U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                              --------------------

                                   FORM 10-QSB

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

For the quarterly period ended March 31, 2002

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, including area code)

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 May 10, 2002,  8,138,305  shares of common  stock,  at no par value,  were
outstanding.

Transitional Small Business Disclosure Format:

           Yes                            No        XX
                ---------------               ----------------



<PAGE>


                           OPHTHALMIC IMAGING SYSTEMS

                                   FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2002



PART I.    FINANCIAL INFORMATION                                       PAGE
                                                                       ----

Item 1.    Financial Statements

           Condensed Balance Sheet as of March 31, 2002                  2

           Condensed Statements of Operations for the Three Months
           ended March 31, 2002 and March 31, 2001                       3

           Condensed Statements of Cash Flows for the Three Months
           ended March 31, 2002 and March 31, 2001                       4

           Notes to Financial Statements                                 5

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                           9


PART 11.   OTHER INFORMATION

Item 1.    Legal Proceedings                                            15

Item 2.    Changes in Securities and Use of Proceeds                    15

Item 3.    Defaults upon Senior Securities                              15

Item 4.    Submission of Matters to a Vote of Security Holders          15

Item 5.    Other Information                                            15

Item 6.    Exhibits and Reports on Form 8-K                             15

<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS


                           Ophthalmic Imaging Systems

                             Condensed Balance Sheet

                                 March 31, 2002

                                   (Unaudited)


ASSETS
------

Current assets:
   Cash and equivalents                                            $     56,006
   Accounts receivable, net                                           1,280,224
   Inventories, net                                                     440,071
   Prepaid expenses and other current assets                             72,633
                                                                   -------------
Total current assets                                                  1,848,934

Furniture and equipment, net of accumulated
   depreciation and amortization of $1,279,837                          174,033

Other assets                                                             11,875
                                                                   ------------
                                                                   $  2,034,842
                                                                   =============


LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
   Notes payable to related party                                  $    520,543
   Accounts payable                                                     568,916
   Accrued liabilities                                                1,846,367
   Deferred extended warranty revenue                                   158,646
   Customer deposits                                                    452,105
   Capitalized lease obligation and other notes payable                   8,939
                                                                   -------------
Total current liabilities                                             3,555,516
                                                                   -------------

Noncurrent liabilities:

   Capitalized lease obligation, less current portion                     1,264

   Notes payable to related party, less current portion               1,656,577
                                                                   -------------
Total noncurrent liabilities                                          1,657,841

                                                                   -------------
Total liabilities                                                     5,213,357
                                                                   -------------

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;
      8,138,305 issued and outstanding                               12,630,604

   Accumulated deficit                                              (15,809,119)
                                                                   -------------
Total stockholders' deficit                                          (3,178,515)
                                                                   -------------
                                                                   $  2,034,842
                                                                   =============


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


                                       2

<PAGE>


                           Ophthalmic Imaging Systems

                       Condensed Statements of Operations

                                   (Unaudited)


                                                        Three months ended
                                                            March 31,
                                                      2002              2001
                                                      ----              ----


Net revenues                                       $ 1,739,829      $ 1,708,801

Cost of sales                                          682,059          816,752
                                                   ------------     ------------
Gross profit                                         1,057,770          892,049

Operating expenses:
     Sales and marketing                               518,329          531,317
     General and administrative                        364,154          274,666
     Research and development                           97,270           82,951
                                                   ------------     ------------
         Total operating expenses                      979,753          888,934
                                                   ------------     ------------
Income from operations                                  78,017            3,115

Other expense, net                                     (74,460)         (53,960)
                                                   ------------     ------------
Income (loss) before extraordinary item                  3,557          (50,845)

Extraordinary item                                          --          188,762
                                                   ------------     ------------
Net income                                         $     3,557      $   137,917
                                                   ============     ===========


Shares used in the calculation of basic
     net income per share                            8,138,305        8,138,305
                                                   ============     ============

Basic income (loss) per share before
     extraordinary item                            $      0.00      $      0.00

Extraordinary item                                          --             0.02
                                                   ------------     ------------
Basic net income per share                         $      0.00      $      0.02
                                                   ============     ============

Shares used in the calculation of diluted
     net income per share                            8,138,305        8,138,305
                                                   ============     ============

Diluted income (loss) per share before
     extraordinary item                            $      0.00      $      0.00

