<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C 20549

                                   Form 10-Q

                 QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                                        
For the quarterly period ended April 4, 1998      Commission File number 0-21667


                           PHOTOELECTRON CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)



MASSACHUSETTS                                                  04-3035323
--------------------------------------------------------------------------------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                             Identification No.)


5 FORBES ROAD, LEXINGTON, MASSACHUSETTS                           02173
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                        (Zip code)


                                 (781) 861-2069
--------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

                              ____________________

Check Whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the Registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.  
Yes  X  No
    ---    ---

                              ____________________

7,373,751 shares of Common Stock, $.01 par value, were outstanding as of 
May 11, 1998.
<PAGE>
 
                           PHOTOELECTRON CORPORATION
--------------------------------------------------------------------------------

                         QUARTERLY REPORT ON FORM 10-Q
                       FOR THE PERIOD ENDED APRIL 4, 1998

                               TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
 
PART I - FINANCIAL INFORMATION                                            Page
<S>                                                                     <C>
 
Item 1  Consolidated Financial Statements                                   1
 
           CONSOLIDATED BALANCE SHEETS AT APRIL 4,
              1998 AND JANUARY 3, 1998                                      1
 
           CONSOLIDATED STATEMENTS OF OPERATIONS FOR
              THE THREE MONTHS ENDED APRIL 4, 1998 AND 
              MARCH 29, 1997                                                2
 
           CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
              THE THREE MONTHS ENDED APRIL 4, 1998 AND 
              MARCH 29, 1997                                                3
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       4
 
Item 2  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                5
 
PART II - OTHER INFORMATION
          -----------------
 
Item 2  Changes in Securities and Use of Proceeds                           9
 
Item 6  Exhibits and Reports on Form 8-K                                    9
 
</TABLE>
<PAGE>

                   PHOTOELECTRON CORPORATION AND SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                          CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                April 4, 1998
                                                 (Unaudited)     January 3, 1998
                                                -------------    ---------------
<S>                                             <C>              <C>
                      ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                      $  5,498,295     $  2,286,583
  Inventories                                         511,700          383,051
  Prepaid expenses                                    419,673          413,707
  Investments Held to Maturity                      6,937,680       11,889,356
  Other current assets                                 46,597           29,111
                                                 ------------     ------------
    Total current assets                           13,413,945       15,001,808

PROPERTY AND EQUIPMENT:
  Computer Equipment                                  752,547          684,027
  Lab and production equipment                        668,211          630,472
  Clinical site equipment                             795,476          752,952
  Furniture and fixtures                              150,930          149,513
  Leasehold improvements                              769,878          758,211
                                                 ------------     ------------
PROPERTY, PLANT, EQUIPMENT AND LEASEHOLDS,          3,137,042        2,975,175
  LESS - ACCUMULATED DEPRECIATION AND
  AMORTIZATION                                      1,777,943        1,631,961
                                                 ------------     ------------
                                                    1,359,099        1,343,214
                                                 ------------     ------------
  Other long-term assets                               80,211           80,211
                                                 ------------     ------------
    Total assets                                 $ 14,853,255     $ 16,425,233
                                                 ============     ============

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
  Accounts payable                               $    510,565     $    297,514
  Accrued expenses                                    354,583          398,180
  Accrued payroll and benefits                         88,741           31,977
  Current portion of convertible subordinated
    notes                                                 --               --
  Current portion of obligation under capital
    leases                                                --               --
                                                 ------------     ------------
    Total current liabilities                         953,889          727,671
                                                 ------------     ------------

LONG-TERM DEBT:
  Convertible subordinated notes and other
    advances, net of current portion                1,709,647        1,685,547
                                                 ------------     ------------
SHAREHOLDERS' EQUITY
  Preferred stock, $0.01 par value - 
    Authorized - 7,500,000
    Issued and outstanding - none at 
      April 4, 1998 and January 3, 1998,
      respectively                                        --               --

