FORM 10-QSB

                   SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, DC  20549



               QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
               OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 1998

Commission File Number: 1-11140

                       OPHTHALMIC IMAGING SYSTEMS
         (Exact name of registrant as specified in its charter)

               CALIFORNIA                         94-3035367
        (State of Incorporation)     (IRS Employer Identification No.)

             221 LATHROP WAY, SUITE I, SACRAMENTO, CA  95815
                (Address of principal executive offices)

                             (916) 646-2020
                       (Issuer's telephone number)

Check  whether  the issuer (1) has filed all reports required to be filed
by Section 13 or  15(d) of the Exchange Act during the past 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   XX       No

As  of April 13, 1998, 4,155,428 shares of common stock, at no par value,
were outstanding.


<PAGE>1
                    PART I     FINANCIAL INFORMATION

<PAGE>2

ITEM 1. FINANCIAL STATEMENTS

                                   Ophthalmic Imaging Systems

                                     Condensed Balance Sheet
                                       February 28, 1998
                                          (Unaudited)

Assets
------

Current assets:
       Cash and equivalents                                      $    74,960
       Accounts receivable, net                                       882,048
       Inventories, net                                               987,574
       Prepaid expenses and other current assets                      113,223
                                                             ---------------    
Total current assets                                                2,057,805
Furniture and equipment, net of accumulated
       depreciation and amortization of $835,371                      416,205
Other assets                                                           16,473
                                                                 $  2,490,483
                                                              ===============   
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
       Borrowings under line of credit                              $ 115,951
       Accounts payable                                               609,106
       Accrued liabilities                                          1,695,213
       Accrued warrant appreciation right                             262,175
       Deferred extended warranty revenu e                            110,592
       Customer deposits                                              336,105
       Current portion of notes payable                                   186
                                                             -----------------
       
Total current liabilities                                           3,129,328

Notes payable, less current portion                                        --

Commitments

Stockholders' deficit:
       Preferred stock, no par value, 20,000,000 shares authorized;
               none issued or outstanding                                  --
       Common stock, no par value, 20,000,000 shares authorized;
               4,155,428 issued and outstanding                    10,492,365
       Deferred compensation                                         (277,866)
       Accumulated deficit                                        (10,853,344)
                                                                -------------
Total stockholders' deficit                                          (638,845)
                                                                -------------
                                                                  $ 2,490,483
                                                                =============
See accompanying notes.

<PAGE>3

                           Ophthalmic Imaging  Systems

                     Condensed Statements of Cash Flows
                 Increase (Decrease) in Cash and Equivalents
                                 (Unaudited)


                                           Six months ended February 28,
                                               1998                   1997
                                        ------------------------------------
Operating activities:

Net loss                                 $   (1,583,392)      $     (694,316)

Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
    Depreciation and amortization                60,540               67,283
    Stock option compensation expense            63,028                   --
    Net decrease (increase) in current assets
       other than cash and equivalents          549,156             (439,064)
    Net increase in current liabilities
       other than short-term borrowings         931,728              116,446
                                          ----------------------------------
Net cash provided by (used in) operating 
 activities                                      21,060             (949,651)
  
Investing activities:

 Purchases of furniture and equipment           (95,963)            (116,581)
Net (increase) decrease in other assets          (9,088)              16,882
                                         ------------------------------------
Net cash used in investing activities          (105,051)             (99,699)

Financing activities:

Principal payments on notes payable             (2,048)               (3,287)
Net proceeds from (repayments of) 
line-of-credit borrowings                     (195,051)             (269,000)
Net proceeds from sale of common stock         213,750               605,481
                                         ------------------------------------
Net cash provided by (used in) financing  
activities                                      16,651               333,194
                                         ------------------------------------

Net increase (decrease) in cash and     
equivalents                                    (67,340)             (716,156)

Cash and equivalents at beginning of         
period                                         142,300             1,051,325
                                         -----------------------------------

Cash and equivalents at end of period         $ 74,960             $ 335,169
                                         ====================================

See accompanying notes.

<PAGE>4
                                  OPHTHALMIC IMAGING SYSTEMS
                             Condensed Statements of Operations
                                         (Unaudited)

<TABLE>
<CAPTION>
<S>                                   <C>                 <C>                 <C>                 <C>      
                                      Three months ended February 28,         Six months ended February 28,
                                      1998                1997                1998                1997
                                      -------------------------------        --------------------------------- 

Net revenues                          $ 1,468,157         $ 2,285,407        $ 3,370,034          $ 3,169,653
Cost of sales                           1,026,652           1,296,445          2,208,648            1,917,977
Gross Profit                              441,505             988,962          1,161,386            1,251,676

Operating expenses:
     Sales and marketing                  488,418             391,633          1,060,836              888,611
     General and administrative           929,940             249,908          1,253,358              532,676
     Research and development             189,437             232,645            401,705              497,426
                                      -------------------------------         -------------------------------    
      Total operating expenses          1,607,795             874,186          2,715,899            1,918,713
                                      -------------------------------         ------------------------------- 
Income (loss) from operations          (1,166,290)            114,776         (1,554,513)            (667,037)
Other expense, net                        (19,750)            (13,557)           (28,879)             (27,279)
                                      ------------------------------          -------------------------------        
Net income (loss)                    $ (1,186,040)          $ 101,219        $(1,583,392)        $   (694,316)
                                      ===============================        =================================

Shares used in the calculation of
   basic net income (loss) per 
   share                                3,908,206           3,544,163          3,906,817            3,432,566
                                       ==============================         =================================
  
Basic net income (loss) per share         $ (0.30)             $ 0.03        $     (0.41)        $      (0.20)
                                       ===============================        =================================       

Shares used in the calculation of
   diluted net income (loss) per
   share                               3,908,206            5,014,422          3,906,817            3,432,566
                                      ===============================         ================================

Diluted net income (loss) per
   share                              $    (.30)          $      0.02         $    (0.41)        $      (0.20)           
                                      ================================        ================================

See accompanying notes.


