FORM 10-QSB/A
                                (Amendment No. 1)

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



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

For the quarterly period ended November 30, 1999

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.)

                  221Lathrop  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 January 14, 2000,  4,305,428 shares of common stock, at no par value, were
outstanding.

<PAGE>ii

The purpose of this Amendment No. 1 to Form 10-QSB  originally  filed on January
14, 2000 for the  quarterly  period ended  November 30, 1999 is to: (i) insert a
line  item  previously  omitted  from the  Condensed  Statement  of Cash  Flows,
financing  activities;  and  (ii)  modify  two  line  item  descriptions  in the
Condensed Statement of Cash Flows.

These  amendments do not change the  Registrant's  net cash generated from (used
in)  financing  activities or net increase  (decrease)  in cash and  equivalents
originally reported for such period.


<PAGE>1




                          PART I FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


<PAGE>2

                           Ophthalmic Imaging Systems
                             Condensed Balance Sheet
                                November 30, 1999
                                   (Unaudited)
<TABLE>
<S>                                                                                     <C>

Assets
Current assets:
      Cash and equivalents                                                               $          246,852
      Accounts receivable, net                                                                      298,117
      Inventories, net                                                                              354,351
      Prepaid expenses and other current assets                                                      48,991
                                                                                         -------------------
Total current assets                                                                                948,311
Furniture and equipment, net of accumulated
      depreciation and amortization of $1,030,706                                                   285,765
Other assets                                                                                         12,386
                                                                                         -------------------
                                                                                         $        1,246,462
                                                                                         ===================

Liabilities and Stockholders' Equity
Current liabilities:
      Borrowings under line of credit                                                    $           24,844
      Borrowings under note payable to, and unsecured
           advances from significant shareholder                                                  1,323,889
      Accounts payable                                                                              867,012
      Accrued liabilities                                                                         1,414,145
      Accrued warrant appreciation right                                                            300,442
      Deferred extended warranty revenue                                                             94,190
      Customer deposits                                                                             687,652
      Capitalized lease obligation and other notes payable                                            8,939
                                                                                         -------------------
Total current liabilities                                                                         4,721,113
Capitalized lease obligation and other notes payable,
      less current portion                                                                           17,331
Commitments
Stockholders' deficit:
      Preferred stock, without par value, 20,000,000 shares authorized:
           Series A Junior Participating Preferred Stock, without par value,
                100,000 shares authorized;  none issued or outstanding                                   --
           Series B Preferred Stock, $.01 par value, 2,000 shares
                 authorized; 150 issued and outstanding                                               3,750
      Common stock, no par value, 20,000,000 shares authorized;
           4,305,428 issued and outstanding                                                      10,518,854
      Deferred compensation                                                                         (74,411)
      Accumulated deficit                                                                       (13,940,175)
                                                                                         -------------------
Total stockholders' deficit                                                                      (3,491,982)
                                                                                         -------------------
                                                                                         $        1,246,462
                                                                                         ===================

See accompanying notes.

</TABLE>



<PAGE>3

                           Ophthalmic Imaging Systems
                       Condensed Statements of Operations
                                   (Unaudited)
<TABLE>
<S>                                           <C>                     <C>

                                                   Three months ended November 30,
                                                       1999                   1998
                                               ------------------     ------------------

Net revenues                                   $       1,010,168      $       1,490,234
Cost of sales                                            746,346                972,421
                                               ------------------     ------------------
Gross Profit                                             263,822                517,813
Operating expenses:
     Sales and marketing                                 548,647                525,387
     General and administrative                          247,348                299,864
     Research and development                            122,420                207,914
                                               ------------------     ------------------
          Total operating expenses                       918,415              1,033,165
                                               ------------------     ------------------
Income (loss) from operations                           (654,593)              (515,352)
Other expense, net                                       (37,771)               (42,010)
                                               ------------------     ------------------
Net income (loss)                              $        (692,364)     $        (557,362)
                                               ==================     ==================

Shares used in the calculation of basic
     net income (loss) per share                       4,221,362              4,155,428
                                               ==================     ==================
Basic net income (loss) per share              $           (0.16)     $           (0.13)
                                               ==================     ==================

Shares used in the calculation of diluted
     net income (loss) per share                       4,221,362              4,155,428
                                               ==================     ==================
Diluted net income (loss) per share            $           (0.16)     $           (0.13)
                                               ==================     ==================

See accompanying notes.