Extraordinary item                                          --             0.02
                                                   ------------     ------------
Diluted net income per share                       $      0.00      $      0.02
                                                   ============     ============


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


                                       3

<PAGE>


                                Ophthalmic Imaging Systems

                            Condensed Statements of Cash Flows

                                       (Unaudited)


<TABLE>
<CAPTION>

                                                                        Three months ended
                                                                            March 31,
                                                                     2002             2001
                                                                     ----             ----
<S>                                                               <C>               <C>
OPERATING ACTIVITIES:

Net income                                                        $   3,557         $ 137,917

Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation and amortization                                  18,679            29,622
      Stock option compensation expense                                  --             3,049
      Extraordinary gain on early exinguishment of debt                  --          (188,762)
      Net (increase) decrease in current assets other
          than cash and equivalents                                (389,561)           45,230
      Net increase in current liabilities
          other than short-term borrowings                          372,529            22,384
                                                                  ----------        ----------
Net cash provided by operating activities                             5,204            49,440

INVESTING ACTIVITIES:

Purchases of furniture and equipment                                 (8,034)          (29,493)
Net decrease (increase) in other assets                               1,015              (106)
                                                                  ----------        ----------
Net cash used in investing activities                                (7,019)          (29,599)

FINANCING ACTIVITIES:

Principal payments on notes payable                                  (1,905)           (1,709)

(Repayments of) proceeds from borrowings under
     notes payable to significant shareholders, net                 (12,200)           40,000
                                                                  ----------        ----------
Net cash (used in) provided by financing activities                 (14,105)           38,291
                                                                  ----------        ----------

Net (decrease) increase in cash and equivalents                     (15,920)           58,132

Cash and equivalents at beginning of period                          71,926            36,574
                                                                  ----------        ----------

Cash and equivalents at end of period                             $  56,006         $  94,706
                                                                  ==========        ==========


SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:

         Reduction in aggregate debt payable
         to significant shareholders in exchange for
         inventory and other noncash transactions, net            $ (58,236)        $(114,156)
                                                                  ==========        ==========

</TABLE>

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


                                       4

<PAGE>

                           Ophthalmic Imaging Systems

                     Notes to Condensed Financial Statements

                Three Month Periods ended March 31, 2002 and 2001

                                   (Unaudited)

Note 1.   Basis of Presentation

          The  accompanying  unaudited  condensed  balance sheet as of March 31,
          2002,  condensed  statements of operations for the three month periods
          ended March 31,  2002 and 2001 and the  condensed  statements  of cash
          flows for the three month  periods  ended March 31, 2002 and 2001 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 Ophthalmic  Imaging  Systems'  (the  "Company's")
          Annual  Report for the Twelve  Months Ended  December 31, 2001 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 March 31,
          2002 are not necessarily  indicative of the operating  results for the
          full year.

          Certain  amounts in the fiscal  2001  financial  statements  have been
          reclassified  to conform  with the  presentation  in the  fiscal  2002
          financial statements.

Note 2.   Net Income (Loss) Per Share

          Basic earnings (loss) per share ("EPS"),  which excludes dilution,  is
          computed by dividing income (loss) available to common shareholders by
          the  weighted-average  number of  common  shares  outstanding  for the
          period.  Diluted EPS reflects the potential  dilution that could occur
          if securities or other contracts to issue common stock,  such as stock
          options,  result in the  issuance of common  stock which shares in the
          earnings  of the  Company.  The  treasury  stock  method is applied to
          determine the dilutive  effect of stock  options in computing  diluted
          EPS.  However,  diluted  EPS is not  presented  when a net loss occurs
          because the conversion of potential common stock is antidilutive.



                                       5
<PAGE>

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

          The following  table sets forth the  computation  of basic and diluted
          income per share:

                                                      Unaudited
                                                  Three Months Ended
                                                       March 31,
                                              2002               2001
                                           -----------------------------

Numerator for basic and diluted net
income  per share                          $    3,557        $  137,917
                                           =============================

Denominator for basic net income
per share:

   Weighted average shares                  8,138,305         8,138,305

Effect of dilutive securities:
   Employee/director stock options                 --                --
   Warrants and other                              --                --
                                           -----------------------------
Dilutive potential common shares                   --                --


Denominator for diluted net income
per share                                   8,138,305         8,138,305
                                           =============================