  Common stock, $0.01 par value -
    Authorized - 15,000,000
    Issued and outstanding 7,368,751, and
      7,362,251 at April 4, 1998 and
      January 3, 1998, respectively                    73,687           73,622

  Capital in excess of par value -
    common stock                                   37,229,379       37,220,144
  Capital in excess of par value -
    preferred stock                                       --               --
  Deferred Compensation                               (17,180)         (17,180)
  Subscription receivable                             (15,831)         (25,583)
  Deficit accumulated during development 
    stage                                         (25,080,336)     (23,238,988)
                                                 ------------     ------------
      Total shareholders' equity                   12,189,719       14,012,015
                                                 ------------     ------------
      Total liabilities and shareholders'
        equity                                   $ 14,853,255     $ 16,425,233 
                                                 ============     ============
</TABLE> 

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


<PAGE>

                   PHOTOELECTRON CORPORATION AND SUBSIDIARY
                        (A DEVELOPMENT STAGE COMPANY)
                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE> 
<CAPTION> 
                                                       Three Months Ended
                                                    -------------------------
                                                     April 4,       March 29,
                                                       1998           1997
                                                    ----------     ----------
                                                           (Unaudited)
<S>                                                 <C>            <C>
Revenues                                             $       --     $   362,849

Cost of Goods Sold                                           --         182,898

Gross Margin                                                 --         179,951

Operating Expenses
  Research and Development expenses                  $ 1,353,725    $   973,393
  Sales, general and administrative expenses             650,710        419,904
                                                     -----------    -----------
  Total operating expenses                             2,004,435      1,393,297
                                                     -----------    -----------

  Operating loss                                      (2,004,435)    (1,213,346)
                                                     -----------    -----------
  Interest income                                        187,193        161,966
  Interest expense                                       (24,106)       (30,100)
                                                     -----------    -----------
  Interest income, net                                   163,087        131,866
                                                     -----------    -----------
  Net loss                                           $(1,841,348)   $(1,081,480)
                                                     ===========    ===========
  Basic and diluted net loss per share               $     (0.25)   $     (0.22)
                                                     ===========    ===========
  Weighted average basic and diluted shares            7,366,180      4,947,741

</TABLE> 

  The accompanying notes are an integral part of these financial statements.
 
<PAGE>
 

                   PHOTOELECTRON CORPORATION AND SUBSIDIARY
                        (A DEVELOPMENT STAGE COMPANY)
                     CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE> 
<CAPTION> 
                                                       Three Months Ended
                                                    -------------------------
                                                     April 4,       March 29,
                                                       1998           1997
                                                    ----------     ----------
                                                           (Unaudited)
<S>                                                 <C>            <C>
Cash flows from operating activities:
  Net loss                                           $(1,841,348)   $(1,081,480)
  Adjustments to reconcile net loss to net 
    cash used in operating activities -
  Depreciation and amortization                          145,982        132,973
  Noncash interest converted to subordinated
    notes                                                 24,100         30,100
  Changes in current accounts -
  Inventories                                           (128,649)        99,849
  Prepaid expenses                                        (5,966)        91,465
  Other current assets                                   (17,486)      (197,754)
  Accounts payable                                       213,051       (159,197)
  Accrued expenses                                        13,167        (90,427)
                                                     -----------    -----------
    Net cash used in operating activities             (1,597,149)    (1,174,471)
                                                     -----------    -----------
Cash flows from investing activities:
  Net Maturities of held to maturity investments       4,951,676            --
  Purchases of equipment and leasehold
    improvements                                        (161,867)      (211,013)
                                                     -----------    -----------
    Net cash used in investing activities              4,789,809       (211,013)
                                                     -----------    -----------
Cash flows from financing activities:
  Proceeds from issuance of common stock                  19,052     17,338,926
                                                     -----------    -----------
    Net cash provided by (used in)
      financing activities                                19,052     17,338,926
                                                     -----------    -----------
Increase (decrease) in cash and cash
  equivalents                                          3,211,712     15,953,442
Cash and cash equivalents, beginning of period         2,286,583      2,537,023
                                                     -----------    -----------
Cash and cash equivalents, end of period             $ 5,498,295    $18,490,465
                                                     ===========    ===========
Cash flows from noncash financing activities:
  Conversion of preferred stock to common stock      $       --     $17,231,386
                                                     ===========    ===========

