FORM 10-KSB/A-5
    

                U.S. SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON,  D.C. 20549
(Mark one)
      [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                For fiscal year ended December 31, 1996
                                  OR
   [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

              For the transition period from          to
                                             --------    -------
                   Commission file number:   0-22340

                  PALOMAR MEDICAL TECHNOLOGIES, INC.
                  ----------------------------------
        (Exact name of small business issuer as specified in its charter)
<TABLE>
<S>                    <C>                                           <C>         <C>

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

   
        45 Hartwell Avenue, Lexington, Massachusetts 02421-3102
        -------------------------------------------------------
               (Address of principal executive offices)

                             (781)676-7300
                             -------------
           (Issuer's telephone number, including area code)
    

Securities registered pursuant to Section 12 (b) of the Act:

                                                     Name of each
                                                     exchange on
     Title of each class                           which registered
     -------------------                           ----------------
       Not Applicable                               Not Applicable

     Securities registered pursuant to Section 12 (g) of the Act:
     ------------------------------------------------------------
                          Common Stock, $.01 par value

         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 report(s), and (2) has been subject to such
filing requirements for the past 90 days).   Yes   X    No
                                                 ----      ----

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

         The issuer's  revenues for its fiscal year ended December 31, 1996 were
$70,098,443.

         As of March 20, 1997, 30,945,824 shares of Common Stock, $.01 par value
per share,  and 16,000  shares of Preferred  Stock $.01 par value per share were
outstanding.  The aggregate market value, held by  non-affiliates,  of shares of
the  Common  Stock,  based  upon the  average of the bid and ask prices for such
stock on that date was approximately $195,345,514.

      Transitional Small Business Disclosure Format:        Yes    X   No
                                                       ----      ----
<PAGE>
   

                  PALOMAR MEDICAL TECHNOLOGIES, INC.

                                 INDEX
PART II
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<S>  <C>                                                                         <C>

     Item 5.  Market for Common Equity and Related Stockholder Matters           P. 1

SIGNATURES                                                                       P. 4
</TABLE>

    

<PAGE>

                                PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         The  company's  common  stock  is  currently  traded  on  the  National
Association of Securities Dealers Automated  Quotation System (NASDAQ) under the
symbol PMTI.  The following  table sets forth the high and low bid prices quoted
on NASDAQ  for the  Common  Stock for the  periods  indicated.  Such  quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
do not necessarily represent actual transactions.

                                                   Fiscal Year Ended
                                                   December 31, 1995
                                                   -----------------
                                                  High            Low
                                                  ----            ---
              Quarter Ended March 31, 1995       3 5/8           2 1/2
              Quarter Ended June 30, 1995        2 5/8           1 15/16
              Quarter Ended Sept. 30, 1995       6 11/16         1 7/8
              Quarter Ended Dec. 31, 1995        7 1/8           4 7/16

                                                   Fiscal Year Ended
                                                   December 31, 1996
                                                   -----------------
                                                  High            Low
                                                  ----            ---
              Quarter Ended March 31, 1996       13 1/8          5
              Quarter Ended June 30, 1996        16 3/8          9 1/8
              Quarter Ended Sept. 30, 1996       14 5/8          7 7/8
              Quarter Ended Dec. 31, 1996         9 1/8          6

         As of March 24,  1997,  the Company had 600 holders of record of common
stock. This does not include holdings in street or nominee names.

         The Company has not paid dividends to its common stockholders since its
inception and does not plan to pay dividends to its common  stockholders  in the
foreseeable  future.  The Company  intends to retain any earnings to finance the
growth of the Company.

         Private Placement of Common Stock
         ---------------------------------

         Pursuant to Regulation S under the Act, the Company sold 365,533 shares
of common stock and 182,765  warrants to purchase  common stock to a total of 23
overseas  individuals  and  corporations  on February  1, 1996 for an  aggregate
purchase price of  $1,783,800.  The warrants were issued at a price of $5.00 per
share,  are  immediately  exercisable and expire on February 1, 1999. The common
stock, and common stock  underlying the warrants,  were registered on a Form S-3
filed on February 6, 1996.

