<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

                                   (MARK ONE)




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

          FOR THE QUARTERLY PERIOD ENDED     JUNE   26, 1998
                                         ------------------------

                                       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  0-16453
                                                -------

                                   HEARx LTD
    ----------------------------------------------------------------------
              EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER

<TABLE>
<S>                                                                                 <C>
        DELAWARE                                                                           22-2748248      
    ----------------------------------------------------------------------------------------------------   
    (STATE OF OTHER JURISDICTION OF                                                     (I.R.S. EMPLOYER   
    INCORPORATION OR ORGANIZATION)                                                      IDENTIFICATION NO.)
    </TABLE>

<TABLE>
<S>                                                                                      <C>
    1250 NORTHPOINT PARKWAY, WEST PALM BEACH, FLORIDA                                           33407   
    ----------------------------------------------------------------------------------------------------
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                                 (ZIP CODE) 
    </TABLE>

          REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE   (561) 478-8770
                                                              ----------------

  ----------------------------------------------------------------------------
              FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                          IF CHANGED SINCE LAST REPORT


                 INDICATE BY CHECK [X] WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS
YES  X     NO
   ------    -------

ON JUNE 26,1998, 100,855,550 SHARES OF THE REGISTRANT'S COMMON STOCK WERE
OUTSTANDING.
<PAGE>   2





                                     INDEX

<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            ----
PART I.          FINANCIAL INFORMATION
<S>     <C>                                                                                 <C>

         Item 1. Financial Statements:

         Balance Sheets                                                                       3
                 June 26, 1998 and December 26, 1997

         Statements of Operations                                                             4
                 Six months ended June 26, 1998 and June 27, 1997

         Statements of Operations                                                             5
                 Three months ended June 26, 1998 and June 27, 1997

         Statements of Cash Flows                                                             6
                 Six months ended June 26, 1998 and June 27,1997

           Notes to Financial Statements                                                      7

         Item 2. Management's Discussion and Analysis of Financial Condition                8 - 12
                 and Results of Operations

PART II.         OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders                          13

         Item 5. Other Information                                                            13

         Item 6. Exhibits and reports on Form 8-K                                             14


                 Signatures                                                                   15
</TABLE>





                                       2


<PAGE>   3
                                   HEARx LTD.
                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                        June  26,         December 26,
                                                                          1998               1997
                                                                     --------------     ---------------
                                                                       (unaudited)         (audited)
 <S>                                                                 <C>                <C>
                                    ASSETS
 CURRENT ASSETS:
  Cash and cash equivalents                                          $    1,534,577     $    3,644,838
  Investment securities                                                   7,778,133         10,281,913
  Accounts and notes receivable, less allowance for
    doubtful accounts of $336,081 and $246,371                            3,861,860          3,256,716
  Inventories                                                               587,226            523,356
  Prepaid expenses                                                          340,362            312,866
  Other                                                                     673,332            143,371
                                                                     --------------     --------------

      Total current assets                                               14,775,490         18,163,060

 PROPERTY AND EQUIPMENT - NET                                             8,749,077          9,014,190

 OTHER                                                                    1,468,747          1,182,297
                                                                     --------------     --------------

                                                                     $   24,993,314     $   28,359,547
                                                                     ==============     ==============


                     LIABILITIES AND STOCKHOLDERS'  EQUITY

 CURRENT LIABILITIES:
   Accounts payable and accrued expenses                             $    4,557,522     $    3,062,062
   Accrued salaries and other compensation                                  274,667            914,156
   Current maturities of long term debt                                     992,728          1,050,695
                                                                     --------------     --------------

       Total current liabilities                                          5,824,917          5,026,913
                                                                     --------------     --------------

 LONG TERM DEBT, LESS CURRENT MATURITIES                                    171,897            177,897
                                                                     --------------     --------------
 COMMITMENTS AND CONTINGENCIES
 STOCKHOLDERS' EQUITY:
  Non-redeemable preferred stock:
   (Aggregate liquidation preference $ 7,335,927 and $7,447,163)
   $1 par; 2,000,000 shares authorized; issued and
   outstanding:
         1997 Convertible - 6,815 shares                                      6,815              7,115
                                                                     --------------     --------------


            Total preferred stock                                             6,815              7,115