</TABLE> 

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

<PAGE>
 
                           PHOTOELECTRON CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  UNAUDITED RESULTS - The interim unaudited consolidated financial statements
    contained herein have been prepared in accordance with generally accepted
    accounting principles for interim financial information.  Accordingly, they
    do not include all of the information and footnotes required by generally
    accepted accounting principles for complete financial statements.  In
    management's opinion, the unaudited information includes all adjustments
    (consisting of normal recurring accruals) necessary for a fair presentation
    of the financial position, results of operations, and cash flows for the
    periods presented.  The results of operations for the interim periods shown
    on this report are not necessarily indicative of the results expected for
    the full year.  The interim financial statements should be read in
    conjunction with the financial statements and notes for the year ended
    January 3, 1998 included in the Company's Form 10-K filing with the
    Securities and Exchange Commission.

2.  NET LOSS PER SHARE - During the first quarter of 1998, basic and diluted net
    loss per share were calculated as follows:

<TABLE>
<CAPTION>
                                       April 4, 1998       March 29, 1997
                                    -------------------  -------------------
<S>                                 <C>                  <C>
Basic:                              
     Net loss                              $(1,841,348)         $(1,081,480)
     Weighted average shares                 7,366,180            4,947,741
     Basic net loss per share              $     (0.25)         $     (0.22)
                                    
Diluted:                            
     Net loss                              $(1,841,348)         $(1,081,480)
     Weighted average shares                 7,366,180            4,947,741
     Diluted net loss per share            $     (0.25)         $     (0.22)
</TABLE>

   The computation of diluted earnings per share for April 4, 1998 and March 29,
   1997 exclude the effect of assuming the exercise of certain outstanding stock
   options and the conversion of convertible securities because the effect would
   be anti-dilutive, due to the Company's net loss during the year. As of April
   4, 1998, there were 693,392 of such options outstanding, with exercise prices
   ranging from  $0.40 - $9.00 per share.

3.  COMPREHENSIVE INCOME - During the first quarter of 1998, the Company adopted
    Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
    Comprehensive Income." This pronouncement sets forth requirements for
    disclosure of the Company's comprehensive income and accumulated other
    comprehensive income. There were no items of other comprehensive income
    therefore comprehensive income equals net income.
<PAGE>
 
PART I:  FINANCIAL INFORMATION
ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

OVERVIEW

     Certain statements contained in this Quarterly Report on Form 10-Q,
including, without limitation, statements containing the words "expects,"
"anticipates," "believes" and words of similar import, constitute "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995.  These forward looking statements are subject to various
risks and uncertainties, including those referred to in the Company's
Registration Statement on Form S-1 (Reg. No. 333-14541) and in the Company's
Form 10-K for the fiscal year ended January 3, 1998, that could cause actual
future results and events to differ materially from those currently anticipated.
Readers are cautioned not to place undue reliance on these forward-looking
statements.

     The Company is engaged in the design, development and commercialization of
the Photon Radiosurgery System ("PRS"), a proprietary, therapeutic device for
the treatment of cancerous tumors through the application of radiation directly
into a tumor. To date, the Company has not received any revenue from the sale of
its current PRS model, PRS400, and does not anticipate receiving any significant
revenue from the sale of its products at least until the middle of 1998. The
Company has an accumulated deficit totaling approximately $25.1 million since
its inception and expects to continue to incur losses until such time as its
commercialization efforts yield offsetting revenues.  The Company anticipates
that its research and development, sales, general and administrative and
manufacturing expenses will continue to significantly increase during 1998 as it
pursues the commercialization of the PRS400.

