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, 2001

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 21, 2001, 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, 2001
<TABLE>
<CAPTION>


PART I.      FINANCIAL INFORMATION                                            Page
                                                                              ----
<S>          <C>                                                              <C>
Item 1.      Financial Statements

             Condensed Balance Sheet as of March 3, 2001                      2

             Condensed Statements of Operations for the Three Months
             ended March 31, 2001 and March 31, 2000                          3

             Condensed Statements of Cash Flows for the Three Months
             ended March 31, 2001 and March 31, 2000                          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                                                16

Item 2.      Changes in Securities and Use of Proceeds                        16

Item 3.      Defaults upon Senior Securities                                  16

Item 4.      Submission of Matters to a Vote of Security Holders              16

Item 5.      Other Information                                                16

Item 6.      Exhibits and Reports on Form 8-K                                 16
</TABLE>


<PAGE>

                    PART I           FINANCIAL INFORMATION

ITEM 1.    FINANACIAL STATEMENTS

                               Ophthalmic Imaging Systems
                                Condensed Balance Sheet
                                     March 31, 2001
                                      (Unaudited)
<TABLE>
<CAPTION>
ASSETS
------
Current assets:
<S>                                                                             <C>
      Cash and equivalents                                             $          94,706
      Accounts receivable, net                                                   430,256
      Inventories, net                                                           311,721
      Prepaid expenses and other current assets                                   22,635
                                                                       ------------------
Total current assets                                                             859,318
Furniture and equipment, net of accumulated
      depreciation and amortization of $1,166,454                                211,859
Other assets                                                                      10,401
                                                                       ------------------
                                                                       $       1,081,578
                                                                       ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
      Notes payable to related party                                   $         343,293
      Accounts payable                                                           603,151
      Accrued liabilities                                                      1,311,538
      Accrued warrant appreciation right                                               -
      Deferred extended warranty revenue                                         117,188
      Customer deposits                                                          464,251
      Capitalized lease obligation and other notes payable                         8,939
                                                                       ------------------
Total current liabilities                                                      2,848,360
                                                                       ------------------

Noncurrent liabilities:
      Capitalized lease obligation, less current portion                           8,725
      Notes payable to related party, less current portion                     1,341,102
                                                                       ------------------
Total noncurrent liabilities                                                   1,349,827

                                                                       ------------------
Total liabilities                                                              4,198,187
                                                                       ------------------

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
      Deferred compensation                                                            -
      Accumulated deficit                                                    (15,747,213)
                                                                       ------------------
Total stockholders' deficit                                                   (3,116,609)
                                                                       ------------------
                                                                       $       1,081,578
                                                                       ==================
</TABLE>

SEE ACCOMPANYING NOTES.

                                       2
<PAGE>

                           Ophthalmic Imaging Systems
                       Condensed Statements of Operations
                                   (Unaudited)

                                           Three months ended March 31,
                                              2001               2000
                                         ----------------   ---------------

Net revenues                             $     1,708,801    $    1,590,620
Cost of sales                                    816,752           777,268
                                         ----------------   ---------------
Gross profit                                     892,049           813,352
Operating expenses:
     Sales and marketing                         531,317           449,088
     General and administrative                  274,666           280,128
     Research and development                     82,951            59,321
                                         ----------------   ---------------
         Total operating expenses                888,934           788,537
                                         ----------------   ---------------
Income from operations                             3,115            24,815
Other expense, net                               (53,960)          (22,737)
                                         ----------------   ---------------
Income (loss) before extraordinary item          (50,845)            2,078
Extraordinary item                               188,762                 -
                                         ----------------   ---------------
Net income                               $       137,917    $        2,078
                                         ================   ===============

Shares used in the calculation of basic
     net income per share                      8,138,305         4,305,428
                                         ================   ===============
Basic income (loss) per share before
     extraordinary item                  $             -    $            -
Extraordinary item                                  0.02                 -
                                         ----------------   ---------------
Basic net income per share               $          0.02    $            -
                                         ================   ===============

Shares used in the calculation of diluted
     net income per share                      8,138,305         4,334,209
                                         ================   ===============
Diluted income (loss) per share before
     extraordinary item                  $             -    $            -
Extraordinary item                                  0.02                 -
                                         ----------------   ---------------
Diluted net income per share             $          0.02    $            -
                                         ================   ===============