</TABLE>

<PAGE>4



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

<TABLE>
<S>                                                                  <C>                     <C>

                                                                          Three months ended November 30,
                                                                            1999                    1998
                                                                     ------------------       -----------------

Operating activities:
Net loss                                                              $        (692,364)       $       (557,362)
Adjustments to reconcile net loss to net cash
     used in operating activities:
          Depreciation and amortization                                          31,359                  32,924
          Stock option compensation expense                                      19,722                  32,365
          Net decrease (increase) in current assets other
               than cash and equivalents                                        138,786                 (67,633)
          Net increase in current liabilities other than
               short-term borrowings                                            509,243                 479,002
                                                                     ------------------       -----------------
Net cash provided by (used in) operating activities                               6,746                 (80,704)
Investing activities:
Purchases of furniture and equipment                                            (13,994)                     --
Net (increase) decrease in other assets                                          (5,001)                   (547)
                                                                      ------------------       -----------------
Net cash used in investing activities                                           (18,995)                   (547)
Financing activities:
Principal payments on notes payable                                                  --                    (132)
Net  (repayments of) proceeds from borrowings under
     note payable to and unsecured advances from
     significant shareholder                                                     (3,750)                  9,289
Net proceeds from (repayments of) line-of-credit
    borrowings                                                                   24,844                 (78,004)
Net proceeds from sale of common stock                                           56,250                      --
Net proceeds from sale of preferred stock                                         3,750                      --
                                                                      ------------------       -----------------
Net cash generated from (used in) in financing activities                        81,094                 (68,847)
                                                                      ------------------       -----------------
Net increase (decrease) in cash and equivalents                                  68,845                (150,098)
Cash and equivalents at beginning of period                                     178,007                 514,186
                                                                      ------------------       -----------------
Cash and equivalents at end of period                                 $         246,852        $        364,088
                                                                      ==================       =================

Supplemental schedule of noncash financing activities:
Reduction of borrowings under note payable to and
     unsecured advances from significant shareholder
     in exchange for inventory, net                                   $         143,213        $             --
                                                                      ==================       =================

See accompanying notes.

</TABLE>

<PAGE>5

                           Ophthalmic Imaging Systems

                     Notes to Condensed Financial Statements

              Three Month Periods ended November 30, 1999 and 1998

                                   (Unaudited)


Note 1.         Basis of Presentation

                The  accompanying   unaudited  condensed  balance  sheet  as  of
                November 30, 1999,  condensed  statements of operations  for the
                three month  periods  ended  November  30, 1999 and 1998 and the
                condensed  statements  of cash flows for the three month periods
                ended   November  30,  1999  and  1998  have  been  prepared  in
                accordance  with generally  accepted  accounting  principles for
                interim financial  information and with the instructions to Form
                10-QSB and Item 310(b) of Regulation S-B.  Accordingly,  they do
                not  include all of the  information  and  footnote  disclosures
                required  by  generally  accepted   accounting   principles  for
                complete  financial  statements.  It  is  suggested  that  these
                condensed  financial  statements be read in conjunction with the
                audited  financial  statements and notes thereto included in the
                registrant's  (the Company's)  Annual Report for the Fiscal Year
                Ended  August  31,  1999 on Form  10-KSB/A.  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
                November  30,  1999  are  not  necessarily   indicative  of  the
                operating results for the full year.

                Certain  amounts in the fiscal 1999  financial  statements  have
                been reclassified to conform with the presentation in the fiscal
                2000 financial statements.

Note 2.         Net Income (Loss) Per Share

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

<PAGE>6


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

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

                                                             Unaudited
                                                         Three Months Ended
                                                            November 30,
                                                        1999            1998
                                                    -----------     -----------

                Numerator for basic and diluted
                net income (loss) per share         $ (692,364)     $ (557,362)
                                                    ===========     ===========

                Denominator for basic net income
                (loss) per share:
                   Weighted average shares           4,221,362       4,155,428

                Effect of dilutive securities:
                   Employee/director stock                  --              --
                options
                   Warrants and other                       --              --
                                                    ------------   -----------
                Dilutive potential common shares            --              --
                                                    ------------   -----------
                Denominator for diluted net
                income (loss) per share              4,155,362       4,155,428
                                                    ===========     ===========