     Based on the results of clinical trials, the Company received, on June 20,
1997, a 510(k) market clearance from the U.S. Food and Drug Administration
("FDA") to market the PRS Model 3 for treatment of intracranial tumors. On
February 9, 1998, the Company submitted to the FDA an application for 510(k)
market clearance of the PRS400, an upgraded version of the PRS Model 3 with
similar radiation output and enhanced safety and user interface systems. The
Company believes that the PRS400 is substantially equivalent to the PRS Model 3
and that 510(k) market clearance of the PRS Model 3 will facilitate 510(k)
market clearance of the PRS400. On April 28, 1998, the FDA requested additional
information on the system software used with the PRS400. The Company believes it
can satisfactorily answer the questions posed by the FDA and intends to furnish
the additional information requested within the allotted 30-day period. The
Company plans to introduce the PRS400 as its first commercial product.

     Clinical trials using the PRS for the treatment of brain tumors are
continuing at sites in Europe and Japan. The Company has received authorization
from the United Kingdom Medical Device Agency to commence intraoperative
clinical breast tumor trials in England. The Company anticipates that the
clinical trials to determine the safety of the PRS for the treatment of breast
cancer will begin in the second quarter of 1998 in England, although there can
be no assurance that clinical trials will begin at that time. Early results from
these trials in England, if 
<PAGE>
 
favorable, will be used to support an application to the FDA to begin human
clinical trials using the PRS for the treatment of breast cancer in the U.S. The
Company has also recently obtained approval from the FDA of an Investigation
Device Exemption for use of the PRS in the treatment of certain skin cancer
tumors (basal cell and squamous cell carcinomas and Kaposi's sarcoma). The
Company anticipates starting this clinical study in the second quarter of 1998.

     Before medical devices such as the PRS400 can be marketed in the U.S.,
approval or marketing clearance by the FDA is required. Upon obtaining all
necessary regulatory approvals, the Company intends to begin commercial sale of
the PRS400. The Company will consider use of the PRS400 for other potential
applications on an ongoing basis. In order to support such commercialization the
Company will experience significant working capital and financing needs.

     If all regulatory clearances are obtained, the Company intends to market
and distribute its products through a combination of collaborative relationships
and in-house sales and marketing resources.  The Company has developed and will
continue to develop strategic alliances with companies that have established
distribution channels in domestic and international markets.  As part of the
manufacturing process, the Company intends to sub-contract the fabrication of
most of its electrical and mechanical components. On September 22, 1997, the
Company received ISO 9001 registration for operating a quality management
system. On May 2, 1998, following successful assessment by the British Standards
Institution, the Company was certified as compliant with Annex II of the
European Union Medical Device Directive. The Company may now self-certify and
affix the CE Mark to the Company's products, subject to ongoing compliance with
the Medical Device Directive. The Company also expects to demonstrate compliance
to Good Manufacturing Practice standards as required by the FDA.


RESULTS OF OPERATIONS

     Revenue. The Company had revenues of $0 in the first three months of 1998,
as compared with $362,849 in the first three months of 1997. The 1997 revenue is
the result of a sale of the PRS to Toshiba Medical Company for the use in
Japanese clinical trials. This reflects the agreement that the Company and
Toshiba entered into relating to clinical trials and to future product
distribution arrangements in that country. This decrease is a reflection of the
Company's plan not to market the PRS Model 3. It is the Company's intention to
market the PRS400 upon receipt of a 510(k) clearance from the FDA.

     Research and development expenses. The Company's research and development
expenses increased by $380,332 from $973,393 in the first three months of 1997
to $1,353,725 in the first three months of 1998. The principal cost in research
and development was the continuing development of the PRS400. This increase also
reflects significant increases in activity in the Company's clinical trial
efforts, filing a 510(k) application with the FDA, and breast cancer research
and development program. Other factors contributing to the increase in research
and development expenses were costs incurred in complying with regulatory
agencies in the United Kingdom concerning the breast cancer research and trial
protocol.
<PAGE>
 
     Selling, general and administrative expenses. Selling, general and
administrative expenses increased by $230,806 from $419,904 in the first three
months of 1997 to $650,710 in the first three months of 1998. The principal
costs can be attributable to Sales and Marketing department beginning operation,
with a specific focus on marketing material, trade show and new personnel.
Secondly, the increase reported is attributable to the growth in personnel from
32 to 41 employees and other related costs.