SEE ACCOMPANYING NOTES.
                                       3
<PAGE>

                                Ophthalmic Imaging Systems
                            Condensed Statements of Cash Flows
                       Increase (Decrease) in Cash and Equivalents
                                       (Unaudited)
<TABLE>
<CAPTION>

                                                            Three months ended March 31,
                                                                2001             2000
                                                           ---------------  ---------------
OPERATING ACTIVITIES:
<S>                                                             <C>                <C>
Net income                                                 $      137,917   $        2,078
Adjustments to reconcile net income to net cash
     used in operating activities:
         Depreciation and amortization                             29,622           31,746
         Stock option compensation expense                          3,049           19,722
         Extraordinary gain on early extinguishment of debt      (188,762)
         Net decrease in current assets other
             than cash and equivalents                             45,230          171,648
         Net increase in current liabilities
             other than short-term borrowings                      22,384           87,419
                                                           ---------------  ---------------
Net cash provided by operating activities                          49,440          312,613

INVESTING ACTIVITIES:
Purchases of furniture and equipment                              (29,493)               -
Net increase in other assets                                         (106)         (10,279)
                                                           ---------------  ---------------
Net cash used in investing activities                             (29,599)         (10,279)

FINANCING ACTIVITIES:
Principal payments on notes payable                                (1,709)          (2,019)
Proceeds from (repayments of) borrowings under
     notes payable to significant shareholders, net                40,000         (309,339)
Net repayments of credit facility borrowings                            -          (24,844)
                                                           ---------------  ---------------
Net cash provided by (used in) financing activities                38,291         (336,202)
                                                           ---------------  ---------------
Net increase (decrease) in cash and equivalents                    58,132          (33,868)
Cash and equivalents at beginning of period                        36,574          212,586
                                                           ---------------  ---------------
Cash and equivalents at end of period                      $       94,706   $      178,718
                                                           ===============  ===============

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
         (Reduction) increase in aggregate debt payable
         to significant shareholders in exchange for
         inventory and other noncash transactions, net     $     (114,156)  $      454,675
                                                           ===============  ===============
</TABLE>

SEE ACCOMPANYING NOTES.

                                       4
<PAGE>

                           Ophthalmic Imaging Systems

                     Notes to Condensed Financial Statements

                Three Month Periods ended March 31, 2001 and 2000

                                   (Unaudited)

Note 1.         Basis of Presentation

                The accompanying unaudited condensed balance sheet as of March
                31, 2001, condensed statements of operations for the three month
                periods ended March 31, 2001 and 2000 and the condensed
                statements of cash flows for the three month periods ended March
                31, 2001 and 2000 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) Transition Report for the Four Months Ended December
                31, 2000 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, 2001
                are not necessarily indicative of the operating results for the
                full year.

                Certain amounts in the fiscal 2000 financial statements have
                been reclassified to conform with the presentation in the fiscal
                2001 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 are 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,
                                                 2001            2000
                                            --------------- ---------------
         Numerator for basic and diluted
         net income  per share                   $ 137,917       $ 2,078
                                            ===============================

         Denominator for basic net income
         per share:
            Weighted average shares              8,138,305     4,305,428

         Effect of dilutive securities:
            Employee/director stock options             --        28,781
            Warrants and other                          --            --
                                            -------------------------------
         Dilutive potential common shares               --        28,781
                                            -------------------------------
         Denominator for diluted net income
         per share                               8,138,305     4,334,209
                                            ===============================

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

         Diluted net income  per share             $ 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 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 the definitive agreements, in July 2000,
                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 accrued interest, was payable the earlier of the closing or
                termination of the transactions contemplated by the definitive
                agreements, October 13, 2000 or as otherwise 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, 2001,
                the Company had recorded approximately $277,000 in principal and
                interest outstanding under the Short-Term Note. MediVision and
                the Company are in discussions with regard to reclassifying
                amounts currently owing under the Short-Term Note to amounts
                owing under the Working Capital Note discussed in further detail
                below.

                                       6

<PAGE>

                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. At March 31, 2001,
                the Company had recorded approximately $1,601,000 in principal
                and interest outstanding under the Working Capital Note.

                At March 31, 2001, the Company had recorded approximately
                $1,684,000 in aggregate debt owed to MediVison, which amount is
                net of accounts receivable recorded in connection with sales of
                the Company's products to MediVision. In addition, at that date
                the Company and MediVision were in negotiations to, among other
                things, increase the principal amount under the Working Capital
                Note.