</TABLE>



<PAGE 5>

                                 Ophthalmic Imaging Systems

                          Notes to Condensed Financial Statements

                Three and Six Month Periods ended February 28, 1998 and 1997

                                          (Unaudited)


Note 1.            Basis of Presentation

                   The accompanying unaudited condensed balance sheet as of
                   February  28,  1998,  condensed statements of operations
                   for the three and six month  periods  ended February 28,
                   1998 and 1997 and the condensed statements of cash flows
                   for the three and six month periods ended  February  28,
                   1998  and  1997  have  been  prepared in accordance with
                   generally  accepted accounting  principles  for  interim
                   financial information  and with the instructions to Form
                   10-QSB and Item 310(b) of  Regulation S-B.  Accordingly,
                   they do not include all of the  information and footnote
                   disclosures  required by generally  accepted  accounting
                   principles for  complete  financial  statements.   It is
                   suggested  that these condensed financial statements  be
                   read  in  conjunction   with   the   audited   financial
                   statements   and   notes   thereto   included   in   the
                   registrant's  (the  Company's)  Annual  Report  for  the
                   Fiscal  Year  Ended  August 31, 1997 on Form 10-KSB.  In
                   the opinion of management,  the  accompanying  condensed
                   financial statements include all adjustments, consisting
                   only of normal recurring adjustments, necessary  for  a
                   fair presentation  of  the  Company's financial position
                   and results of operations for  the  periods  presented.
                   The results  of operations for the period ended February
                   28, 1998 are not necessarily indicative of the operating
                   results for the full year.

                   Certain amounts  in the fiscal 1997 financial statements
                   have been reclassified  to conform with the presentation
                   in the fiscal 1998 financial statements.

Note 2.            Net Income (Loss) Per Share

                   In 1997, the Financial Accounting Standards Board issued
                   Statement  of  Financial  Accounting  Standards No. 128,
                   "Earnings  per  Share".   Statement  128  replaced   the
                   previously  reported  primary and fully diluted earnings
                   per share with basic and  diluted  earnings  per  share.
                   Unlike  primary  earnings  per share, basic earnings per
                   share  excludes  any  dilutive   effects   of   options,
                   warrants,  and convertible securities.  Diluted earnings
                   per share is  very  similar  to  the previously reported
                   fully diluted earnings per share.  All net income (loss)
                   per share amounts for all periods  have  been presented,
                   and   where  necessary,  restated  to  conform  to   the
                   Statement 128 requirements.

<PAGE>6

Note 2.            Net Income (Loss) Per Share (continued)

                   The  following table sets forth the computation of basic
                   and diluted income (loss) per share:
<TABLE>
<CAPTION>

                                                Unaudited                        Unaudited
                                              Three Months                   Six Months Ended
                                                  Ended                        February 28,
                                              February 28,
                                        1998                1997             1998               1997
                                        ---------------------------------------------------------------
<S>                                     <C>                 <C>              <C>             <C>      
Numerator for basic and
 diluted net income  
    (loss) per share                    $(1,186,040)        101,219          (1,583,392)      (694,316)
                                        ===============================================================                       
Denominator for basic
 net income (loss) per
 share:
     Weighted average  
      shares                              3,908,206       3,544,163           3,906,817      3,432,566
            
Effect of dilutive securities:
 Employee stock options                          --         569,484                  --             --
 Warrants and other                              --         900,775                  --             --
                                         -------------------------------------------------------------
Dilutive potential common
 shares                                          --       1,470,259                  --             --                 
                                         --------------------------------------------------------------
Denominator for diluted
 net income (loss) per share               3,908,206      5,014,422           3,906,817      3,432,566
                                         =============================================================
                  
Basic net income (loss) 
 per share                               $     (0.30)    $    (0.03)         $    (0.41)    $    (0.20)
                                         ==============================================================  
Diluted net income (loss)
 per share                               $     (0.30)    $     0.02             $ (0.41)    $    (0.20)
                                         ============================================================== 

</TABLE>

Note 3.             Line of Credit

                    In  April  1995, the Company entered into a revolving line
                    of credit agreement  (the  "Credit Agreement") with a bank
                    (the "Bank") which, after several  amendments,  expired on
                    November 7, 1997.  The maximum amount available under  the
                    terms  of  the Credit Agreement was $750,000 and was based
                    upon eligible  outstanding  accounts  receivable balances.
                    Borrowings under the Credit Agreement bore interest at the
                    Bank's  prime  lending  rate plus three percent  and  were
                    secured  by virtually all  assets  of  the  Company.   The
                    Credit  Agreement   also   contained  certain  restrictive
                    covenants which provided for,  among other things, certain
                    working  capital and net worth balance  and  ratios.   The
                    Credit Agreement  was  subsequently  converted  to  a full
                    recourse accounts receivable credit agreement.

                     On November 18, 1997, the Company entered into an accounts
                     receivable  credit  agreement  (the  "Agreement") with the
                     Bank,  and  all  amounts  outstanding  under   the  Credit
                     Agreement were considered to be the initial advance  under
                     the Agreement.  The Agreement allows for up to 80% advance
                     rate  on  eligible  accounts  receivable balances, and the
                     maximum  borrowing  base  under  the   Agreement  is  $1.2
                     million.  The Bank has full recourse against  the  Company
                     and  the  Agreement  expires in November 1998.  Borrowings
                     under the Agreement bear  interest  at  the  Banks's prime
                     lending  rate plus 4%.  In addition, the Bank will  charge
                     monthly an  administrative  fee  equal  to  the greater of
                     1/2  %  of  the  average daily balance for the month  or
                     $1,200.  Under the terms  of the Agreement, borrowings are
                     secured by substantially all of the Company's assets.

<PAGE>7
                                                                  
Note 4.             Private Placement

                    In   November   1995,  the  Company  completed  a  private
                    placement of 1,368,421  shares  of  its  common stock with
                    detachable warrants.  The net proceeds from  this offering
                    was  approximately $1,075,000.  Along with each  share  of
                    common  stock  issued,  the  purchasers  were  given an "A
                    Warrant"  and  "B  Warrant"  to  purchase  shares  of  the
                    Company's  common  stock.   The A and B Warrants per share
                    exercise prices were $1.25 and $1.75, respectively.  The A
                    and B Warrants expired on February 19, 1997 as amended and
                    November 21, 1997, respectively.