     Interest income. Interest income increased by $25,227 from $161,966 in the
first three months of 1997 to $187,193 in the first three months of 1998. The
increase resulted from the investment in held to maturity investments of the
proceeds of the Company's initial public offering.


LIQUIDITY AND CAPITAL RESOURCES

     In February 1997, the Company completed an initial public offering of
2,275,000 shares of Common Stock at a price of $8.50 per share. As a result of
the initial public offering, the Company received net proceeds of $16,818,854.

     Consolidated working capital was $12.5 million at April 4, 1998, compared
with $14.3 million at January 3, 1998. Included in working capital are cash and
cash equivalents of $5.5 million at April 4, 1998, compared with $2.3 million at
January 3, 1998. During the three months ended April 4, 1998, $1.6 million of
cash was used for operating activities.

     The Company used $161,867 of cash in the three months ended April 4, 1998
for fixed assets and leasehold improvements.

     The Company maintains medical product liability insurance policies with
respect to its clinical trials, which the Company believes, contain reasonable
deductibles and other ordinary and customary provisions.  The Company believes
that these policies cover such risks in such amounts as are reasonable and
prudent under the circumstances, and the Company does not anticipate that claims
under these policies, if any, will have a material adverse impact on the
Company's liquidity or capital resources.  Prior to commercial sale of its
products, the Company will be required to obtain product liability insurance
covering the commercial use of its products.

     The Company is currently involved in settlement discussion with a physician
and his employer. The Company has been notified that such physician and his
employer believe that they have certain rights with regard to their
understanding of the Company's planned use of the PRS for treatment of tumors in
body cavities. No formal legal proceedings were initiated and the Company
believes it has reached an agreement in principle with the parties as to
settlement of the matter.  The Company's management also believes that the
outcome of this matter will not have a material effect on the Company's
financial position or results of operations.

     The Company anticipates that it may be necessary to seek financing in the
second half of 1999 to expand its marketing and manufacturing capabilities, to
support the research and 
<PAGE>
 
development of additional applications for the PRS400, to fund further clinical
trials and to provide working capital. There is no assurance that the Company
will be able to obtain such financing on acceptable terms or at all. If the
Company raises additional funds through the issuance of equity securities,
dilution to existing shareholders will occur.

     The Company's business plan calls for various applications of the PRS,
including the treatment of metastatic brain tumors, primary brain tumors, and
tumors in the breast, skin, liver and kidney. The Company estimates that the
capital requirements to complete the commercialization of the PRS400 to treat
brain tumors will be approximately $3.0 million. The Company believes that such
an amount is needed to complete the Section 510(k) clearance for the PRS400, to
purchase capital equipment for assembly and manufacturing of components for the
PRS400 and to support sales and marketing structure. At this point, the Company
is not able to estimate the capital requirements of commercializing all
applications of the PRS.
<PAGE>
 
PART II:  OTHER INFORMATION

ITEM 2:  CHANGES IN SECURITIES AND USE OF PROCEEDS.

     On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of its Common Stock at a price of $8.50 per share.  Pursuant to
an option to purchase additional shares of Common Stock to cover over-
allotments, Needham & Company, Inc. and Dain Bosworth Incorporated purchased
additional 275,000 shares of Common Stock on March 4, 1997. The shares were
registered with the Securities Exchange Commission pursuant to a registration
statement on Form S-1 (No.333-14541), which was declared effective on January
23, 1997. Syndicate underwriters led by Needham & Company, Inc. and Dain
Bosworth Incorporated underwrote the public offering. After deducting
underwriting discounts and commissions of $1,353,625 and expenses of $1,165,021
the Company received net proceeds of $16,818,854.