Note 4          MediVision and Premier Transactions

                In February 1998, the Company and Premier entered into a Stock
                Purchase Agreement (the "Stock Purchase Agreement"), whereby
                Premier would offer to by those shares of the Company's common
                stock not already owned by it. In August 1998, however, Premier
                notified the Company that, due to a variety of factors, Premier
                would not be able to close the transactions contemplated under
                the Stock Purchase Agreement and the Company thereupon
                terminated the Stock Purchase Agreement.

                In October 1999, the Company and Premier entered into an
                Agreement and Plan of Reorganization (the "Merger Agreement"),
                whereby, upon requisite shareholder approval, the Company would
                have become a wholly-owned subsidiary of Premier.

                Also in October 1999, the Company and Premier entered into two
                stock purchase agreements with respect to the Company's Series B
                Preferred Stock whereby, among other things, Premier purchased
                150 shares of the Company's Series B Preferred Stock with each
                share carrying the voting power of 1,000 shares of the Company's
                common stock, at a per share price of $25 in exchange for
                Premier's cancellation of certain of the Company's debt in the
                aggregate amount of $3,750.

                In February 2000, Premier notified the Company that it was
                considering seeking protection under the U.S. Bankruptcy Code
                and the Company thereupon terminated the Merger Agreement. In
                March 2000, Premier filed a voluntary petition for protection
                and reorganization under Chapter 11 of the U.S. Bankruptcy Code.

                                       7

<PAGE>

                As a result of the foregoing transactions, at the time of its
                bankruptcy filing, Premier owned 49 1/2% of the Company's
                outstanding common stock and all 150 shares of the Company's
                Series B Preferred Stock, thereby giving Premier majority voting
                control.

                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, among other things, 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 OIS, 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 OIS WITH THE SEC 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 its newest line of digital angiography systems, the
WinStation 1400 and WinStation 3000, at the recently concluded 2000 Annual
Meeting of the American Academy of Ophthalmology held in Dallas, Texas. These
products have received considerable interest and the Company has received
significant purchase commitments for these products. The Company commenced
commercial delivery of these systems during the first quarter ended March 31,
2001.

     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.

     The Company, however, had limited financial and operational resources to
meet the demand resulting from the introduction of the DFI. In that regard,
during 1999, the Company entered into a manufacturing agreement (the
"Manufacturing Agreement") with Premier Laser Systems, Inc. ("Premier"), a
California corporation and the Company's majority shareholder at the time,
whereby Premier began assembling and manufacturing the Company's products,
including the DFI and DSLI. In addition, the Company agreed with Premier on
certain co-marketing

                                       9
<PAGE>

and selling arrangements and the two companies began selling their ophthalmic
products through a jointly managed EyeSys Vision Group.

     The Company entered into these arrangements in anticipation of the Merger
Agreement, discussed in further detail below, and consummation of the
transactions contemplated thereby.

     In February 2000, however, Premier informed the Company of its inability to
pursue acquisition of the Company under the Merger Agreement and its intentions
to seek voluntary bankruptcy protection under Chapter 11 of the U.S. Bankruptcy
Code. The Company responded by terminating the Merger Agreement.

     As a consequence of the termination of the Merger Agreement in February
2000 and Premier's filing for protection under the U.S. Bankruptcy Code in March
2000, the co-marketing and selling arrangements between the companies became
non-effective and Premier discontinued producing the Company's products under
the Manufacturing Agreement. The Company subsequently resumed manufacture and
assembly of its products in its facilities in Sacramento, California but
incurred increased costs and significant delays in production and product
deliveries as a result of these failed arrangements. The Company also noted a
reduction in its new order bookings following the termination of the Merger
Agreement and Premier's subsequent filing for bankruptcy protection.

     In July 2000, the Company, Premier and MediVision entered into a series of
agreements, discussed in further detail below, the closing of which in August
2000 resulted in, among other things, transfer of majority voting control of the
Company from Premier to MediVision, conversion of the debt owed to Premier to
shares of the Company's common stock and capital commitments to the Company by
MediVision of $1,500,000.