         Pursuant to  Regulation D and Section 4(2) of the Act, the Company sold
a total of 165,810  shares of common  stock on March 29,  1996 for an  aggregate
purchase price of $1,364,842. 114,810 shares of common stock were sold to Arista
High-Tech Growth Fund, Ltd. for an aggregate purchase price of $936,442;  45,000
shares of common  stock  were sold to Histon  Financial  Services,  Inc.  for an
aggregate  purchase price of $378,000 and 6,000 shares of common stock were sold
to Berkshire  International Finance, Inc. Pension Plan for an aggregate purchase
price of $50,400.  The common stock was  registered  on a Form S-3 filed on June
28, 1996.

         Pursuant to  Regulation D and Section 4(2) of the Act, the Company sold
a total of 44,862 shares of common stock on April 15, 1996 to Egger & Co. for an
aggregate purchase price of $450,000.  The common stock was registered on a Form
S-3 filed on June 28, 1996.

     Pursuant to Section 4(2) of the Act,  the Company  sold  600,000  shares of
common  stock on  December  27,  1996 to  Finmanagment,  Inc.  for an  aggregate
purchase  price of  $3,150,000.  In addition to the common  stock,  Finmanagment


                                       1
<PAGE>


received  420,000  net  warrants to  purchase  common  stock at $7.50 per share,
300,000 net warrants to purchase common stock at $9.50 per share and 180,000 net
warrants to purchase  common  stock at $11.50 per share.  The net  warrants  are
subject to a cashless exercise for common stock in which the number of shares of
common  stock  issuable  upon such  cashless  exercise  shall be  determined  by
multiplying  (1) the difference  between (a) the closing bid price of the common
stock on the day prior to the date exercised, as reported by NASDAQ, and (b) the
exercise price, by (2) the number of net warrant shares;  divided by the closing
bid price of the common  stock on the day prior to the date  exercised.  The net
warrants are exercisable immediately and expire on February 28, 1997. The common
stock, and common stock  underlying the warrants,  were registered on a Form S-3
filed on February 4, 1997.

         Convertible Debentures
         ----------------------

         Pursuant to  Regulation  S of the Act,  the Company sold 9,675 units of
convertible debentures to a total of 11 overseas individuals on July 3, 1996 for
an aggregate  purchase price of $7,669,441.  Each unit consists of a convertible
debenture  due July 3, 2003  denominated  in 1,000 Swiss Francs and a warrant to
purchase  24 shares of the  Company's  common  stock at $16.50  per  share.  The
warrants are  immediately  exercisable  and expire on June 27, 2003.  The common
stock  underlying the debentures and warrants was registered on a Form S-3 filed
on March 4, 1997.

         Pursuant  to  Section  4(2) of the  Act,  the  Company  sold a total of
$5,000,000  4.5%  Convertible  Debentures on October 17, 1996 to Cameron Capital
Ltd. and Wood Gundy London Limited. The debentures, due October 17, 2001, may be
converted  at any time after 75 days from  issuance  at the option of the holder
into shares of the Company's common stock at a price equal to 85% of the average
trailing  five day bid  price  from the date of  conversion.  The  common  stock
underlying  the  debentures  was  registered  on a Form S-3 filed on February 4,
1997.

         Pursuant  to  Section  4(2) of the  Act,  the  Company  sold a total of
$6,000,000  5%  Convertible  Debentures  as  follows:  $3,000,000  to High  Risk
Opportunities  Hub Fund Ltd. on  December  31,  1996;  $2,000,000  to  Berckeley
Investment  Group,  Ltd. on  December  31,  1996;  and  $1,000,000  to High Risk
Opportunities  Hub Fund Ltd. on January 13, 1997. The  debentures,  due December
31, 2001, December 31, 2001 and January 13, 2002, respectively,  are convertible
into shares of common  stock at a  conversion  price equal to 85% of the average
trailing 10 day bid price from the date of  conversion,  provided that in any 30
day period the holder of these  debentures  may convert no more than 33% (or 34%
in the last 30 day period  available  for  conversion)  of the  debentures.  The
common stock  underlying  the  debentures  was registered on a Form S-3 filed on
March 4, 1997.