     As of April 4, 1998, the Company has used a portion of the net proceeds
from its public offering for the purposes of funding research and development,
sales, general and administrative expenses and fixed assets. Since the Company's
initial public offering, the Company has expensed approximately $ 6.0 million,
and $ 3.0 million for research and development, and sales, general and
administrative expenses, respectively, and capitalized $1.0 million of fixed
assets.


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

(A)  EXHIBITS

     Copies of the following Exhibits are furnished with this report.
Additional Exhibits are incorporated herein by reference as reflected in the
Exhibit Index.

    NO.                 DESCRIPTION
    ---                 -----------

    27.      Financial Data Schedule.
<PAGE>
 
(B)  REPORTS ON FORM 8-K

     No reports on Form 8-K have been filed during the quarter for which this
report is filed.

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



                                      PHOTOELECTRON CORPORATION

                                      By: /s/ Peter E. Oettinger
                                         ---------------------------------
                                         Peter E. Oettinger
                                         Vice President, Chief Operating Officer


                                      By: /s/ Gerald J. Bojas
                                         ---------------------------------
                                         Gerald J. Bojas
                                         Chief Financial Officer


Dated:  May 14, 1998
<PAGE>
 
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
 NO.           DESCRIPTION                                               PAGE
-------        -----------                                               ----
<S>            <C>                                                      <C>
 *3.1           Articles of Organization of the Company, as amended.
 
 *3.2           Forms of Articles of Amendment of the Company.
 
**3.3           By-Laws of the Company, as amended.
 
 *4.1           Specimen Certificate representing the Company's 
                Common Stock.
 
 *4.2           Subordinated Convertible Note Purchase Agreement among 
                the Company, Thermo Electron Corporation and 
                Photoelectron Investments Corporation of Liberia dated 
                as of May 22, 1990, and Exhibits thereto.
 
 *4.3           Amendment and Waiver of Subordinated Convertible Note 
                Purchase Agreement among the Company, Thermo Electron
                Corporation and Photoelectron Investments Corporation
                of Liberia dated as of August 1, 1996, and Exhibits
                thereto.
 
 *4.4           Amended and Restated 8% Subordinated Note Due 1997 
                from the Company to Thermo Electron Corporation in the
                principal amount of $125,000 dated as of August 1,
                1996.
 
 *4.5           Amended and Restated 8% Subordinated Note Due 1997 from 
                the Company to Peter M. Nomikos in the principal amount
                of $175,000 dated as of August 1, 1996.
 
 *4.6           Amended and Restated Convertible Note Purchase Agreement 
                originally dated as of July 11, 1991, among the
                Company, PYC Corporation (formerly known as
                Photoelectron Investments Corporation of Liberia) and
                Peter M. Nomikos, and Exhibits thereto.
 
 *4.7           8% Subordinated Convertible Note Due 1998 from the Company 
                to Peter M. Nomikos in the principal amount of $500,000
                dated as of August 8, 1996.
 
 *4.8           Convertible Note and Warrant Purchase Agreement between 
                the Company and Peter M. Nomikos dated as of May 13,
                1992, and Exhibits thereto.
 
 *4.9           Amendment and Waiver of Convertible Note and Warrant 
                Purchase Agreement dated as of May 13, 1992 between the
                Company and Peter M. Nomikos, dated as of August 1,
                1996 and Exhibits thereto.
 
 *4.10          Amended and Restated 8% Subordinated Convertible Note 
                Due on Demand from the Company to Peter M. Nomikos in
                the principal amount of $705,000 dated as of August 1,
                1996.
 
*10.1          Lease Agreement dated June 12, 1996 between Lexington 
               Development Company Trust and the Company.
 
*10.2          Cash or Deferred Profit Sharing Plan and Trust dated 
               April 1, 1995, as amended, of the Company.
 
*10.3          Employee Stock Purchase Plan of the Company and form 
               of Subscription Agreement.
 
*10.4          1989 Employee Stock Option Plan of the Company and 
               forms of Stock Option Agreements.
 
*10.5          1996 Equity Incentive Plan of the Company.
 
*10.6          Form of Stock Purchase Warrant issued to certain 
               security holders of the Company and Schedule of
               Substantially Identical Documents from Exhibits.
 