                   The private placement underwriter was issued a warrant ("C
                   Warrant")  to purchase 250,000  shares  of  the  Company's
                   common stock  at  $.95  per  share.   The number of shares
                   exercisable  as well as the per share exercise  price  are
                   subject  to adjustment  upon  the  occurrence  of  certain
                   events.  This  warrant  expires  on November 21, 1999.  In
                   addition, the underwriter will receive  as  a  commission,
                   10% of the proceeds received by the Company upon  exercise
                   of the A and B Warrants described above.

                   In  February  1998,  the underwriter sold its rights under
                   the C Warrant and the  C  Warrant  was  exercised  for all
                   250,000  shares  exercisable thereunder.  The net proceeds
                   recognized  from  the  exercise  of  said  C  Warrant  was
                   approximately $213,750 (see Note 6).

Note 5.            Nonstatutory Stock Option Plan

                   In October 1997, the Company's board of directors approved
                   the 1997 Nonstatutory Stock Option Plan (the "Plan") under
                   which  all  officers,  employees directors and consultants
                   may  participate.   The  Plan  expires  in  October  2002.
                   Options granted under the  Plan  are  non-qualified  stock
                   options  and  will have a term of not longer than ten (10)
                   years from the  date  of grant, unless otherwise specified
                   in the option agreement.   The  exercise  prices under the
                   Plan will generally be at 100% of the fair market value of
                   the  Company's  common  stock  on the date of grant.   The
                   maximum  number of shares of the  Company's  common  stock
                   which  may   be  optioned  and  sold  under  the  Plan  is
                   1,000,000, of which 798,000 options remained available for
                   granting as of  February  28,  1998.   As  of February 28,
                   1998, stock options to purchase 202,000 shares at exercise
                   prices  of  between  $1.09  and  $1.38  were  granted  and
                   outstanding under the Plan and none of the granted options
                   were exercised.

<PAGE>8

Note 6.           Stock Purchase Agreement

                  On  February  25,  1998,  the  Company  entered  into  a Stock
                  Purchase Agreement (the "Stock Purchase Agreement") with
                  Premier Laser Systems, Inc., a  California  corporation
                  ("Premier") pursuant to which, among other things: (i)
                  Premier agreed to commence a tender offer ("Tender  Offer") 
                  to  acquire  all  shares of the Company's common stock not
                  held by  Premier  or  its affiliates in exchange for a
                  combination of cash and Premier securities; and (ii) the
                  Company agreed to recommend that shareholders  tender their
                  shares of the Company's common stock in the Tender Offer
                  and not to solicit any competing acquisition  proposals.  
                  As a condition to the  Stock  Purchase  Agreement,  the 
                  Company agreed to amend its Rights Agreement  ("Rights 
                  Agreement") dated as of December 31, 1997, by and between
                  the Company and American Securities Transfer, Inc., as 
                  rights agent, to permit  Premier  to  acquire up to 51.3%
                  of the Company's outstanding Common Stock in private 
                  transactions to be made simultaneously with the execution
                  of the Stock Purchase Agreement.

                  Under  the  Stock  Purchase  Agreement,  pursuant  to the 
                  Tender Offer, each of the Company's shareholders will
                  receive, in exchange for each share of the Company's common
                  stock: (i) $1.75  per  share  in  cash; (ii) $0.25 in value
                  (measured by a formula in the Stock Purchase Agreement) of
                  Premier Class  A  Common  Stock;  and (iii) one Class C and
                  one Class D Warrant (collectively, the "Warrants"). Each
                  Warrant will  be  exercisable  for  fractional shares of
                  Premier common stock having a value (at the measurement date
                  as defined in the Stock Purchase Agreement)  of  $0.25, but
                  the exercisability of such Warrants will be conditional
                  upon the achievement of certain  sales  targets  for  the
                  Company's products.  No fractional shares of Premier 
                  common  stock  will  be issued pursuant to  the  Tender 
                  Offer,  and  the  Company's shareholders who otherwise 
                  would be entitled to receive a fractional share of Premier
                  common stock  will receive a cash payment  in lieu thereof. 
                  It is anticipated that following consummation of the Tender
                  Offer, Premier will engage in a merger transaction in which
                  the remaining holders of the  Company's  common stock will
                  receive an economic benefit similar to that being paid in the
                  Tender Offer.

                  The  Tender  Offer  will  be  extended  to any shares of the 
                  Company's common stock which are unconditionally issued or
                  allotted upon the  exercise  of  vested  options  granted
                  under the Company's stock option plans or otherwise until 
                  the expiration date of the Tender  Offer. In addition,  
                  option  holders  under  the  Company's  stock  option plans
                  will be offered an opportunity  to cancel any unexercised
                  options in return for the grant of comparable  Premier
                  options (after  giving effect to an exchange ratio based on a
                  value of $2.18 per share of the Company's common stock), to
                  purchase Premier common stock.


<PAGE>9

Note 6.           Stock Purchase Agreement (continued)

                  The  Company has been advised that the cash portion of the
                  Private  Acquisitions  (as  defined  below),  the  Warrant
                  exercise  and  the proposed Tender Offer (and any proposed
                  merger), and the fees and costs incurred or to be incurred
                  in connection therewith,  have  been and will be paid from
                  existing  cash and other working capital  of  Premier  and
                  that no outside  sources  of  funds  or borrowings will be
                  used.

                  Simultaneous   with   execution   of  the  Stock  Purchase
                  Agreement,   Premier  entered  into  individual   purchase
                  agreements ("Purchase Agreement" or "Purchase Agreements")
                  with  three shareholders,  including  a  director  of  the
                  Company  and  JB  Oxford  & Company ("JBO"), providing for
                  these parties to sell to Premier  an  aggregate of 730,360
                  shares of the Company's common stock.   Additionally,  JBO
                  sold to Premier, pursuant to the terms of the JBO Purchase
                  Agreement,  warrants  (the  "JBO  Warrants")  to  purchase
                  250,000  shares  of  the  Company's common stock.  Premier
                  exercised  the JBO Warrants  on  February  26,  1998  (the
                  purchases made  pursuant  to  the  Purchase Agreements are
                  referred to collectively as the "Private Acquisitions").