Basic net income  per share                $     0.00        $     0.02
                                           =============================

Diluted net income  per share              $     0.00        $     0.02
                                           =============================


Note 3.   Notes Payable to Related Parties

          In July 2000, the Company, Premier Laser Systems, Inc. ("Premier"),  a
          California  corporation  and the Company's then majority  shareholder,
          and  MediVision  Medical  Imaging  Ltd.  ("MediVision"),   an  Israeli
          corporation,  entered into a series of definitive  agreements relating
          to the  transfer of  Premier's  ownership  interests in the Company to
          MediVision,  including,  among other  things,  converting  in favor of
          Premier the  Company's  entire debt owed to Premier,  calculated at an
          approximate  book value of $2.1 million,  into shares of the Company's
          common stock at a conversion price of $.55 per share. This occurred in
          August  2000  in  connection  with  the  closing  of the  transactions
          contemplated  by  the  definitive   agreements  (the  "Closing").   In
          addition,  at the Closing,  Premier and the Company  executed a mutual
          waiver and release of claims,  thereby  releasing  each other from any
          and all claims, whether known or unknown between them.

          Also in  connection  with this  transaction,  the  Company  executed a
          promissory note in favor of MediVision (the  "Short-Term  Note").  The
          Company  has  borrowed  the  maximum   principal  amount  of  $260,000
          available  under  the  Short-Term   Note,   which   principal   amount
          outstanding,  together  with  any  and  all  interest  is  payable  as
          stipulated in the Short-Term  Note.  Under the terms of the Short-Term
          Note,  borrowings  bear interest at the rate of 9.3% per annum and are
          secured by certain of the  Company's  assets.  At March 31, 2002,  the
          Company had recorded  approximately $301,000 in principal and interest
          outstanding under the Short-Term Note.  MediVision and the Company are
          in



                                       6
<PAGE>

          discussions with regard to reclassifying amounts currently owing under
          the  Short-Term  Note to amounts owing under the Working  Capital Note
          (as defined below).

          In further  connection  with the Closing in August  2000,  the Company
          executed a second promissory note in favor of MediVision (the "Working
          Capital Note").  The Company has borrowed the maximum principal amount
          of $1.5  million  available  under the  Working  Capital  Note,  which
          principal  amount  outstanding,  together  with  any and  all  accrued
          interest,  is payable by August 31, 2003 or as otherwise stipulated in
          the Working  Capital Note,  except that MediVision may, at its option,
          at any time  convert  any amount of  principal  and accrued but unpaid
          interest then outstanding into shares of the Company's common stock at
          a  conversion  price of $.80 per  share,  which  price is  subject  to
          adjustment  upon the  occurrence  of  certain  events set forth in the
          Working  Capital  Note.  Under the terms of the Working  Capital Note,
          borrowings bear interest at the rate of 9.3% per annum and are secured
          by all of the Company's assets.

          The Company and MediVision entered into Amendment No. 1 to the Working
          Capital Funding Agreement (the  "Amendment")  dated as of July 1, 2001
          whereby, among other things, the maximum principal amount of allowable
          borrowings  pursuant to the Working Capital Funding  Agreement entered
          into in  connection  with the Closing was  increased  by $1 million to
          $2.5 million.  In connection with the Amendment,  the Company executed
          in favor of MediVision a promissory note in the aggregate amount of $1
          million (the "Amendment Note"). Under the terms of the Amendment Note,
          all principal amounts  outstanding,  together with any and all accrued
          interest,  is payable by August 31, 2003 or as otherwise stipulated in
          the Amendment Note,  except that MediVision may, at its option, at any
          time convert any amount of principal  and accrued but unpaid  interest
          then  outstanding  into  shares  of the  Company's  common  stock at a
          conversion  price of $0.185  per  share,  which  price is  subject  to
          adjustment  upon the  occurrence  of  certain  events set forth in the
          Amendment Note. Under the terms of the Amendment Note, borrowings bear
          interest  at the rate of 9.3% per annum and are  secured by all of the
          Company's assets.

          At  March  31,  2002,   the  Company  had   recorded,   in  aggregate,
          approximately  $2,381,000 in principal and interest  outstanding under
          the Working Capital Note and Amendment Note.

          At March 31, 2002, the Company had recorded  approximately  $2,177,000
          in  aggregate  debt  owed  to  MediVison,   which  amount  is  net  of
          approximately  $505,000 in accounts  receivable recorded in connection
          with sales of the Company's products to MediVision.