                Basic net income (loss) per share   $    (0.16)     $    (0.13)
                                                    ===========     ===========

                Diluted net income (loss) per
                share                               $    (0.16)     $    (0.13)
                                                    ===========     ===========

Note 3.         Short-Term Borrowings

                The Company entered into an accounts receivable credit agreement
                (the  "Agreement")  with a bank (the  "Bank") in July 1999.  The
                Agreement  allows  for up to an 80%  advance  rate  on  eligible
                receivable balances. Borrowings are secured by substantially all
                assets of the  Company  and bear  interest  at the Bank's  prime
                lending rate plus 10%. The minimum monthly amount charged by the
                Bank is the greater of interest  calculated in  accordance  with
                the  immediately  preceding  sentence or $1,200.  The  Agreement
                remains in effect from year to year unless terminated in writing
                by the Company or the Bank. At November 30, 1999,  approximately
                $24,844 in principal was outstanding under the Agreement.

Note 4.         Note Payable to Related Party

                On April 30, 1998, the Company  executed a promissory  note (the
                "Note") in favor of Premier  Laser  Systems,  Inc., a California
                corporation   ("Premier").   Borrowings  against  the  Note  are
                available to the Company in the form of periodic  advances.  The
                maximum  principal  amount available under the Note is $500,000,
                which principal  amount  outstanding,  together with any and all
                accrued  interest,  is payable the earlier of (i) written demand
                by Premier or (ii) April 30, 1999.  Under the terms of the Note,
                borrowings  bear  interest at the rate of 8 1/2% per annum,  are
                secured by certain of the Company's  assets and are  subordinate
                to borrowings  against the accounts  receivable credit line with

<PAGE>7


                the Company's  Bank (see Note 3).  Premier also has made certain
                unsecured  advances to the Company  which are not covered by the
                Note.

                At November  30, 1999,  the Company had  recorded  approximately
                $1,508,000 in principal and interest  outstanding under the Note
                and  unsecured  advances,  of which  approximately  $183,800  of
                accrued interest was included in other accrued liabilities.  The
                principal  amount is net of, among other  things,  an offset for
                inventory  transferred  to Premier  pursuant to a  Manufacturing
                Agreement entered into between the Company and Premier (see Note
                5).

                In October 1999,  the Company and Premier  entered into a Merger
                Agreement  whereby,  among other things, the parties have agreed
                that no payments  will be required with respect to amounts owing
                as of August  31,  1999  under the Note and  unsecured  advances
                during the term of the Merger Agreement (see Note 6).

Note 5.         Manufacturing Agreement

                In  March  1999,   the  Company  and  Premier   entered  into  a
                manufacturing  agreement  ("Manufacturing   Agreement")  whereby
                Premier will manufacture the majority of the Company's products.
                The Manufacturing  Agreement will terminate upon the earlier of:
                (i) material  breach by either party,  which breach is not cured
                within thirty (30) days written notice thereof; (ii) ninety (90)
                days written notice by the Company to Premier; (iii) one hundred
                eighty (180) days written  notice by Premier to the Company;  or
                (iv) mutual written agreement of the parties.

                Under  the terms of the  Manufacturing  Agreement,  among  other
                things,  the  Company  charges  Premier  for  certain  inventory
                transferred  to Premier  and  Premier  charges  the  Company for
                products manufactured pursuant to the Manufacturing Agreement.

Note 6.         Merger Agreement

                On October 21,  1999,  the Company and Premier  entered  into an
                agreement and plan of reorganization  (the "Merger  Agreement"),
                whereby,   upon   requisite   shareholder   approval   and   the
                satisfaction  of certain other  preconditions,  the Company will
                become a  wholly-owned  subsidiary  of Premier and each share of
                the Company's common stock, other than any dissenting shares and
                any  stock  then  owned by  Premier  or its  subsidiaries,  will
                convert into 0.80 shares of Premier's  common stock.  The Merger
                Agreement will terminate on January 31, 2000 or earlier based on
                the  occurrence  of  certain  events  set  forth  in the  Merger
                Agreement. The   parties   are   currently  in discussion with
                regard to an extension   of   time to complete the transactions
                contemplated by    the   Merger   Agreement.  Under  the Merger
                Agreement, among other  things,  the  parties  have agreed that
                no payments   will be required  during the term of the Merger
                Agreement  with  respect to amounts  owing by the Company to
                Premier as of August 31, 1999 (see Note 4).