     The Company has experienced operating losses for each fiscal year since its
initial public offering in 1992. At March 31, 2001, the Company had an
accumulated deficit in excess of $15,000,000 and its current liabilities
exceeded its current assets by approximately $1,989,000. 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
-----------------------------------

     On February 25, 1998, the Company and Premier entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), whereby Premier would offer to buy
those shares of the Company's common stock not already owned by it. In August
1998, however, Premier notified that Company that, due to a variety of factors,
Premier would not be able to close the transactions contemplated under the Stock
Purchase Agreement and the Company thereupon terminated the Stock Purchase
Agreement. As a result of such termination, the Company made demand to Premier
for payment of a $500,000 termination fee (the "Termination Fee") as provided
for in the Stock Purchase Agreement. The demand was not pursued at the time
because of a revival of plans for merger of the companies.

     On October 21, 1999, the Company and Premier entered into an Agreement and
Plan of Reorganization (the "Merger Agreement") whereby, upon requisite
shareholder approval, the Company would have become a wholly-owned subsidiary of
Premier.

                                       10
<PAGE>

     Also on October 21, 1999, the Company and Premier entered into two stock
purchase agreements with respect to the Company's Series B Preferred Stock
whereby, among other things, Premier purchased 150 shares of the Company's
Series B Preferred Stock with each share carrying the voting power of 1,000
shares of the Company's common stock, at a per share price of $25 in exchange
for Premier's cancellation of certain of the Company's debt in the aggregate
amount of $3,750.

     In February 2000, Premier notified the Company that it was considering
seeking protection under the U.S. Bankruptcy Code and the Company thereupon
terminated the Merger Agreement on February 17, 2000. In March 2000, Premier
filed a voluntary petition for protection and reorganization under Chapter 11 of
the U.S. Bankruptcy Code.

     As a result of the foregoing transactions, at the time of its bankruptcy
filing, Premier owned 49.5% of the Company's outstanding common stock and all
150 outstanding shares of the Company's Series B Preferred Stock, thereby giving
Premier majority voting control.

     On July 13, 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 in exchange for cash and stock (the
"MediVision Investments"). In separate but related transactions, MediVision
loaned the Company $260,000 as short-term funding for continued operations and,
upon the closing of the transactions contemplated under the agreements in August
2000 (the "Closing"), MediVision has committed to loan up to $1,500,000 to the
Company, which is convertible at MediVision's option into shares of the
Company's common stock. Pursuant to the agreements relating to the MediVision
Investments, among other things: (i) the Company's entire debt owed to Premier,
calculated at an approximate book value of $2,100,000, was converted per the
agreements in favor of Premier into shares of the Company's common stock at a
conversion price of $0.55 per share; and (ii) 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.

     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, including the $500,000
Termination Fee claimed by the Company against Premier.

     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.

                                       11
<PAGE>

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

Revenues

     The Company's revenues for the first quarter ended March 31, 2001 were
$1,708,801 representing an increase of approximately 7% from revenues of
$1,590,620 for the first quarter ended March 31, 2000. The increased revenue
levels during fiscal 2001 include revenues from initial deliveries of the
Company's newest digital angiography systems, the WinStation 1400 and WinStation
3000. Sales of these products accounted for approximately 59% of the Company's
total revenues for the 2001 first quarter. Revenues from sales of systems
incorporating the Company's DFI and DSLI products continue to be below initial
management expectations and accounted for approximately 11% and 8% of first
quarter revenues during 2001 and 2000, respectively.

Gross Margins

     Gross margins were approximately 52% during the first quarter ended March
31, 2001 versus approximately 51% for the comparable quarter of 2000. Pursuant
to the Closing of the transactions with MediVision, the Company has, with
support from MediVision, 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 47% of total revenues during the first quarter of fiscal 2001 as
compared with approximately 46% during the first quarter of fiscal 2000. Actual
expense levels increased to $805,983 during the first quarter of 2001 versus
$729,216 during the first quarter of 2000. Primary contributing factors to the
increased expenses were professional, administrative and other costs in
connection with or as a consequence of the transactions with MediVision.
Subsequent to the Closing of the transactions with MediVision, the Company has
hired, among others, a Director of Operations and has undertaken recruitment
efforts for management and other personnel in this and other areas.

Research and Development Expenses

     Research and development expenses increased by approximately 40% to
$82,951, or approximately 5% of revenues in the first quarter of fiscal 2001
from $59,321, or approximately 4% of revenues in fiscal 2000. The Company has
focused its recent research and development efforts on new digital image capture
products and reducing cost configurations for its current products. 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.