                 The  purchase  of  the Company's shares  pursuant  to  the
                 Private Acquisitions  and the exercise of the JBO Warrants
                 have  increased  Premier's  beneficial  ownership  of  the
                 Company's  common  stock  to  an  aggregate  of  2,131,758
                 shares, or approximately  51.3%  of the outstanding shares
                 of  the Company's common stock.  The  total  consideration
                 paid by Premier for the Company's common stock pursuant to
                 the Private  Acquisitions was approximately $2,137,185, or
                 $2.18 per share,  which  consideration  was  paid for in a
                 combination    of   cash   and   Premier   securities   in
                 approximately the  same  relative amounts as to be paid to
                 the Company's stockholders  under  the  terms of the Stock
                 Purchase Agreement.

                  The   Purchase   Agreement  with  the  Company's  director
                  provides  for recession  if  Premier  fails  to  make,  or
                  withdraws,   abandons,  or  terminates  the  Tender  Offer
                  without purchasing  all  shares  validly  tendered and not
                  withdrawn.

                  In order to permit the Private Acquisitions and the offer
                  contemplated by the Stock Purchase Agreement, the Board of 
                  Directors of the Company, after considering the terms of
                  the Stock Purchase Agreement and an opinion rendered by the
                  Company's independent financial advisors as to the fairness
                  of Premier's offer to shareholders of the Company, amended
                  the Company's Rights Agreement.   
 
<PAGE>10

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

THE STATEMENTS BELOW INCLUDE STATEMENTS THAT ARE "FORWARD LOOKING STATEMENTS" 
WITHIN THE MEANING OF SECTION 21A OF THE SECURITIES ACT OF 1933, AS AMENDED,
IN SECTION 21E  OF  THE SECURITIES  ACT  OF 1934, AS AMENDED, AND IS SUBJECT
TO THE SAFE  HARBOR CREATED THEREBY. FUTURE OPERATING RESULTS  MAY  BE 
ADVERSELY EFFECTED AS A RESULT OF A NUMBER OF  FACTORS ENUMERATED IN THE
COMPANY'S PUBLIC REPORTS.

The  Company,  a California corporation,  is engaged  in  the  business of
designing, developing,   manufacturing   and  marketing ophthalmic digital 
imaging systems  and  has derived  substantially  all  of its revenues from
the sale of such products.

Since its inception, the Company's  products have  addressed  primarily the
needs of the ophthalmic fluorescein  angiography  market, and  more  recently
the  indocyanine  green ("ICG")  market.  While the Company believes that 
the  overall  angiography  market  has modest growth  potential,  sustaining
growth in  its  traditional  angiography  equipment business  may become 
increasingly  difficult due to increased competition.

During  the   past  quarter,  the  Company's product  development efforts 
have been primarily   involved   with  features  and enhancements to its
existing  products targeting various telemedicine applications, including
screening, remote consultation and distance learning, as well as
exploration of new products.

On  February  25, 1998, the Company  entered into a Stock Purchase Agreement
(the "Stock Purchase  Agreement")  with   Premier  Laser Systems, Inc.,  a
California  corporation ("Premier"),  pursuant to which, among other things:
(i) Premier  agreed  to  commence  a tender offer ("Tender Offer") to acquire
all shares  of  the  Company's  common stock not held   by  Premier  or  its
affiliates in exchange  for  a  combination of cash  and Premier  securities;
and  (ii  the Company agreed to recommend that shareholders tender their
shares of the Company's common  stock in the Tender  Offer  and not to
solicit any competing  acquisition  proposals.    As a condition  to  the
Stock Purchase Agreement, the  Company  agreed  to  amend  its  Rights
Agreement ("Rights  Agreement")  dated as of December 31, 1997 by and between
the Company and American Securities Transfer,  Inc.,  as rights  agent,  to
permit Premier to acquire up  to  51.3% of the  Company's  outstanding common
stock  in private purchase agreements made simultaneously  with  the  
execution of the  Stock Purchase Agreement. For additional information 
regarding  the terms and   conditions   of   the  Stock  Purchase Agreement, 
see the Company's  Form 8-K filed on March 9, 1998, as referenced  in Part II,
Item 6 of this Form 10-QSB.

The  Company's  results  of operations  have historically  fluctuated  from  
quarter  to quarter due to a number of factors  and  are not necessarily
indicative of the results to be   expected   for  any  future  period  or
expected for the  fiscal  year ending August 31,  1998.  There can be no 
assurance  that revenue   growth  or  profitability  can  be achieved or
sustained in the future.

<PAGE>11

The following  discussion  should be read in conjunction  with  the unaudited
interim financial statements  and  the notes thereto which are set forth
elsewhere in this Report on   Form   10-QSB.  In  the  opinion of management,
the  unaudited  interim  period financial  statements include all 
adjustments, all of which  are of a normal recurring nature, that are 
necessary  for  a fair  presentation  of  the  results  of the periods.

RESULTS OF OPERATIONS
---------------------

The   Company   incurred   a   net  loss  of 1,186,040,  or  $.30  per share,
for the second quarter of fiscal 1998 as compared to net  income  of
$101,219, or $.02 per share, for the second  quarter of fiscal 1997.  The
Company incurred  a  net loss of $1,583,392, or $.41 per share, for the first
six months of 1998 versus a net loss  of  $694,316,  or $.20 per share, for
the comparable period of 1997.   The  per  share  figures are diluted amounts  
in  accordance   with   Financial Accounting Standards No. 128  (see Note 2
of Notes to Condensed Financial Statements).

The   Company's  revenues  for  the   second quarter  of  fiscal  1998  were
$1,468,157, representing a decrease of approximately 36% from  revenues of
$2,285,407 for the  second quarter  of  fiscal  1997.  Revenues for the
first  six  months  of  fiscal   1998   were $3,370,034,  or an increase of 
approximately 6%  versus  $3,169,653  for  the  comparable
period of 1997.   One of the primary reasons for  the  significantly 
decreased  revenue levels  during  the second quarter  of  1998 versus  the
second  quarter  of  1997  was revenues   recognized  during   the   second
quarter  of  1997  from  deliveries  against orders received  during the
first quarter of 1997, which orders  were  carried over in an unusually high
deliverable  backlog from the first quarter of fiscal 1997.   To  a lesser
extent,  sales during the second quarter  of 1998 were adversely impacted by
management's efforts being directed to the negotiation of the Stock  Purchase
Agreement and less time devoted  to the generation  of  sales.   The
slightly increased year to date 1998 revenue levels   include   revenues 
from initial deliveries  during the first half of 1998 of new   models  of
the   Company's   digital angiography  products introduced at the 1997 of all
meeting of the AAO.