<PAGE>8

                The Company's  Board of Directors (the "Board") has approved the
                Merger  Agreement  and the  transactions  contemplated  thereby,
                including  the  acquisition  of the  Company,  and has agreed to
                submit the Merger  Agreement to the Company's  shareholders  for
                their approval.

                To permit  the  acquisition  by  Premier  and all other  actions
                contemplated  by  the  Merger   Agreement,   the  Board,   after
                considering  the terms of the  Merger  Agreement  and an opinion
                rendered by the Company's  independent  financial advisors as to
                the  fairness  of  Premier's  offer to the  shareholders  of the
                Company,  amended the Company's  Rights  Agreement  effective in
                October 1999.

Note 7.         Series B Preferred Stock and Related Agreements

                The Company and Premier also executed a Series B Preferred Stock
                Purchase  Agreement  on October  21, 1999  whereby,  among other
                things, the Company agreed to sell to Premier, upon the issuance
                by the  Company of shares of its common  stock  pursuant  to the
                exercise  of stock  options,  shares of the  Company's  Series B
                Preferred  Stock at a price of $25 per  share  with  each  share
                carrying  the  voting  power of 1,000  shares  of the  Company's
                common stock.

                Also on October 21, 1999, the Company,  Premier and three of the
                Company's outside directors (the "exercising Directors") entered
                into a stock purchase  agreement (the  "Agreement")  pursuant to
                which,  among  other  things,  the  Exercising   Directors  each
                exercised  options to purchase  50,000 shares of common stock at
                an exercise price of $0.375 per share  resulting in net proceeds
                to the Company of $56,250.

                The stock  purchased by the  Exercising  Directors is restricted
                and subject to  repurchase  by the Company  until the earlier of
                May 9, 2000 or the Effective  Date of the Company's  acquisition
                by  Premier,  as defined in the Merger  Agreement  (see Note 6).
                Also under the terms of the  Agreement,  Premier  purchased  150
                shares of the Company's  Series B Preferred 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.  These
                150 shares of Series B Preferred  Stock are also  restricted and
                subject to repurchase by the Company if the Company  repurchases
                any of the common stock purchased by the Exercising Directors.

                As  a  result  of  the  foregoing  transactions,   Premier  owns
                approximately 49 1/2% of the Company's  outstanding common stock
                and  all  150  outstanding  shares  of the  Company's  Series  B
                Preferred Stock, resulting in sole voting power of approximately
                53%.

Note 8.         Ability to Continue as a Going Concern

                The  Company  has  an  accumulated  deficit  of  $13,940,175  at
                November  30,  1999.  In addition,  current  liabilities  exceed
                current  assets by  $3,772,802 as of that date.  These  factors,

<PAGE>9


                among  others,  may indicate  that the Company will be unable to
                continue as a going concern for a reasonable period of time.

                During October 1999,  the Company  entered into an agreement and
                plan of  reorganization  (the "Merger  Agreement") with Premier.
                The  Company's  Board  of  Directors  has  approved  the  Merger
                Agreement and the  transactions  contemplated  thereby,  and has
                agreed  to  submit  the  Merger   Agreement  to  the   Company's
                shareholders for their approval (see Note 6).

                Under the terms of the Merger  Agreement, the Company would need
                to obtain  Premier's  prior consent  with  respect  to  securing
                additional capital beyond that generated from operations, and
                the Company has requested Premier's cooperation and assistance
                in that regard. There can be no assurance,  however,  that  any
                financing  arrangements for securing additional  capital will be
                available, and, if available, can be obtained on terms favorable
                to the Company and acceptable to Premier.

                In addition, as a consequence of the Merger  Agreement,  certain
                holders of options to purchase  shares of the  Company's  common
                stock may be  inclined  to exercise  these  stock  options.  The
                Company could receive substantial  proceeds from the exercise of
                these stock options; however, there can be no assurance that any
                stock options will be exercised in the near term, if at all.

                In the event that the transactions contemplated under the Merger
                Agreement are not  consummated,  then the  Company's  ability to
                continue as a going concern would be seriously jeopardized,  and
                would  depend upon its ability to restructure  payment terms
                and/or obtain substantial new financing to repay its debts and
                ensure continued supply of materials and services.