*10.7          Stock Option Agreements variously dated between 
               certain directors and officers of the Company and the
               Company.
 
*10.8          Form of Subscription Agreement between the Company and 
               purchasers of Series B Preferred Stock.
 
*10.9          Form of Subscription Agreement between the Company and 
               purchasers of Series C Preferred Stock.
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
EXHIBIT
 NO.           DESCRIPTION                                               PAGE
-------        -----------                                               ----
<S>            <C>                                                      <C>
 *10.10         Series B Subscription Agreement dated 1994 between 
                the Company and Thermo Electron Corporation.
 
 *10.11         Series C Subscription Agreement dated December 16, 
                1995 between the Company and Toshiba Medical Systems
                Co., Ltd.
 
 *10.12         Form of Registration Rights Agreement between the 
                Company and holders of Series C Preferred Stock.
 
 *10.13         Registration Rights Agreement dated December 22, 
                1995 between the Company and Toshiba Medical Systems
                Co., Ltd.
 
 *10.14         Technology Cross License Agreement dated as of 
                January 4, 1989 between the Company and Thermo Electron
                Corporation.
 
 *10.15         International Distributor Sales and Service 
                Agreement dated December 13, 1995, as amended, between
                the Company and Toshiba Medical Systems Co., Ltd.
 
 *10.16         Agreement dated as of February 1, 1991, as amended, 
                between the Company and the General Hospital
                Corporation.
 
 *10.17         Clinical Trial Agreement dated as of August 1, 1992, 
                as amended, between the General Hospital Corporation,
                Nicholas T. Zervas, M. D. and the Company.
 
 *10.18         Investigational Treatment Agreement dated as of 
                September 1, 1994 between the General Hospital
                Corporation, Rees G. Cosgrove, M.D. and the Company.
 
 *10.19         Clinical Research Agreement dated as of April 1, 1995, 
                as amended, between the Brigham and Women's Hospital
                Corporation, Peter Black, M.D. and the Company.
 
 *10.20         Clinical Trial Agreement dated as of January 1, 1995 
                between the Tokyo Women's Medical College, Kintomo
                Takakura, M.D. and the Company.
 
 *10.21         Clinical Trial Agreement dated December 13, 1995, 
                as amended, between the Company and Toshiba Medical
                Systems Co., Ltd.
 
 *10.22         Clinical Research Agreement dated as of November 1, 
                1995 between The Royal Free Hampstead (NHS), Felix
                Senanayake, M.D. and the Company.
 
 *10.23         Form of Lock-Up Letter with certain security holders 
                of the Company.
 
 *10.24         Forms of Medical Advisory Board Agreements between 
                the Company and members of its Medical Advisory Board.
 
**10.25         Letter Agreement between Photoelectron Corporation 
                and Peter M. Nomikos dated as of March 29, 1998
 
**10.26         Letter Agreement between Photoelectron Corporation and 
                Peter M. Nomikos dated as of March 29, 1998
  
**10.27         Sub-sublease Agreement between Photoelectron Corporation 
                and IPRAX Corporation, dated November 1, 1996
 
**10.28         Pledge Agreement dated February 21, 1997 between 
                Peter E. Oettinger, Ph.D. and Photoelectron Corporation
 
**10.29         Promissory Note of Peter E. Oettinger, Ph.D. in the 
                principal amount of $80,211.26 in favor of
                Photoelectron Corporation, dated February 21, 1997
 
 *21.1          Subsidiaries of the Company.
 
**23.1          Consent of Arthur Andersen, LLP
 
 *24.1          Power of Attorney.
 
  27.           Financial Data Schedule.
</TABLE>
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*   Filed as same numbered exhibit to the Company's Registration Statement on 
    Form S-1 (Reg. No. 333-14541) and incorporated herein by reference.
**  Filed herewith as same numbered exhibit to the Company's Annual Report on 
    Form 10-K for the period ended January 3, 1998 and incorporated herein by 
    reference.