Gross margins  were approximately 30% during
the second quarter  ended  February 28, 1998
versus approximately 43% for  the comparable
quarter  of 1997.  For the six-month  period
ended February  28, 1998, gross margins were
approximately    33%    as    compared    to
approximately  39%   during  the  comparable
period  of  1997.   The  decrease  in  gross
margin percentage during the  second quarter
was    attributable    primarily    to   the
significantly   decreased   revenue   levels
during the second quarter of 1998 and,  to a
lesser   extent,   the   adverse  impact  of
increased   reserves  for  potential   field
upgrades  recognized   for  certain  systems
delivered  during the 1998  second  quarter.
Furthermore,  the  increase of such reserves
for systems delivered  during the first half
of  1998  was  a principal  factor  for  the
decrease in gross  margins for the six month
period of 1998 as compared to 1997.

<PAGE>12

As  a  percentage  of  revenues,  sales  and
marketing  and  general  and  administrative
expenses accounted for approximately  97% of
total revenues during the second quarter  of
fiscal  1998  versus  approximately  28%  of
total  revenues during the comparable second
quarter  of  fiscal 1997.  For the first six
months of fiscal  1998 and fiscal 1997, such
expenses accounted for approximately 69% and
45%  of total revenues  for  the  respective
six-month   periods.   Expense  levels  also
increased to  $1,418,358  during  the second
quarter  of 1998 versus $641,541 during  the
second quarter  of  1997.  For the first six
months of 1998, expense  levels increased to
$2,314,194   from  $1,421,287   during   the
comparable  period  of  1998.   The  primary
factors contributing to these increases were
significant investment  banking,  legal  and
other  professional  costs recognized during
the second quarter of  1998  associated with
the   negotiation   of  the  Stock  Purchase
Agreement, the costs  related  to additional
senior management personnel hired during the
fourth  quarter of fiscal 1997, as  well  as
increased compensation expense recognized in
connection with stock options issued to non-
employees  and  non-directors.   To a lesser
extent,  increased  commissions  and   other
costs   associated   with  increase  revenue
levels  also contributed  to  the  increased
expense levels  for  the first six months of
1998.  The Company anticipates  expenses  in
this   area   will  continue  to  run  above
historical levels.

Research  and  development  expenses,  as  a
percentage of revenues,  were  approximately
13%  in  the  second quarter of 1998  versus
approximately 10%  in  the second quarter of
1997.  For the first six  months  of  fiscal
1998,    such    expenses    accounted   for
approximately  12%  of  total  revenues   as
compared  to  approximately  16%  during the
comparable  period of 1997.  Expense  levels
decreased in actual dollar terms to $189,437
during  the  second  quarter  of  1998  from
$232,645  in 1997.   During  the  first  six
months of fiscal  1998,  expense levels also
decreased in actual dollar terms to $401,705
versus $497,426 in 1997.   The  Company  has
focused its research and development efforts
on current product enhancements and reducing
cost    configurations   for   its   current
products.

Other expense  was $19,750 during the second
quarter of fiscal 1998 versus $13,557 during
the second quarter  of  1997.  For the first
six months of 1998 and 1997,  other  expense
was $28,879 and $27,279, respectively.   The
primary  contributing factor to the increase
during  the  second  quarter  was  increased
interest   expense  associated  with  higher
interest rates  and  related bank charges on
average  daily borrowings  against  existing
credit lines during 1998 versus 1997.

<PAGE>13

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's operating activities generated
cash of $21,060  during the first six months
of fiscal 1998 and  used  cash  of  $949,651
during the comparable period for 1997.  Cash
generated  from operating activities in  the
first   six   months    of   1998   resulted
principally from the collection  of accounts
receivable,  increased  revenue  levels  and
increases  in customer deposits and  accrued
liabilities,  the  aggregate impact of which
more  than  offset  the  net  loss  for  the
quarter.   The cash used  by  operations  in
1997 resulted  primarily  from  the net loss
during  the  period  and  the  decrease   in
accounts    receivable    associated    with
significantly  reduced revenue levels during
the  period,  which   amount  was  partially
offset  by  increases in  customer  deposits
from orders generated at the AAO meeting and
other   current    liabilities,    excluding
borrowings  under the Credit Agreement  (see
Note  3  in  Notes  to  Condensed  Financial
Statements.

Cash  used  in  investing   activities   was
$105,051  during  the  first half of 1998 as
compared to $99,699 during  the  same period
for  1997.   The Company's primary investing
activities consist  of  equipment  and other
capital  asset  acquisitions.   The  Company
does not currently have any pending material
commitments  regarding capital expenditures.
While the Company  had  anticipated  that it
would   continue  to  upgrade  its  existing
management    information    and   corporate
communications  systems,  the  Company  will
defer    significant   capital   acquisition
decisions  as  a  result of the contemplated
acquisition  of the  Company.   The  Company
anticipates that  related  expenditures,  if
any,  will  be  financed from one or more of
the following sources:  (i) working capital;
(ii)  borrowings under  an  existing  credit
agreement,  if  available;  or  (iii)  debt,
equity  or other financing arrangements,  if
any, available  to  the  Company,  including
possible loans or other advances made to, or
on  behalf  of, the Company by Premier.   In
this regard,  Premier  has agreed to advance
certain   funds   for  the  procurement   of
inventory  and  certain  other  expenditures
pending consummation of the Tender Offer.