Note 4    MediVision and Premier Transactions

          In  February  2000,  Premier,  then  a  significant  shareholder  with
          majority  voting control of the Company,  notified the Company that it
          was considering seeking protection under the U.S. Bankruptcy Code (the
          "Code") and the Company



                                       7
<PAGE>

          thereupon  terminated a merger agreement and rendered as non-effective
          a  manufacturing  agreement  and certain  other  arrangements  then in
          effect between the parties.  In March 2000,  Premier filed a voluntary
          petition for  protection  and  reorganization  under Chapter 11 of the
          Code.

          In July 2000,  the  Company,  Premier and  MediVision  entered  into a
          series of definitive  agreements relating to the transfer of Premier's
          ownership  interests in the Company to MediVision (see Note 3). At the
          Closing,  MediVision  purchased  all of the stock of the Company  then
          held by  Premier,  including  150  shares  of the  Company's  Series B
          Preferred  Stock  which were  converted  by their terms into shares of
          common stock,  and 3,832,727 shares of common stock issued pursuant to
          the conversion of the Premier debt.

          As a result of the foregoing  transactions,  MediVision currently owns
          approximately 73% of the Company's outstanding common stock.

Note 5    Extraordinary Item

          In March 2001, the Company  reached  agreement with Imperial Bank (the
          "Bank") to retire  the  aggregate  amount of  principal  and  interest
          previously  recorded pursuant to a stock appreciation right granted to
          the Bank in connection with a credit agreement.  Accordingly, the debt
          forgiven  in  the  amount  of  $188,762  has  been  recognized  as  an
          extraordinary  item in the financial  statements for the quarter ended
          March 31, 2001.



                                       8
<PAGE>

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

          This report contains forward-looking  statements within the meaning of
the federal securities laws. The Company intends such forward-looking statements
to be covered by the safe  harbor  provisions  contained  in Section  27A of the
Securities  Act of 1933,  as amended,  and in Section 21E of the Exchange Act of
1934,  as  amended.  Forward-looking  statements,  which  are  based on  certain
assumptions  and describe  future  plans,  strategies  and  expectations  of the
Company,  are generally  identifiable by use of the words  "believe,"  "expect,"
"intend,"  "anticipate,"  "estimate,"  "project,"  or similar  expressions.  The
Company's  ability to predict  results or the actual  effect of future  plans or
strategies is inherently uncertain.  Factors which could have a material adverse
effect on its operations and future prospects  include,  but are not limited to,
changes in: economic  conditions  generally and the medical  instruments  market
specifically, legislative or regulatory changes affecting the Company, including
changes in healthcare  regulation,  the  availability  of working  capital,  the
introduction of competing  products,  and other risk factors  described  herein.
These risks and uncertainties, together with the other risks described from time
to time in reports and documents  filed by the Company with the  Securities  and
Exchange   Commission   should  be  considered  in  evaluating   forward-looking
statements, and undue reliance should not be placed on such statements.  Indeed,
it is likely that some of the Company's  assumptions will prove to be incorrect.
The  Company's  actual  results  and  financial  position  will vary from  those
projected or implied in the forward-looking statements, and the variances may be
material.

Overview
--------

          To  date,  the  Company  has  designed,  developed,  manufactured  and
marketed ophthalmic digital imaging systems and has derived substantially all of
its revenues from the sale of such  products.  The primary target market for the
Company's  digital  angiography  systems and related products has  traditionally
been retinal specialists.

          The Company  introduced a new line of digital  angiography  systems at
the 2000 Annual Meeting of the American Academy of Ophthalmology ("AAO") held in
Dallas,  Texas. One of these products has received considerable interest and the
Company has received  significant  purchase commitments for this product. At the
2001 Annual  Meeting of the AAO held in New Orleans,  Louisiana  during the last
quarter of 2001, the Company  introduced its latest digital imaging system,  the
WinStation  5000, which has also been positively  received.  Since their initial
introduction, the preponderance of the Company's revenues has come from the sale
of these products, including upgrades.