Other Expense

     Other expense was $53,960 during the first quarter of fiscal 2001 versus
$22,737 during the same period of 2000. These amounts were comprised principally
of interest expense associated with net borrowings from MediVision and Premier
during fiscal 2001 and 2000, respectively, as well as interest expense during
both periods in connection with

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<PAGE>

a stock appreciation right granted to the Company's bank discussed in further
detail below. The fiscal 2000 expenses were partially offset by an insurance
claim settlement during the first quarter.

Net Income

     The Company recorded net income of $137,917, or $.02 per share, for the
first quarter ended March 31, 2001 as compared to net income of $2,078, or
breakeven per share, for the first quarter ended March 31, 2000.

     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 to the Company's bank (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 $1.8 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 $49,440 in the first
quarter ended March 31, 2001 as compared to $312,613 in the first quarter ended
March 31, 2000. The cash generated from operations during the first quarter of
2001 was principally from increases in accrued liabilities, increases in
customer deposits from orders generated pursuant to the recently completed 2000
AAO Meeting 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. The cash provided by operations during the
first quarter of fiscal 2000 resulted principally from increased accounts and
other payable amounts associated with the procurement of inventory, including
inventory purchased from Premier under the Manufacturing Agreement, as well as
collection of accounts receivable during the period, which amounts were only
partially offset by reduced levels of accrued liabilities and customer deposits.

     Cash used in investing activities was $29,599 during the first quarter of
2001 as compared to $10,279 during the same period for 2000. 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 with its ongoing efforts to upgrade its existing
management information and corporate communication systems. The Company
anticipates that related expenditures, if any, will be

                                       13
<PAGE>

financed from borrowings under existing arrangements with MediVision, if
available, or other financing arrangements, if any, available to the Company.

     The Company generated cash from financing activities of $38,291 during the
first quarter of fiscal 2001 as compared to using cash of $336,202 during the
comparable period of fiscal 2000. The cash provided by financing activities
during the first quarter of fiscal 2001 was principally from increased
borrowings under existing arrangements with MediVision. The cash used in
financing activities during the first quarter of fiscal 2000 resulted
principally payments under then-existing arrangements with Premier and, to a
lesser extent, payments under a then-available credit facility with the Bank.
Principal payments on notes payable other than to significant shareholders in
both years was minimal.

     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 a promissory note in favor of MediVision (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, 2001, the Company had
recorded approximately $277,000 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 discussed in further detail below.

     In addition, in connection with the Closing in August 2000 of the
transactions contemplated by the MediVision Investments, the Company executed a
second promissory note in favor of MediVision (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. At March 31, 2001, the Company had
recorded approximately $1,601,000 in principal and interest outstanding under
the Working Capital Note and the Company and MediVision were in negotiations to,
among other things, increase the principal amount under the Working Capital
Note.

     At March 31, 2001, the Company had recorded approximately $1,684,000 in
aggregate debt owed to MediVison, which amount is net of accounts receivable
recorded in connection with sales of the Company's products to MediVision for
further sale to customers in international markets.

     On March 31, 2001, the Company's cash and cash equivalents were $94,706.
Management anticipates that additional sources of capital beyond those currently
available to the Company will be required to continue operations and procure
inventory necessary to meet current and anticipated demand for the Company's
products. Substantial delays in the delivery of the Company's products would
result in reduced cash flow from sales of such products as well as potential
increased costs. Additionally, such delays could prompt customers to request
return deposits which would further adversely impact the Company's cash
position.

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<PAGE>

     Recent transactions between the Company and MediVision will, in
Management's opinion, significantly improve the Company's financial condition
and enhance Management's ability to achieve sustained profitable operations.

     Its relationship with MediVision will provide the Company access to
resources in addition to working capital. As a direct consequence of the
MediVision transactions, the Company has undertaken certain gross margin
enhancement efforts, including improved production cost control and sustaining
engineering programs. In addition, the Company and MediVision have begun
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.

     In these regards, the Company and MediVision are currently in discussions
with respect to, among other things, increasing available working capital beyond
the $1,500,000 under the Working Capital Note. Concurrent with these
discussions, 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.

                                       15
<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.


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<PAGE>

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

Dated:  May 21, 2001


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