The Company generated  cash  of $16,651 from
financing  activities during the  first  six
months  of  fiscal   1998   as  compared  to
$333,194  during the same period  of  fiscal
1997.  The  source  of  cash  from financing
activities in 1998 was the net proceeds from
the  exercise  of  certain  warrants  issued
pursuant  to  a  private  placement  of  the
Company's  common  stock  in November  1995,
which amount was significantly offset by net
repayments  of borrowings under  the  Credit
Agreement. The cash generated from financing
activities  during   the   1997  period  was
principally  the  net  proceeds   from   the
exercise  of  certain  other warrants issued
pursuant  to the private  placement  of  the
Company's common  stock  in  November  1995,
and,  to  a lesser extent, net proceeds from
the exercise  of  stock  options  issued  to
employees,   which  amounts  were  partially
offset by repayments of borrowings under the
Credit Agreement.   Principal  repayments on
notes  payable was negligible in  both  1998
and 1997.


<PAGE>14

As indicated  in  Note  3  of  the  Notes to
Condensed  Financial Statements, on November
18,  1997,  the   Company  entered  into  an
accounts receivable  credit  agreement  (the
"Agreement")  with the Bank, and all amounts
outstanding under  the Credit Agreement were
considered to be the  initial  advance under
the Agreement.  The Agreement allows  for up
to  an 80% advance rate on eligible accounts
receivable   balances,   and   the   maximum
borrowing  base under the Agreement is  $1.2
million.  The Bank has full recourse against
the Company  and  the  Agreement  expires in
November   1998.    Borrowings   under   the
Agreement  bear interest at the Bank's prime
lending rate plus 4%.  In addition, the Bank
will charge  monthly  an  administrative fee
equal  to  the  greater  of  1/2  %  of  the
average  daily  balance  for  the  month  or
$1,200.  Under the terms of  the  Agreement,
borrowings are secured by substantially  all
of the Company's assets.

The  Company believes that its existing cash
balances  together  with ongoing collections
of   its   accounts  receivable,   available
borrowing capacity  under the Agreement, and
financing arrangements with Premier, will be
adequate to meet its  liquidity  and capital
requirements  in  the  near term.  Principal
and   interest   amounts   due   under   the
alternative  stock appreciation  right  with
the Bank, which  amounts  were approximately
$262,000  as  of  February  28,   1998,  are
currently  due;  however,  no  request   for
payment  has  yet  been made.  If demand for
payment were to be made  by  the  Bank,  the
Company would have to seek financing to make
such  payment.   There  can be no assurance,
however,   that  such  financing   will   be
available and, if available, can be obtained
on terms favorable to the Company.

In  a  letter  dated  March  23,  1998  from
NASDAQ,  the Company was notified that on or
before May 20, 1998, the Company must make a
public  filing   with   the  Securities  and
Exchange  Commission  and NASDAQ  evidencing
the  successful  completion  of  the  Tender
Offer by Premier.   The Company's securities
will  be  delisted  on the  earlier  of  the
Tender  Offer completion  date  or  May  20,
1998.

In a letter  dated  March  3,  1998 from the
Boston  Stock Exchange ("BSE"), the  Company
was  notified  by  BSE,  that,  due  to  the
Company's    noncompliance   with   the  BSE
requirement  to maintain capital and surplus
of  at  least $500,000,  BSE  suspended  the
Company's  common  stock  from trading as of
the close of business on March  3,  1998 and
filed for delisting with the Securities  and
Exchange Commission.

<PAGE>15

                        PART II     OTHER INFORMATION

ITEM 1.                  LEGAL PROCEEDINGS
                         None.

ITEM 2.                  CHANGES IN SECURITIES
                         In  October  1997,  the  Company's  board  of directors
                         approved the 1997 Nonstatutory Stock Option  Plan 
                         (the "Plan")  under  which all officers, employees
                         directors  and consultants may  participate.   The
                         Plan expires in October 2002.  Options granted
                         under  the Plan are non-qualified stock options and
                         will generally  have a term of  ten  (10)  years 
                         from  the  date  of grant, unless otherwise  
                         specified  in  the  option  agreement.   The
                         exercise  prices  under the Plan will generally  be 
                         at 100% of the fair market  value  of the Company's
                         common stock  on  the date of grant.  The  maximum 
                         number  of shares of the  Company's  common  stock
                         which  may  be optioned and sold under the Plan is
                         1,000,000, of which 798,000  options  remained
                         available for granting as of February 28, 1998.  
                         As  of  February  28,  1998, stock options  to 
                         purchase 202,000 shares at exercise  prices of
                         between $1.09 and $1.38 were granted and outstanding
                         under the  Plan  and  none  of the granted options 
                         were exercised.

ITEM 3.                  DEFAULTS UPON SENIOR SECURITIES
                         None.

ITEM 4.                  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
                         None.

ITEM 5.                  OTHER INFORMATION

ITEM 6.                  EXHIBITS AND REPORTS ON FORM 8-K

                    (a)            The exhibits listed on the accompanying Index
                                   to  Exhibits below are filed as a part hereof
                                   and are incorporated by reference as  noted.
                    (b)            A  Form  8-K was filed on January 2, 1998, to
                                   report under  Item  5  thereof  the Company's
                                   adoption of a Rights Agreement, dated  as  of
                                   December 31, 1997, between Ophthalmic Imaging
                                   Systems  and  American  Securities  Transfer,
                                   Inc.  (the  "Rights  Agreement"),  a copy  of
                                   which  Form  8-K will be made available  upon
                                   request  to  the  Company  at  its  principal
                                   offices.

                                   A  Form  8-K  was  filed on March 9, 1998, to
                                   report under Item 1  thereof that the Company
                                   and Premier Laser Systems,  Inc. entered into
                                   a  Stock  Purchase  Agreement  dated   as  of
                                   February 25, 1998, and to report under Item 5
                                   thereof,   the  Company's  amendment  to  its
                                   Rights Agreement,  a  copy  of which Form 8-K
                                   will  be made available upon request  to  the
                                   Company at its principal offices.
<PAGE>16

                                                        SIGNATURES

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

                                    OPHTHALMIC IMAGING SYSTEMS
                                    (Registrant)


                                    By: STEVEN R. VERDOONER
                                        Steven R. Verdooner,
                                        Chief Executive Officer
                                        and Chief Financial
                                        Officer (principal
                                        executive officer and
                                        principal financial and
                                        accounting officer)

                                     By: WILLIAM L. MINCE
                                         William L. Mince,
                                         President and Chief
                                         Operating Officer


Dated:  April 14, 1998



<PAGE>17

                                   INDEX TO EXHIBITS

<TABLE>
<CAPTION>
          Exhibit                                                                Footnote
          NUMBER           DESCRIPTION OF EXHIBIT                                REFERENCE
<S>       <C>              <C>                                                   <C> 
           2.1             Stock  Purchase  Agreement, dated as of               (13)
                           February  25,  1998,   by  and  between
                           Registrant  and Premier Laser  Systems,
                           Inc.