         Preferred Stock
         ---------------

         Pursuant to Section  4(2) of the Act,  the Company sold 6,000 shares of
Series D  Convertible  Preferred  Stock on February  14,  1996 to the  Travelers
Insurance  Company for an aggregate  purchase  price of  $6,000,000.  All of the
Series D Convertible  Preferred  Stock was converted  into  1,116,918  shares of
common stock  (including  accrued  dividends of $342,092 and accrued interest of
$9,183) as of December 31,  1996.  In  connection  with the issuance of Series D
Convertible  Preferred  Stock the Company  issued  600,000  warrants to purchase
common  stock at a price of $7.50 per share,  and  200,000  warrants to purchase
common stock at a price of $8.00 per share, both of which expire on February 14,
2001 and are immediately exercisable.  The common stock underlying the Preferred
Stock and the warrants was registered on a Form S-3 filed on June 28, 1996.

         Pursuant to Section 4(2) of the Act, the Company sold 10,000  shares of
Series E Convertible  Preferred  Stock on April 17, 1996 to GFL  Advantage  Fund
Limited for an  aggregate  purchase  price of  $10,000,000.  All of the Series E
Preferred Stock was converted into 1,381,506  shares of common stock  (including
accrued  dividends of $326,174 and accrued interest of $7,536) as of January 28,
1997. In connection with the issuance of Series E Convertible  Preferred  Stock,
the Company issued 304,259  warrants to purchase  common stock at a price of $15
per share, which expire on April 17, 2001 and are immediately  exercisable.  The
common stock underlying the Preferred Stock and the warrants was registered on a
Form S-3 filed on June 28, 1996.

         Pursuant to Section  4(2) of the Act,  the Company sold 6,000 shares of
Series F Convertible Preferred Stock on July 12, 1996 to the Travelers Insurance
Company for an aggregate purchase price of $10,000,000. The Series F Convertible
Preferred  Stock,  together  with  any  accrued  but  unpaid  dividends,  may be
converted  into common stock at 80% of the daily  


                                       2
<PAGE>

average closing price of the common stock on the ten trading days preceding such
conversion,  but in no event  less  than  $7.00 or more  than  $16.00.  Series F
Preferred  stock may be redeemed  at any time,  with no less than 10 days and no
more than 30 days notice or when the stock price exceeds $16.50 per share, at an
amount  equal to the  amount  of  liquidation  preference  determined  as of the
applicable  redemption  date.  In  connection  with  the  issuance  of  Series F
Convertible  Preferred  Stock,  the Company issued 500,000  warrants to purchase
common stock at a price of $11 per share,  which expire on July 12, 2001 and are
immediately exercisable. The common stock underlying the Preferred Stock and the
warrants was registered on a Form S-3 filed on August 23, 1996.