          In recent years, the Company expended research and development efforts
on product  offerings and applications  targeting the broader markets of general
ophthalmology and optometry. Two such products resulting from these efforts, the
Digital Fundus Imager (the "DFI") and the Digital Slit Lamp Imager (the "DSLI"),
were introduced in the latter half of 1998, with the DFI receiving  considerable
interest.  After  generating  substantial  revenues from sales of these products
initially,  on-going  revenues  from the sale of these  products  continue to be
below  management's  original  expectations.  Nonetheless,  the Company  remains
committed


                                       9
<PAGE>

to these products and continues to evaluate  product  features and  enhancements
considering customer feedback and other market conditions and factors.

          The extent and focus of future research and  development  efforts will
depend,  in large measure,  on direction from  MediVision,  including  potential
collaborative  projects  between  MediVision and the Company,  one of which such
projects has been undertaken commencing in the last quarter of fiscal 2000.

          At March 31, 2002, the Company had an accumulated deficit in excess of
$15,000,000  and  its  current  liabilities   exceeded  its  current  assets  by
approximately  $1,707,000.   The  Company  continues  to  experience  cash  flow
pressures and there can be no assurance that the Company will be able to achieve
or sustain  significant  positive cash flows,  revenues or  profitability in the
future.

MediVision and Premier Transactions
-----------------------------------

          In  February  2000,  Premier,  then  a  significant  shareholder  with
majority  voting  control  of the  Company,  notified  the  Company  that it was
considering  seeking  protection  under  the  Code  and  the  Company  thereupon
terminated a merger  agreement  and rendered as  non-effective  a  manufacturing
agreement and certain other arrangements then in effect between the parties.  In
March 2000, Premier filed a voluntary petition for protection and reorganization
under Chapter 11 of the Code.

          In July 2000,  the  Company,  Premier and  MediVision  entered  into a
series of definitive  agreements relating to the transfer of Premier's ownership
interests in the Company to MediVision (see Note 3). At the Closing,  MediVision
purchased  all of the stock of the Company then held by Premier,  including  150
shares of the Company's  Series B Preferred  Stock which were converted by their
terms into shares of common stock,  and 3,832,727  shares of common stock issued
pursuant to the conversion of the Premier debt.

          As a result of the foregoing  transactions,  MediVision currently owns
approximately 73% of the Company's outstanding common stock.

          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.



                                       10
<PAGE>

Results of Operations
---------------------

Comparison  of Three Months Ended March 31, 2002 to Three Months Ended March 31,
2001

Revenues

          The Company's revenues for the first quarter ended March 31, 2002 were
$1,739,829,  representing  an  increase  of  approximately  2% from  revenues of
$1,708,801  for the first  quarter  ended  March 31,  2001.  The amounts in both
periods include  revenues from deliveries of the Company's  digital  angiography
systems  introduced  at the annual AAO meeting  held in the  preceding  quarter.
Sales of these products, including upgrades, accounted for approximately 84% and
59% of the  Company's  total  revenues  for the first  quarter of 2002 and 2001,
respectively. Revenues from sales of systems incorporating the Company's DFI and
DSLI products continue to be below initial management expectations and accounted
for  approximately  1% and 11% of first quarter  revenues  during 2002 and 2001,
respectively.

Gross Margins

          Gross  margins were  approximately  61% during the first quarter ended
March 31, 2002 versus  approximately 52% for the comparable quarter of 2001. The
Company has undertaken certain gross margin enhancement efforts and continues to
monitor its expenses in this area in  contemplation  of current and  anticipated
business conditions.

Sales, Marketing, General and Administrative Expenses

          Sales and marketing and general and administrative  expenses accounted
for  approximately 51% of total revenues during the first quarter of fiscal 2002
as compared  with  approximately  47% during the first  quarter of fiscal  2001.
Actual  expense  levels  increased to $882,483  during the first quarter of 2002
versus $805,983 during the first quarter of 2001. Primary  contributing  factors
to the  increased  expenses  were  salaries and support  costs related to direct
sales and other support  personnel added subsequent to the first quarter of 2001
as well as other costs in connection with the Company's selling efforts in 2002.

Research and Development Expenses

          Research and development  expenses  increased by approximately  17% to
$97,270,  or  approximately  6% of revenues in the first  quarter of fiscal 2002
from $82,951,  or  approximately  5% of revenues in fiscal 2001. The Company has
focused its recent research and development efforts on new digital image capture
products and reducing cost configurations for its current products.

Other Expense

          Other  expense  was  $74,460  during the first  quarter of fiscal 2002
versus  $53,960  during the same period of 2001.  These  amounts were  comprised
principally of interest  expense,  mainly  associated  with net borrowings  from
MediVision.