           3.1             Articles   of   Incorporation   of  the                 *
                           Registrant, as amended.

           3.1(a)          Amendment  to Articles of Incorporation               (11)
                           (Certificate    of   Determination   of
                           Preferences   of   Series    A   Junior
                           Participating   Preferred   Stock    of
                           Ophthalmic Imaging Systems).
           3.2             Amended Bylaws of the Registrant.                       *

           4.1             See Exhibits 3.1 and 3.2 for provisions                 *
                           of  the  Articles  of Incorporation, as
                           amended, and the amended  Bylaws of the
                           Registrant   defining  the  rights   of
                           holders   of  Common   Stock   of   the
                           Registrant.
           4.2             Specimen of Stock Certificate.                          *

           4.3             Rights  Agreement, dated as of December               (10)
                           31,  1997,   between   Registrant   and
                           American   Securities  Transfer,  Inc.,
                           including form  of  Rights  Certificate
                           attached thereto.

           4.4             Amendment to Rights Agreement, dated as               (14)
                           of    February    25,   1998,   between
                           Registrant   and  American   Securities
                           Transfer, Inc.

           10.1            Lease  Agreement,  dated as of July 10,                 *
                           1987,   between   the  Registrant   (as
                           tenant)  and Transamerica/Emkay  Income
                           Properties  I,  as  amended on July 23,
                           1990 and June 11, 1991.

           10.1(a)         Seventh Amendment to lease effective as                (7)
                           of July 18, 1996.
          10.2            Employment  Agreement,  dated March 27,                 *
                           1992, between the Registrant and Dennis
                           J. Makes.

           10.2(a)         Amendment  dated  June  30, 1993 to the                (1)
                           Employment   Agreement   between    the
                           Registrant  and  Dennis  J. Makes dated
                           March 27, 1992.

<PAGE>18

           10.3            Confidentiality  Agreement, dated March                 *
                           27,  1992  between the  Registrant  and
                           Dennis J. Makes.

           10.4            Confidentiality  Agreement, dated March                 *
                           27,  1992  between the  Registrant  and
                           Steven R. Verdooner.

           10.5            Confidentiality  Agreement, dated March                 *
                           27,  1992  between the  Registrant  and
                           Richard Wullaert.

           10.6            Consulting Agreement, dated January 23,                 *
                           1992,  between  the  Registrant  and G.
                           Peter Halberg, M.D.

           10.7            Assignment  dated  October  23, 1990 of                 *
                           U.S.  Patent  Application for Apparatus
                           and Method for  Topographical  Analysis
                           of  the  Retina  to  the Registrant  by
                           Steven R. Verdooner, Patricia C. Meade,
                           and  Dennis  J. Makes (as  recorded  on
                           Reel 5490, Frame  423 in the Assignment
                           Branch of the U.S. Patent and Trademark
                           Office).
           10.8            Form   of   International  Distribution                 *
                           Agreement used  by  the  Registrant and
                           sample   form   of  End  User  Software
                           License Agreement.

           10.9            Original     Equipment     Manufacturer                 *
                           Agreement, dated April 1, 1991, between
                           the   Registrant   and   SONY   Medical
                           Electronics,   a   division   of   SONY
                           Corporation of America.

           10.10           Original  Equipment  Manufacturer/Value                 *
                           Added Reseller Agreement,  dated May 7,
                           1991,   between   the  Registrant   and
                           Eastman Kodak Company.

           10.11           The   Registrant's   1992  Nonstatutory                 *
                           Stock Option Plan and  sample  form  of
                           Nonstatutory Stock Option Agreement.

           10.12           Common   Stock   and  Warrant  Purchase                 *
                           Agreement ("Stock Purchase Agreement"),
                           dated as of February 8, 1992, among the
                           Registrant,   Jonnie    R.    Williams,
                           Kathleen  M.  O'Donnell, as Trustee  of
                           Irrevocable  Trust   No.  6,  FBO  F.E.
                           O'Donnell,   Jr.,   M.D.,   Steven   R.
                           Verdooner and Dennis J. Makes.
  
<PAGE>19

         10.12(a)          Amendment   No.  1  to  Stock  Purchase                 *
                           Agreement, dated  March 25, 1992, among
                           the  Registrant,  Jonnie  R.  Williams,
                           individually, Jonnie  R.  Williams,  as
                           Trustee  of  Irrevocable  Trust  No. 1,
                           Rambert   Simmons,   and   Kathleen  M.
                           O'Donnell,  as  Trustee  of Irrevocable
                           Trust  No. 6, FBO F.E. O'Donnell,  Jr.,
                           M.D.

           10.13           Cross-Indemnification  Agreement, dated                 *
                           February 14, 1991, among  Dennis Makes,
                           Steven Verdooner, and Richard Wullaert.

           10.14           Key  Man Life Insurance Policies in the                 *
                           amount   of   $1,000,000  for  each  of
                           Dennis   J.   Makes   and   Steven   R.
                           Verdooner, with  the  Registrant as the
                           named beneficiary.

           10.15           Warrant  dated February 12, 1993 issued                (1)
                           by   the  Registrant   to   Steven   R.
                           Verdooner  to purchase 50,000 shares of
                           Common Stock.
           10.16           Stock Option Plan.                                     (1)

           10.17           Promissory  Note  dated January 4, 1993                (1)
                           from   the   Registrant    to   Western
                           Financial Savings Bank in the amount of
                           $25,209.83  due  in full by January  4,
                           1998.

           10.18           Rental  Agreement  dated May 1, 1994 by                (2)
                           and between the Registrant  and  Robert
                           J. Rossetti.

           10.19           Security   and   Loan  Agreement  (with                (3)
                           Credit  Terms  and  Conditions)   dated
                           April  12,  1995  by  and  between  the
                           Registrant and Imperial Bank.

