and confidential
information to develop, manufacture and/or market an excimer laser for the
treatment of psoriasis known as the EX-308UV Laser, and to prepare and submit a
section 510(k) application for the approval of the EX-308UV Laser to the FDA.
The Complaint seeks temporary and permanent injunctive relief and damages.
SurgiLight and Shea filed a motion to dismiss, which was granted in part with
leave to amend. After the Amended Complaint was filed, SurgiLight and Shea filed
an answer, in which they deny the substantive allegations in the Amended
Complaint. Additionally, Shea has filed a counter-claim against the Company
alleging claims for unused vacation and certain medical benefits, each in an
unspecified amount. The Company intends to file a response denying liability to
Shea for these claims. The parties have commenced discovery in the proceeding.
Based on the information currently available, the Company is unable to evaluate
the likelihood of an unfavorable outcome, if any, to the Company.

         LITIGATION WITH LASTEC, INC., JOHN YORKE AND RAYMOND "TIM" THOMPSON. On
June 7, 2000, the Company filed a Complaint against Lastec, Inc. ("Lastec"),
John Yorke ("Yorke") and Raymond "Tim" Thompson ("Thompson") in the Circuit
Court of the Ninth Judicial Circuit in and for Orange County, Florida, to
collect the balance of $337,500 in principal, plus interest, due on a promissory
note and guaranty. The promissory note and guaranty were given as a portion of
the purchase price for assets purchased by Lastec from the Company with respect
to its prior business operations in Orlando, Florida. Lastec is the obligor on
the promissory note. Yorke and Thompson signed a guaranty of the note. The
Complaint alleges that Lastec failed to make an installment payment of $37,500
due on the note on May 20, 2000, and that the full amount is therefore due and
payable on the note and the guaranty. The Complaint seeks to enforce the
promissory note and guaranty, and also includes claims for breach of the
security agreement, which secures the note, and repossessing the assets. The
defendants have filed an answer denying liability. The Company is advised that
if the matter is not settled, the defendants will file an amended answer and
cross-complaint claiming damages for the Company's alleged breach of the
agreement and that the defendants have repudiated the agreement based thereon.
Based on the information currently available, the Company is unable to evaluate
the likelihood of an unfavorable outcome, if any, to the Company.

         CLAIM BY LANDLORD FOR FORMER FLORIDA FACILITY. The Company received a
letter, dated October 20, 2000, from the counsel for the Company's former
landlord for its former Florida facility, which asserts that the Company is
liable for approximately $77,000 of unpaid rent for the subject premises for the
period covering June, 2000 through approximately October, 2000. The letter also
purports to serve as an eviction notice for the premises. The Company is not
aware that any action has been filed or served by the former landlord in
connection with this letter. The Company believes that it has valid defenses to
the claims set forth in the letter, if any proceeding is brought against the
Company related to such claims.


                                       18
<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

INCREASE IN CAPITAL

         On August 8, 2000, pursuant to a vote of the Company's stockholders at
the Annual Meeting on July 18, 2000, the Company amended its Certificate of
Incorporation to increase its authorized capital from 25,000,000 to 50,000,000
shares of Common Stock, par value $0.01 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

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

         On July 18, 2000, at the Company's Annual Meeting of Stockholders, the
Company's stockholders adopted the following resolutions by the votes set forth
below:

         1.  The Company's six directors were re-elected by the following votes:

         Director                Votes For    Votes Against    Votes Withheld
         --------               ----------    -------------    --------------
         Alex Charlton          10,687,596          0               2,059
         Jeffrey O'Donnell      10,687,596          0               2,059
         Alan Novak             10,687,588          0               2,067
         John J. McAtee, Jr.    10,687,596          0               2,059
         Samuel Navarro         10,687,596          0               2,059
         Richard DePiano        10,687,596          0               2,059

         2. The Company's Restated Certificate of Incorporation and revised
Bylaws were approved with 10,649,255 votes for, 29,684 against and 10,716
abstaining.

         3. The Company's Certificate of Incorporation was amended to increase
the Company's authorized capital to 50,000,000 shares of Common Stock, with
10,532,125 votes for, 150,879 against and 6,033 abstaining.

         4. The Company's change of name to PhotoMedex, Inc. was approved by a
vote of 10,675,551 for, 8,071 against and 6,033 abstaining.

         5. The Company's adoption of its 2000 Stock Option Plan was approved by
a vote of 3,574,753 for, 270,732 against and 199,104 abstaining.

         6. The Company's adoption of its 2000 Non-Employee Director Stock
Option Plan was approved by a vote of 3,60,495 for, 355,614 against and 79,480
abstaining.


                                       19
<PAGE>

ITEM 5. OTHER INFORMATION

         Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A.       Exhibits

27       Financial Data Schedule

B.       Reports on Form 8-K

         None.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The Company is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549; at its New York
Regional Office, Suite 1300, 7 World Trade Center, New York, New York 10048; and
its Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661,and copies of such materials can be obtained from the Public
Reference Section of the Commission at its principal office in Washington, D.C.,
at prescribed rates. In addition, such materials may be accessed electronically
at the Commission's site on the World Wide Web, located at http://www.sec.gov.
The Company intends to furnish its stockholders with annual reports containing
audited financial statements and such other periodic reports as the Company may
determine to be appropriate or as may be required by law.


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<PAGE>


                                   SIGNATURES

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

                                             PHOTOMEDEX, INC.


Date: November 14, 2000               By: /s/ Jeffrey F. O'Donnell
                                         -------------------------
                                           Jeffrey F. O'Donnell
                                           President and Chief Executive Officer


Date: November 14, 2000               By: /s/ Dennis McGrath
                                         -------------------
                                           Dennis McGrath
                                           Chief Financial Officer







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