   Common stock; $.10 par; 130,000,000 shares authorized;
    100,885,550 and 99,211,436 shares issued
    and outstanding                                                      10,085,555          9,921,144
   Additional paid-in capital                                            70,671,417         70,646,172
   Accumulated deficit                                                  (61,689,132)       (57,326,412)
   Unrealized gain on marketable securities                                  16,376             20,156
   Unamortized deferred compensation                                       ( 94,531)          (113,438)
                                                                     ---------------    ---------------

          Total stockholders' equity                                     18,996,500         23,154,737
                                                                     --------------     --------------

                                                                     $   24,993,314     $   28,359,547
                                                                     ==============     ==============
</TABLE>



See accompanying notes to the consolidated financial statements





                                       3
<PAGE>   4
                                   HEARx LTD.
                            STATEMENTS OF OPERATIONS
                SIX MONTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997


<TABLE>
<CAPTION>
                                                                  1998                      1997
                                                            ---------------           ----------------
                                                               (Unaudited)               (Unaudited)
<S>                                                        <C>                        <C>
NET REVENUE                                                 $    13,910,905           $     11,602,849
                                                            ---------------           ----------------
COSTS AND EXPENSES:
  Cost of products sold                                           3,993,738                  3,279,883
  Center operating expenses                                       9,534,405                  8,060,129
  General and administrative expenses                             3,383,739                  3,015,935
  Depreciation and amortization                                   1,122,374                    952,777
  Interest expense                                                   36,716                          -
                                                            ---------------           ----------------
      Total expenses                                             18,070,972                 15,308,724
                                                            ---------------           ----------------

LOSS BEFORE DIVIDENDS ON PREFERRED STOCK                         (4,160,067)                (3,705,875)

DIVIDENDS ON PREFERRED STOCK:
  Deemed dividends                                                        -                 (1,500,000)
  Dividends                                                        (202,653)                  (236,057)
                                                            ---------------           ----------------
      Total dividends                                              (202,653)                (1,736,057)
                                                            ---------------           ----------------

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS                  $    (4,362,720)          $     (5,441,932)
                                                            ===============           ================

NET LOSS PER COMMON SHARE - BASIC AND DILUTED               $         (0.04)          $          (0.06)
                                                            ===============           ================

WEIGHTED AVERAGE NUMBER OF SHARES OF
  COMMON STOCK OUTSTANDING                                      100,579,400                 84,425,871
                                                            ===============           ================
</TABLE>


See accompanying notes to the consolidated financial statements





                                       4
<PAGE>   5
                                   HEARx LTD.
                            STATEMENTS OF OPERATIONS
               THREE MONTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997




<TABLE>
<CAPTION>
                                                                   1998                       1997
                                                             ----------------        ------------------
                                                                (Unaudited)               (Unaudited)
 <S>                                                         <C>                      <C>
 NET REVENUE                                                 $      6,816,576          $     5,854,592
                                                             ----------------          ----------------

 COSTS AND EXPENSES:
   Cost of products sold                                            1,913,691                 1,468,120
   Center operating expenses                                        4,869,950                 4,057,941
   General and administrative expenses                              1,667,671                 1,594,856
   Depreciation and amortization                                      567,319                   548,067
   Interest expense                                                    17,210                         -
                                                            -----------------          ----------------
       Total expenses                                               9,035,841                 7,668,984
                                                            -----------------          ----------------

 LOSS BEFORE DIVIDENDS ON PREFERRED STOCK                          (2,219,265)               (1,814,392)

 DIVIDENDS ON PREFERRED STOCK
   Deemed dividends                                                         -                (1,500,000)
   Dividends                                                          (98,618)                 (180,871)
                                                             ----------------          ----------------
       Total dividends                                                (98,618)               (1,680,871)
                                                             ----------------          ----------------

 NET LOSS APPLICABLE TO COMMON SHAREHOLDERS                  $     (2,317,883)         $     (3,495,263)
                                                             ================          ================

 NET LOSS PER COMMON SHARE - BASIC AND DILUTED               $          (0.02)         $          (0.04)
                                                             ================          ================

 WEIGHTED AVERAGE NUMBER OF SHARES OF
   COMMON STOCK OUTSTANDING                                       100,806,813                84,764,248
                                                             ================         =================
</TABLE>


See accompanying notes to the consolidated financial statements





                                       5
<PAGE>   6
                                   HEARx LTD.
                             STATEMENT OF CASHFLOWS
                SIX MONTHS ENDED JUNE 26, 1998 AND JUNE 27, 1997