Net Income

          The Company recorded net income of $3,557, or breakeven per share, for
the first quarter ended March 31, 2002 as compared to net income of $137,917, or
$.02 per share, for the first quarter ended March 31, 2001.



                                       11
<PAGE>

          The 2001 figures include an  extraordinary  gain of $188,762,  or $.02
per share,  resulting  from the  negotiated  reduction of certain  principal and
interest  charges  previously  recorded in connection with a stock  appreciation
right  granted the Bank  discussed  in further  detail in Note 5 of the Notes to
Condensed Financial Statements included in Item 1 of this Form 10-QSB.

          The results of operations do not include any amounts with respect to a
potential  contingent  liability in connection with the collection of taxes from
the  Company's  customers,  which  amount  has been  estimated  on the  basis of
numerous factors and assumptions that might, in the least favorable combination,
reach  $2.1  million.  Management  believes  that  the  probability  of  such an
assessment  is remote  and  accordingly,  has not  recorded a  liability  in its
financial  statements.  However,  there can be no assurance that the amount that
might  ultimately be assessed for prior periods would not materially  affect the
Company's results of operations or cash flows in any given reporting period.

Liquidity and Capital Resources
-------------------------------

          The Company's  operating  activities  generated  cash of $5,204 in the
first  quarter  ended March 31, 2002 as compared to $49,440 in the first quarter
ended March 31, 2001.  The cash  generated  during the first quarter of 2002 was
principally  from  increases in accrued  liabilities  and  increases in customer
deposits  from orders  generated  pursuant  the recently  completed  2001 Annual
Meeting  of the AAO,  which  amounts  were  substantially  offset  by  increased
accounts receivable levels associated with deliveries made toward the end of the
quarter and, to a lesser extent,  increased  inventory levels during the period.
The  cash  generated  from  operations  during  the  first  quarter  of 2001 was
principally  from  increases  in  accrued  liabilities,  increases  in  customer
deposits  from  orders and  reduced  inventory  levels  during the  period,  the
aggregate  impact  of which was only  partially  offset  by  increased  accounts
receivable levels associated with end of quarter sales,  including  intercompany
sales of the Company's products to MediVision.

          Cash used in investing  activities was $7,019 during the first quarter
of 2002 as compared to $29,599  during the same period for 2001.  The  Company's
primary  investing  activities  consist of  equipment  and other  capital  asset
acquisitions.  The  Company  anticipates  continued  certain  near-term  capital
expenditures   in  connection  in  connection   with   increasing  its  pool  of
demonstration  equipment, as well as its ongoing efforts to upgrade its existing
management   information  and  corporate   communication  systems.  The  Company
anticipates that related  expenditures,  if any, will be financed from cash flow
from operations,  borrowings  under existing  arrangements  with MediVision,  if
available, or other financing arrangements, if any, available to the Company.

          The Company used cash in financing  activities  of $14,105  during the
first  quarter of 2002 as  compared  to  generating  cash of $38,291  during the
comparable  period of 2001.  The cash used in  financing  activities  during the
first  quarter  of 2002 was  principally  to reduce  borrowings  under  existing
arrangements with MediVision.  The cash provided by financing  activities during
the first quarter of fiscal 2001 was principally from increased borrowings under
said  arrangements  with MediVision.  Principal  payments on notes payable other
than to significant shareholders in both years were minimal.



                                       12
<PAGE>

          As  discussed  further  above and in Note 3 and Note 4 of the Notes to
Condensed  Financial  Statements included in Item 1 of this Form 10-QSB, on July
21, 2000, the Company  executed the Short-Term Note and the Company has borrowed
the maximum principal amount of $260,000 available under the Short-Term Note. At
March 31, 2002, the Company had recorded approximately $301,000 in principal and
interest  outstanding  under the Short-Term Note and the Company is currently in
discussions with MediVision with regard to reclassifying amounts currently owing
under the Short-Term Note to amounts owing under the Working Capital Note.