         Pursuant to Section 4(2) of the Act, the Company sold 10,000  shares of
Series G  Convertible  Preferred  Stock to Genesee Fund Limited on September 26,
1996 for an  aggregate  purchase  price of  $10,000,000.  Genesee  Fund  Limited
subsequently  transferred 5,000 of its shares of Series G Convertible  Preferred
Stock to GFL Advantage  Fund and the remaining  5,000 shares to GFL  Performance
Fund. The Series G Convertible  Preferred  Stock,  together with any accrued but
unpaid  dividends,  may be  converted  into  common  stock at 85% of the average
closing  bid  price  for  the  three  trading  days  immediately  preceding  the
conversion  date, but in no event at less than $6.00 or more than $11.50 for the
5,000 shares of Series G Convertible  Preferred Stock held by GFL Advantage Fund
and no less  than  $6.00 or more than  $8.00  for the  5,000  shares of Series G
Convertible  Preferred  Stock held by GFL  Performance  Fund.  The  warrants are
immediately  exercisable  and expire on December 31, 2001.  Series G Convertible
Preferred  Stock may be redeemed  at any time,  with no less than 10 days and no
more than 20 days  notice,  at an amount  equal to the sum of (a) the  amount of
liquidation  preference determined as of the applicable redemption date plus (b)
$176.50.  In  connection  with the  issuance of Series G  Convertible  Preferred
Stock,  the Company issued 323,799  warrants to purchase common stock at a price
of $12 per share,  which expire on September  27, 2001,  and 50,000  warrants to
purchase common stock at a price of $6.5625 per share,  which expire on December
31,  2001 and are  immediately  exercisable.  The common  stock  underlying  the
Preferred  Stock and the warrants was registered on a Form S-3 filed on February
4, 1997.

         Stockholder Services
         --------------------

         Stockholders  of the Company who desire  information  about the Company
are invited to contact John Ingoldsby,  Director of Investor Relations,  Palomar
Medical Technologies,  Inc., 66 Cherry Hill Drive, Beverly, Massachusetts 01915,
508-921-9300,  e-mail at jingoldsby@palmed.com.  A mailing list is maintained to
enable  stockholders  whose stock is held in street name,  and other  interested
individuals,  to receive quarterly reports, annual reports and press releases as
quickly as possible.  (Quarterly  reports and press  releases are also available
through  the  Internet  at the  Company's  home  page  on  the  World  Wide  Web
(http://www.palmed.com)).

   
         Conversions of Preferred Stock and Debentures
         ---------------------------------------------

         During the year ended December 31, 1996, the following  securities were
converted by the accredited  investor  unaffiliated  third-party holders for the
number of shares of common stock indicated:

                                                Number          Number of
          Type of Security                     of Shares          Shares
                                               ---------       Common Stock
                                                                  Issued
                                                                  ------

     Preferred Stock Class A Series I           1,960             468,700
     Preferred Stock Class A Series II          4,400           1,058,542
     Preferred Stock Series A                   2,500             394,110
     Preferred Stock Series B                   2,500             394,601
     Preferred Stock Series D                   6,000           1,116,918
     Preferred Stock Series E                   7,849           1,048,647
     Debenture 5% Due 10/26/97                   N/A               34,615

      The  Company  received  no  proceeds  in  connection  with  any  of  these
conversions.
    


                                       3
<PAGE>


                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1934,  the
Registrant  certifies  that it has caused this Report to be signed on its behalf
by the  undersigned,  thereunto duly  authorized,  in the Town of Beverly in the
Commonwealth of Massachusetts on March 3, 1999.


                                             PALOMAR MEDICAL TECHNOLOGIES, INC.



                                             By:   /s/ Louis P. Valente
                                                 ------------------------------
                                                   Louis P. Valente
                                                   Chief Executive Officer and
                                                   President

         Pursuant to the requirements of the Securities Act of 1934, this Report
has been  signed by the  following  persons on behalf of the  Registrant  in the
capacities and on the dates indicated.


              Name                 Capacity                          Date
              ----                 --------                          ----


/s/ Louis P. Valente
--------------------
Louis P. Valente              President, Chief                    March 3, 1999
                              Executive Officer and 
                              Director
/s/ Joseph P. Caruso
--------------------
Joseph P. Caruso              Chief Financial Officer             March 3, 1999
                              and Treasurer
                              (Principal Financial
                              Officer and Principal 
                              Accounting Officer)

/s/ James G. Martin
-------------------
James G. Martin               Director                            March 3, 1999


/s/ A. Neil Pappalardo
----------------------
A. Neil Pappalardo            Director                            March 3, 1999


-------------------
Nicholas P. Economou          Director                            March 3, 1999