<TABLE>
<CAPTION>
                                                                       1998              1997
                                                                   -------------     ---------------
                                                                    (Unaudited)        (Unaudited)
 <S>                                                               <C>               <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                          $  (4,362,720)     $ (5,441,932)
 Adjustments to reconcile net loss to net cash
 Used by operating activities:
      Depreciation and amortization                                    1,122,374           952,777
      Provision for doubtful accounts                                     65,967          (159,865)
      Loss on disposition of property                                     23,013                 -

 (Increase) decrease in:
      Accounts and notes receivable                                     (642,650)         (182,910)
      Inventories                                                        (63,871)            3,256
      Prepaid expenses                                                   (27,496)           35,720
      Other current assets and deferred charges                         (851,518)           (4,528)
      Accounts payable and accrued expenses                              855,975        (1,466,584)
                                                                  --------------     --------------
 Net cash used in operating activities                                (3,880,926)       (6,264,066)
                                                                  ---------------    --------------


 CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment                                (854,703)       (1,688,062)
      Purchase/sale on investments                                     2,503,858        (1,969,769)
                                                                  --------------    ---------------
 Net cash provided (used) by investing activities                      1,649,155        (3,657,831)
                                                                  --------------    ---------------


 CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of:
      Long-term debt                                                           -           114,219
  Principle payments:
      Long-term debt                                                     (63,966)          (62,561)
      Forgiveness of long-term debt                                            -           (97,883)
 Proceeds from the issuance of capital stock, net of
       offering costs                                                    185,476        12,702,680
                                                                  --------------    --------------
 Net cash provided by financing activities                               121,510        12,656,455
                                                                  --------------    --------------
 Net increase (decrease) in cash and cash equivalents                 (2,110,262)        2,734,558
 Cash and cash equivalents at beginning of period                      3,644,838         1,811,437
                                                                  --------------   ---------------
 Cash and cash equivalents at end of period                       $    1,534,577   $     4,545,995
                                                                  ==============   ===============
</TABLE>





See accompanying notes to the consolidated financial statements





                                       6
<PAGE>   7
                                   HEARx LTD.
                         NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)




      The accompanying unaudited consolidated financial statements should be
      read in conjunction with the Company's Annual Report on Form 10-K for the
      fiscal year ended December 26, 1997.  All adjustments, consisting of
      normal recurring accruals, which are, in the opinion of management,
      necessary for a fair statement of results for interim periods have been
      made.

      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Reclassifications

      Certain amounts in the 1997 consolidated financial statements have been
      reclassified in order to conform to the 1998 presentation.


      2.  RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1997, the FASB issued SFAS 130, Reporting Comprehensive Income,
      which establishes standards for reporting and presentation of
      comprehensive income and its components.  SFAS 130 is effective for
      periods beginning after December 15, 1997 and is not expected to have a
      material impact on the Company's financial statements.

      Additionally in June 1997, the FASB issued SFAS 131, Disclosure about
      Segments of an Enterprise and Related Information.  SFAS 131 establishes
      standards for the way public enterprises are to report operating segments
      in annual financial statements and requires reporting of selected
      information about operating segments in interim reports.  SFAS 131 is
      effective for periods beginning after December 15, 1997 and is not
      expected to have a material impact on the Company's financial statements.





                                       7
<PAGE>   8



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

      GENERAL

      Management believes the shift of patients from the Medicare population to
      managed care, which has occurred in recent years, will continue and
      increase in the future.  To the extent the Company is successful in
      contracting with the providers of Medicare managed care for the provision
      of hearing care goods and services, the Company can enjoy the benefits of
      this shift.

      HEARx intends, as its ultimate goal, to establish a nationwide network of
      hearing care centers, located in the metropolitan areas or regions with
      concentrations of elderly consumers who are more likely to need the
      Company's products or services.  During the second quarter of 1998, the
      Company acquired the customer list and selected assets of a hearing care
      center in the Southeast, Florida market and closed its center in
      Virginia. At the end of the second quarter of 1998, HEARx operated 75
      centers.  Those include 35 centers in Florida, 16 in New York, 15 in New
      Jersey, 4 in Connecticut, and 5 in Pennsylvania. At this point in time,
      the Company believes the existing center network is adequate to service
      all current contracts.