          In  addition,  in  connection  with the  Closing in August 2000 of the
transactions  contemplated by the MediVision  Investments,  the Company executed
the Working Capital Note. The Company has borrowed the maximum  principal amount
available under the Working Capital Note of $1,500,000,  which principal  amount
outstanding,  together with any and all accrued  interest,  is payable by August
31,  2003,  except that any  principal  and accrued but unpaid  interest  amount
outstanding is convertible at any time at MediVision's option into shares of the
Company's common stock at a conversion price of $0.80 per share. Under the terms
of the Working  Capital Note,  borrowings  bear interest at the rate of 9.3% per
annum, are secured by substantially all of the Company's assets.

          In July 2001,  the Company and  MediVision  entered into the Amendment
whereby,   among  other  things,  the  maximum  principal  amount  of  allowable
borrowings  pursuant to the Working  Capital Funding  Agreement  entered into in
connection  with the Closing was  increased  by $1 million to $2.5  million.  In
connection  with the Amendment,  the Company  executed in favor of the Amendment
Note. Under the terms of the Amendment Note, all principal amounts  outstanding,
together with any and all accrued interest,  is payable by August 31, 2003 or as
otherwise  stipulated in the Amendment Note,  except that MediVision may, at its
option,  at any time  convert  any amount of  principal  and  accrued but unpaid
interest  then  outstanding  into  shares  of the  Company's  common  stock at a
conversion price of $0.185 per share,  which price is subject to adjustment upon
the  occurrence  of certain  events set forth in the Amendment  Note.  Under the
terms of the Amendment  Note,  borrowings  bear interest at the rate of 9.3% per
annum and are secured by all of the Company's assets.

          At  March  31,  2002,   the  Company  had   recorded,   in  aggregate,
approximately $2,381,000 in principal and interest outstanding under the Working
Capital Note and the Amendment Note.

          At March 31, 2002, the Company had recorded  approximately  $2,177,000
in  aggregate  debt owed to  MediVision,  which  amount is net of  approximately
$505,000  in  accounts  receivable  recorded  in  connection  with  sales of the
Company's products to MediVision.

          Notwithstanding  the  foregoing,   the  Company's   relationship  with
MediVision,  will, in management's opinion,  significantly improve the Company's
financial  condition  and  enhance  management's  ability to  achieve  sustained
profitable operations, particularly in light of the agreement between MediVision
and Agfa-Gevaert  N.V. entered into during the fourth quarter of 2001.  Pursuant
to the  agreement,  Agfa acquired a minority  interest


                                       13
<PAGE>

in MediVision  and is to invest in MediVision up to $3.5 million,  $1 million of
which was provided in connection with the closing in October 2001 and $1 million
of which was paid in April 2002.  Under the terms of the Agreement,  among other
things, Agfa and MediVision will jointly develop, promote and market a combined,
Integrated  Digital  Ophthalmology  Picture Archive & Communication  System. The
Company anticipates actively supporting MediVision in these efforts.

          The Company's relationship with MediVision provides the Company access
to  resources in addition to working  capital.  As a direct  consequence  of the
MediVision  transactions,  the  Company has  implemented  certain  gross  margin
enhancement  efforts,  including improved production cost control and sustaining
engineering  programs.  In addition,  the Company and  MediVision are continuing
collaborative  efforts  with  respect  to design and  implementation  of certain
product  development  programs.  Furthermore,  the relationship  with MediVision
could  assist the  Company  in  reducing  selling,  general  and  administrative
expenses,   particularly   in  connection  with   co-marketing   and  co-selling
arrangements  currently  contemplated  with  respect  to  certain  international
markets.

          Irrespective  of the foregoing,  the Company will continue to evaluate
alternative  sources of capital to meet its cash  requirements,  including other
asset or debt  financing,  issuing  equity  securities  and entering  into other
financing arrangements and is hopeful that it will be successful in this regard.
There  can be no  assurance,  however,  that any of the  contemplated  financing
arrangements  described  herein  will be  available  and, if  available,  can be
obtained on terms favorable to the Company.



                                       14
<PAGE>


                            PART II OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
          None.

ITEM 2.   CHANGES IN SECURITIES
          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          None.

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

ITEM 5.   OTHER INFORMATION
          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          (a)       None.
          (b)       None.



                                       15
<PAGE>


                                   SIGNATURES

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

                                            OPHTHALMIC IMAGING SYSTEMS
                                            (Company)


                                            By:   /s/ GIL ALLON
                                                  ----------------------------
                                                  Gil Allon,
                                                  Chief Executive Officer
                                                  and Chief Financial Officer

Dated:  May 10, 2002



                                       16