           10.19(a)        General    Security   Agreement   dated                (3)
                           April  12,  1995  by  and  between  the
                           Registrant and Imperial Bank.

           10.19(b)        Warrant  dated  November 1, 1995 issued                (4)
                           by the Registrant  to  Imperial Bank to
                           purchase 67,500 shares of Common Stock.

           10.19(c)        Amended  Loan  and  Security  Agreement                (4)
                           (with   Credit  Terms  and  Conditions)
                           dated November 1, 1995.

           10.19(d)        Registration   Rights  Agreement  dated                (4)
                           November 1, 1995 between the Registrant
                           and Imperial Bank.

           10.19(e)        Amended  Loan  and  Security  Agreement                (6)
                           (with   Credit  Terms  and  Conditions)
                           dated April 4, 1996.
<PAGE>20 

          10.19(f)        Amended  Loan  and  Security  Agreement                (7)
                           (with   Credit  Terms  and  Conditions)
                           dated July 12, 1996.

           10.19(g)        Amended  Loan  and  Security  Agreement                (7)
                           (with   Credit  Terms  and  Conditions)
                           dated November 21, 1996.

           10.19(h)        Amended  Loan  and  Security  Agreement                (8)
                           (with   Credit  Terms  and  Conditions)
                           dated June 3, 1997.

           10.19(i)        Amended  Loan  and  Security  Agreement                (9)
                           (with   Credit  Terms  and  Conditions)
                           dated August 28, 1997.

           10.19(j)        Amended  Loan  and  Security  Agreement                (9)
                           (with   Credit  Terms  and  Conditions)
                           dated October 24, 1997.

           10.19(k)        Amended  Loan  and  Security  Agreement                (9)
                           (with   Credit  Terms  and  Conditions)
                           dated November 3, 1997.

           10.19(l)        Amended  Loan  and  Security  Agreement                (9)
                           (with   Credit  Terms  and  Conditions)
                           dated November 21, 1997.

           10.19(m)        Agreement  of  Purchase  of  Receivable                (9)
                           (Full Recourse) dated November 18, 1997
                           between Registrant and Imperial Bank.

           10.20           Purchase  Agreements dated November 21,                (4)
                           1995 between  the Registrant, JB Oxford
                           & Company and certain Investors.

           10.20(a)        Warrant  Agreement  dated  November 21,                (4)
                           1995 between the Registrant,  JB Oxford
                           & Company and certain Investors.

           10.20(b)        First Amendment Warrant Agreement dated                (7)
                           November    21,    1996   between   the
                           Registrant,  JB Oxford  &  Company  and
                           certain Holders.

           10.20(c)        Registration   Rights  Agreement  dated                (4)
                           November   21,   1995    between    the
                           Registrant,  JB  Oxford  &  Company and
                           certain Investors.

           10.21           Employment Agreement dated November 20,                (4)
                           1995  between the Registrant and Steven
                           R. Verdooner.

           10.22           Employment Agreement dated November 20,                (4)
                           1995  between  the  Registrant  and  R.
                           Michael Clark.
</TABLE>
<PAGE> 21

<TABLE>
<CAPTION>

<S>         <C>               <C>                                                         <C>             
            10.23             Employment  Agreement  dated  July 14, 1997                 (9)
                              between  the  Registrant  and  William   L.
                              Mince.

            10.25             The  Registrant's  1995  Nonstatutory Stock                 (5)
                              Option Plan and sample form of Nonstatutory
                              Stock Option Agreement.

            10.26             The  Registrant's  1997  Nonstatutory Stock                (12)
                              Option Plan and sample form of Nonstatutory
                              Stock Option Agreement.
</TABLE>


<TABLE>
<CAPTION>
<S>      <C>          <C>      
         *            Incorporated  by  reference  to the like-numbered exhibits previously
                      filed with Registrant's Registration  Statement  on Form S-18, number
                      33-46864-LA.

         (1)          Incorporated  by  reference to the Registrant's Annual Report on Form
                      10-KSB for the fiscal  year  ended  August 31, 1993 filed on November
                      26, 1993.

         (2)          Incorporated  by  reference to the Registrant's Annual Report on Form
                      10-KSB for the fiscal  year  ended  August 31, 1994 filed on November
                      29, 1994.

         (3)          Incorporated  by  reference  to  the Registrant's Quarterly Report on
                      Form 10-QSB for the quarterly period ended May 31, 1995 filed on July
                      14, 1995.

         (4)          Incorporated  by  reference to the Registrant's Annual Report on Form
                      10-KSB for the fiscal  year  ended  August 31, 1995 filed on November
                      29, 1995.

         (5)          Incorporated  by reference to the Registrant's Registration Statement
                      on Form S-8 filed on May 28, 1996, number 333-0461.

         (6)          Incorporated by  reference  to  the  Registrant's Quarterly Report on
                      Form 10-QSB for the quarterly period ended May 31, 1996 filed on July
                      15, 1996.

         (7)          Incorporated  by  reference to the Registrant's Annual Report on Form
                      10-KSB for the fiscal  year  ended  August 31, 1996 filed on November
                      29, 1996.

         (8)          Incorporated  by  reference  to  the Registrant's Quarterly Report on
                      Form 10-QSB for the quarterly period ended May 31, 1997 filed on July
                      15, 1997.

         (9)          Incorporated  by  reference to the Registrant's Annual Report on Form
                      10-KSB for the fiscal year ended August 31, 1997 filed on December 1,
                      1997.

        (10)          Incorporated  by  reference to Exhibit 1 of the Registrant's Form 8-K
                      filed on January 2, 1998.

        (11)          Incorporated  by  reference   to  Exhibit  A  of  Exhibit  1  of  the
                      Registrant's Form 8-K filed on January 2, 1998.

<PAGE>22

        (12)          Incorporated by reference to the  Registrant's  Quarterly  Report  on
                      Form 10-QSB for the quarterly period ended November 30, 1997 filed on
                      January 14, 1998.

        (13)          Incorporated by reference to Exhibit 2.1 of the Registrant's Form 8-K
                      filed on March 9, 1998.

        (14)          Incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K
                      filed on March 9, 1998.
</TABLE>