      During the second quarter, HEARx signed an Agreement in Principle to form
      a joint venture in hearing care with The Permanente Federation. Kaiser
      Permanente is America's largest not-for-profit health maintenance
      organization, serving over 9.1 million members in 19 states and the
      District of Columbia.  Kaiser Permanente's delivery system is comprised
      of Kaiser Foundation Health Plan, Kaiser Foundation Hospitals, and the
      Permanente Medical Groups.  The Permanente Federation is a national
      association of the Permanente Medical Groups and is responsible for new
      venture development such as the venture with HEARx.

      The parties intend that the joint venture will concentrate initially on
      providing hearing aids and diagnostic audiology testing in the State of
      California to serve the needs of Kaiser Permanente's membership in that
      State.  The joint venture also will seek contracts to provide services to
      members of other managed care organizations and will market to the
      "self-pay" patients in the same geographic region.  The Agreement in
      Principle provides that the joint venture will be owned 50/50 by HEARx
      and the Permanente Federation and that the centers will bear the HEARx
      name.  HEARx will be responsible for day-to-day operations management of
      the centers, but all clinical and quality issues will be overseen by a
      joint operating committee of the Federation and HEARx clinicians.
      Implementation of the venture is subject to completion of final
      contracts, approval by the governing bodies of each organization and
      approval from the appropriate regulatory bodies.  If the final contracts
      and approvals can be obtained, plans call for the first cluster of
      approximately 15 centers in Southern California to open no later than
      January 1999.  Each center would have adequate testing rooms and
      diagnostic equipment to service approximately $3 million in sales per
      annum, although there can be no assurance that this level of revenue will
      be generated at these centers.  While there can be no assurance the
      Company will obtain such final contracts and approvals, management
      believes good progress is being made and the current targeted date for
      the initial 15 centers is achievable.

      Also during the second quarter, HEARx distinguished itself from other
      hearing care providers by being awarded a three year accreditation,
      effective June 2, 1998, from the Joint Commission on Accreditation of
      Healthcare Organizations (JCAHO).  To achieve accreditation, HEARx was
      required to meet national standards addressing the rights and
      responsibilities of persons enrolled in the network; organization ethics;
      providing a continuum of care; educating and communicating with
      enrollees; leadership; human resources; management of information; and
      improving network performance.  The accreditation process was conducted
      by physicians and managed healthcare experts and involved intensive
      evaluations at specific hearing centers and the corporate office.

      Management continues to observe a number of managed care organizations
      experiencing significant difficulties arising from the widespread growth
      and reach of available plans and





                                       8
<PAGE>   9



      benefits, as well as the diverse nature of some of the defined
      participant populations.  Many of these organizations, including some of
      those with whom HEARx has contracts, have focused substantial resources
      on correcting their own administrative and information systems instead of
      expanding their plan memberships. In an effort to supplement its existing
      and growing base of sales to and through the healthcare provider
      contracts which continue to account for the majority of the Company's
      sales, the Company has, since late 1997, developed and refined its
      marketing programs oriented toward the non-insured "self pay" patient and
      increasing referrals to our existing centers through additional contracts
      (primarily in the Northeast).

      There can be no assurance that all of the Company's provider contracts
      will produce the revenues anticipated.  These contracts call for the
      managed care or insurance companies to reimburse the Company for all, or
      a portion, of the costs incurred by their members for hearing care
      services provided by the Company.  The balance of the cost is borne by
      the member.  The Company is reimbursed by the insurer on either a "fee
      for service" basis, or through a "capitated" plan.  Capitation contracts
      are those contracts which provide for payments to the Company on a per
      member per month basis.  Under those contracts, a member is entitled to
      testing services and a product credit with respect to a hearing aid
      purchase.  These credits (discounted from published retail prices) are
      then applied to the member's purchase of hearing aids.  As generally
      provided in those contracts, the member can receive this credit once
      every three years.  The price of the services and products provided on
      the first visit, above the group discount, as well as any additional
      services or products purchased, are the obligation of the member.

      The Company believes that the loss of any single managed care or
      insurance contract would not have a material adverse effect on its
      financial condition or results of operations.  Each of the existing
      managed care and insurance contracts are achieving expected gross profit
      margins and contributing positively to the Company's results of
      operations.

      Net Revenue for the second quarter was $6,816,576, which is 16.4% higher
      than the comparable quarter of 1997, and included net revenue in the
      month of May 1998 of $2,482,766 which was the highest in the Company's
      history for a four week accounting month.  At the center level, HEARx
      realized an operating profit (before corporate expenses of general and
      administration, depreciation, interest and preferred dividends) of
      $32,935 for all centers for the most recent quarter, the second
      consecutive quarterly operating profit.

      The Company has conducted a comprehensive review of its computer systems
      to identify any system that could be affected by the "Year 2000" issue.
      The Year 2000 problem is the result of computer programs being written
      using two digits rather than four to define the applicable year.   Any of
      the Company's programs that have time sensitive software may recognize a
      date using "00" as the year 1900 rather than 2000.  This could result in
      a system malfunction or miscalculation.  Management believes the Year
      2000 problem will not pose significant operational problems for the
      Company. The Company's computer operational programs have been written
      within the past three years and use four digits to define the applicable
      year.  The Company plans to send confirmations to outside vendors and
      principal customers to ensure their programs are Year 2000 compatible.

      RESULTS OF OPERATIONS

      For the three months ended June 26, 1998 Compared to June 27, 1997 
      Net revenue increased $961,984, or 16.4%, to $6,816,576 in the second 
      quarter of 1998 from $5,854,592 in the same period of 1997.  The 
      increase in net revenue primarily resulted from the increase in the 
      Company's non-insured "self-pay" business and the effect of new 
      contracts signed with major managed care companies.

      Cost of products sold increased $445,571, or 30.4%, to $1,913,691 in the
      second quarter of 1998 from $1,468,120 in the same period of 1997.  The
      increase in the cost of products sold is primarily attributable to the
      increase in net sales from new and existing centers.





                                       9
<PAGE>   10




      Center operating expenses increased $812,009, or 20%, to $4,869,950 in
      the second quarter of 1998 from $4,057,941 in the same period of 1997.
      This increase is partially due to an increase in advertising expense of
      $195,793, a 27.8% increase over the comparable period of 1997. The 1998
      level of advertising expenditures is expected to be adjusted quarterly
      depending on results. The remaining increase of $616,216, or 15.2%, is
      attributable to the increase in the number of centers operating in the
      second quarter of 1998 (75) compared to the second quarter of 1997 (73)
      plus an increase in center wages in the Southeast Florida region to
      manage the increased sales levels.

      General and administrative expenses increased only $72,815, or 4.6%, to
      $1,667,671 in the second quarter of 1998 from $1,594,856 in the same
      period of 1997.  General and administrative expenses actually decreased
      by $48,397 from the first quarter of 1998. At this point in time, the
      Company believes its current level of general and administrative expenses
      is adequate to support its existing operations, including all current and
      anticipated insurance and managed care contracts for its Northeast US and
      Florida markets.

      Depreciation and amortization expense increased only $19,252, or 3.5%, to
      $567,319 in the second quarter of 1998 from $548,067 in the same period
      of 1997. The increase was attributable to the depreciation and
      amortization of the leasehold improvements, medical and computer
      equipment, and furniture associated with the new centers opened in the
      1997 fiscal year and the first and second quarters of 1998.


      RESULTS OF OPERATIONS

      For the six months ended June 26, 1998 Compared to June 27, 1997

      Net revenue increased $2,308,056, or 19.9%, to $13,910,905 for the six
      months ended June 1998 from $11,602,849 for the same period of 1997.  The
      increase in net sales primarily resulted from the increase in the
      Company's non-insured "self-pay" business and the effect of new contracts
      signed with major managed care companies.

      Cost of products sold increased $713,855, or 21.8%, to $3,993,738 for the
      six months ended June 1998 from $3,279,883 for the same period of 1997.
      The increase in the cost of products sold is attributable to the increase
      in net sales from new and existing centers.

      Center operating expenses increased $1,474,276, or 18.3%, to $9,534,405
      for the six months ended June 1998 from $8,060,129 for the same period of
      1997. This increase is partially due to an increase in advertising
      expense of $386,277, a 27.5% increase over the comparable period of 1997.
      The 1998 level of advertising expenditures is expected to be adjusted
      quarterly depending on results. The remaining increase of $1,087,999, or
      13.5%, is attributable to the increase in the number of centers operating
      in the second quarter of 1998 (75) compared to the fiscal year end 1997
      (73) plus an increase in center wages in the Southeast Florida region to
      manage the increased sales levels.

      General and administrative expenses increased $367,804, or 12.2%, to
      $3,383,739 for the six months ended June 1998 from $3,015,935 for the
      same period of 1997.  The increase, which primarily occurred in the first
      quarter of 1998, is attributable to the expansion of staff functions in
      the marketing and insurance claims processing departments as well as an
      increase in outside consulting fees in the areas of public relations,
      quality assurance and center office management, each of which was
      implemented or increased in order to accomplish the Company's objectives
      for 1998.  As discussed in the three months' analysis of the second
      quarter, general and administrative expenses actually decreased, in the
      second quarter, by $48,397 from the first quarter of 1998.  At this point
      in time, the Company believes its current level of general and
      administrative expenses is adequate to support its existing operations,
      including all current and





                                       10
<PAGE>   11



      anticipated insurance and managed care contracts for its Northeast US and
      Florida markets.

      Depreciation and amortization expense increased only $169,597, or 17.8%,
      to $1,122,374 for the six months ended June 1998 from $952,777 for the
      same period of 1997.  The increase was attributable to the depreciation
      and amortization of the leasehold improvements, medical and computer
      equipment, and furniture associated with the new centers opened in the
      1997 fiscal year and the first and second quarters of 1998.

      LIQUIDITY AND CAPITAL RESOURCES

      Working capital decreased $4,185,574 to $8,950,573 as of June 26, 1998
      from $13,136,147 as of December 26, 1997. This decrease is primarily the
      result of operating losses.  The Company believes that its current
      working capital and revenues from operations are sufficient to support
      the Company's current foreseeable capital requirements and current
      operating needs through 1998 in accordance with its strategic plan,
      although there can be no assurance that other cash needs will not arise.
      As discussed above, in the second quarter  HEARx signed an Agreement in
      Principle to form a joint venture with The Permanente Federation to
      provide hearing care products and services through centers to be
      established in California.  The cash requirements for this joint venture
      will be evaluated when the final contracts and approvals have been
      obtained. Additional cash needs for this joint venture may be met by
      either cash available or cash proceeds from  the private placement of
      certain securities of the Company, although no definitive plans have yet
      been established.

      Net cash used by operating activities decreased  from $6,264,066 in the
      first six months of 1997, to $3,880,926 in the first six months of 1998.
      The cash used by operating activities in 1998 and 1997 was primarily the
      result of operating losses in the northeast U.S. market due to provider
      contracts not starting on a timely  basis or not producing the
      anticipated revenue levels.

      Net cash provided by investing activities increased from cash being used
      by investing activities of $3,657,831, in the first six months of 1997 to
      cash being provided by investing activities of 1,649,155 in 1998. This
      increased resulted from a $833,359 reduction of cash ($ 1,688,062 in 1997
      to $854,703 in 1998) used in the construction of leasehold improvements
      and related purchase of property and equipment for new, relocated or
      remodeled centers

      Cash from financing activities decreased from $12,656,455, in the first
      six months of 1997, to $121,510 in the first six months of 1998.  This
      difference was primarily the result of funds in the amount of $9,909,177,
      from a preferred stock offering being included in the first six months of
      1997.





         Except for the historical information provided in this discussion and
         analysis, the discussion contains forward looking statements,
         including those concerning the shift of patients from Medicare to
         managed care and the effect thereof on the Company; the Company's
         goals of establishing a nationwide network; the adequacy of the
         Company's existing center network; the adequacy of current levels of
         general and administrative expenses and current working capital and
         revenues from operations; the proposed joint venture with the
         Permanente Federation and cash needs therefor; the loss of any
         existing contracts; and the year 2000 problem.  Such statements
         involve certain risks and uncertainties that could cause actual
         results to differ materially from those in the forward-looking
         statements.  Potential risks and uncertainties include the ability of
         the Company to conclude definitive agreements with The Permanente
         Federation which are consistent with the terms and conditions of the
         Agreement





                                       11
<PAGE>   12



         in Principle, industry and market conditions, unforeseen capital
         requirements, the ability of the Company to reach its revenue targets
         and maintain cost controls, as well as those risks associated with the
         Company's business described in the Company's filings with the
         Securities and Exchange Commission, including the Form 10K for the
         fiscal year ended December 26, 1997 and the Form S-3 resale
         registration statement dated June 25, 1997.





                                       12
<PAGE>   13



PART II. OTHER INFORMATION

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

The Company held its annual meeting of stockholders on May 18, 1998.  At that
meeting, the stockholders were asked to consider and act on the following
matters:

       1.  The election of five directors; and

       2.  The ratification of the selection of BDO Seidman as the
           Company's independent certified public accountants for its
           fiscal year ending December 25, 1998.


The voting of the shareholders on the above issues was as follows:

       1.  Paul A. Brown, M.D.: 83,417,034 "For"; 
           835,523 "Against/Withheld"; 0 broker non-votes; and 16,541,693 
           abstentions.

           Stephen J. Hansbrough: 83,417,785 "For"; 
           834,772 "Against/Withheld"; 0 broker non-votes; and 16,541,693 
           abstentions.

           Thomas W. Archibald: 83,391,668 "For"; 
           860,889 "Against/Withheld"; 0 broker non-votes; and 16,541,693 
           abstentions.

           Joseph L. Gitterman III: 83,355,585 "For"; 
           896,972 "Against/Withheld"; 0 broker non-votes; and 16,541,693 
           abstentions.

           David J. McLachlan: 83,417,535 "For" 
           835,022 "Against/Withheld"; 0 broker non-votes; and 16,541,693 
           abstentions.


       2.  The ratification of the selection of BDO Seidman as the
           Company's independent certified public accountants for the fiscal
           year ending December 25, 1998:  83,533,146 "For"; 426,531
           "Against"; 0 broker non-votes and 16,834,573 abstentions.




Item 5. Other Information

Any shareholder of the Company that wishes to submit a stockholder proposal
pursuant to SEC Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"), for presentation to the Company's 1999
Annual Meeting of Stockholders must submit such proposal to the Company at its
principal office no later than December 7, 1998 for inclusion, if appropriate,
in the Company's proxy statement and form of proxy relating to such meeting.  A
Company stockholder proposal submitted other than pursuant to Rule 14a-8 will
be timely for purposes of Rule 14a-4(c)(a) promulgated under the 1934 Act only
if submitted to the Company on or before February 20, 1999.





                                       13
<PAGE>   14




Item 6.  Exhibits and Reports on Form 8-K

      (a) Exhibits:

         3.1(1)                   Restated Certificate of Incorporation  of
                                  HEARx Ltd., including certain certificates of
                                  designations, preferences and rights of
                                  certain preferred stock of the Company. [3]

         3.2(2)                   Amendment to Restated Certificate of
                                  Incorporation. [3.1A]

         3.3(3)                   Certificate of Designations, Preferences and
                                  Rights of the Company's 1997 Convertible
                                  Preferred Stock. [3]

         3.4(4)                   By-Laws of HEARx Ltd. [3.2]

         27                             Financial Data Schedule (provided
                                  for the information of the Securities and
                                  Exchange Commission only).

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

        (1)                       Filed as an exhibit to the Company's Current
                                  Report on Form 8-K, filed May 17, 1996, as
                                  the exhibit number indicated in brackets, and
                                  incorporated herein by reference.

        (2)                       Filed as an exhibit to the Company's
                                  Quarterly Report on Form 10-Q for the period
                                  ended June 28,1996, as the exhibit number
                                  indicated in brackets, and incorporated
                                  herein by reference.

        (3)                       Filed as an exhibit to the Company's Current
                                  Report on Form 8-K, filed March 26, 1997, as
                                  the exhibit number indicated in brackets, and
                                  incorporated herein by reference.

        (4)                       Filed as an exhibit to the Company's
                                  Registration Statement on Form S-18
                                  (Registration No. 33-17041-NY) as the
                                  exhibit number indicated in brackets, and
                                  incorporated herein by reference.

        (b) Reports on Form 8-K:

            None





                                       14
<PAGE>   15



                                   SIGNATURES

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

                                  HEARx Ltd.
                                  (Registrant)

<TABLE>
             <S>    <C>                                             <C>      <C>
             Date:  August 10, 1998                                 By:      s/Stephen J. Hansbrough
                                                                             -----------------------
                                                                             Stephen J. Hansbrough
                                                                             President and
                                                                             Chief Operating Officer

             Date:  August 10, 1998                                 By:      s/James W. Peklenk
                                                                             ------------------
                                                                             James W. Peklenk
                                                                             Vice President and
                                                                             Chief Financial Officer
</TABLE>





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