<PAGE>10

         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 Company has a reputation within the
ophthalmic community for producing high quality, reliable, easy to use equipment
and believes itself to be an acknowledged  industry leader in the technology and
sales of digital ophthalmic  imaging systems.  The primary target market for the
Company's digital angiography systems has been retinal specialists.

The Company is currently attempting to expand its role in the ophthalmic imaging
field by developing new ocular imaging devices and applications  targeted at the
broader markets of general ophthalmology and optometry.

In this  regard,  commencing  in fiscal year 1998,  OIS has applied  significant
resources to the development of two ocular imaging  devices,  the Digital Fundus
Imager the ("DFI") and the Digital Slit Lamp Imager (the "DSLI"). The Company is
focusing a majority of its current  development,  manufacturing,  marketing  and
sales  efforts on its DFI and DSLI  products,  and  commenced  delivering  these
products  during the fourth  quarter of fiscal 1999 after  experiencing  certain
delays.

At the 1998 Annual Meeting of the American Academy of  Ophthalmology  (the "1998
AAO  Meeting")  held during the first  quarter of fiscal 1999,  the DFI received
considerable   interest  and  the  Company  has  received  significant  purchase
commitments  for the product.  However,  the Company has limited  financial  and
operational resources,  including manufacturing,  marketing and selling capacity

<PAGE>11


to meet any significant  demand resulting from the introduction of this product.
To address this situation,  during the third quarter of fiscal 1999, the Company
entered into the  Manufacturing  Agreement  with Premier Laser  Systems,  Inc. a
California  corporation  ("Premier"),   whereby  Premier  began  assembling  and
manufacturing  the  Company's  products,  including  the DFI and  DSLI.  Initial
deliveries  of revenue  generating  products  manufactured  by Premier under the
Manufacturing  Agreement  were made during the third quarter of fiscal 1999. The
Company  entered  into  the  Manufacturing  Agreement  to  reduce  the  cost  of
manufacturing  its  products and to take  advantage  of Premier's  manufacturing
capabilities,  but there can be no assurance that this  arrangement will provide
the  Company  the  anticipated  benefits.  To date,  the  Company  has  incurred
increased costs and  significant  delays in deliveries of its products under the
Manufacturing Agreement.

In  addition,  the Company  recently  agreed with  Premier on  co-marketing  and
selling  arrangements  whereby,   among  other  things:  (a)  the  Company  will
distribute in the United States and Canada certain of Premier's EyeSys products;
and (b) Premier will distribute the Company's products in certain  international
markets.  In  anticipation of these  arrangements,  the Company and Premier have
been selling their  ophthalmic  products through a jointly managed EyeSys Vision
Group,  which made its debut at the American  Society of Cataract and Refractive
Surgery meeting in April 1999. To date, the Company has incurred increased costs
under  these  arrangements  and  it  is  unclear  at  this  time  whether  these
arrangements will result in significant, if any, benefit to OIS.

The Company's results of operations have historically fluctuated from quarter to
quarter and from year to year and management  anticipates that such fluctuations
will continue in the future.  The Company has experienced  operating  losses for
each fiscal  year since its initial  public  offering in 1992.  At November  30,
1999,  the Company had an  accumulated  deficit in excess of $13 million and its
current  liabilities  exceeded its current  assets by more than $3 million.  The
Company continues to experience cash flow deficits 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.

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. As a
condition  to the Stock  Purchase  Agreement,  the  Company  agreed to amend its
Rights  Agreement  to permit  Premier to  acquire  up to 51.3% of the  Company's
outstanding common stock in private purchase agreements made simultaneously with
the execution of the Stock Purchase Agreement.

In August 1998, 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. As a result, the Stock Purchase Agreement was terminated. 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 Termination Fee, however,  among other things, was the
subject of subsequent negotiations between the companies.


<PAGE>12


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 will become a  wholly-owned  subsidiary  of Premier.  The
Company's Board of Directors (the "Board") has approved the Merger Agreement and
the transactions contemplated thereby, including the acquisition of the Company,
and has agreed to submit the Merger  Agreement to the Company's  shareholder for
their  approval.  The Merger  Agreement  will  terminate  on January 31, 2000 or
earlier  based on the  occurrence  of  certain  events  set  forth in the Merger
Agreement  and the  parties  are  currently  in  discussion  with  regard  to an
extension  of time to  complete  the  transactions  contemplated  by the  Merger
Agreement.

To permit the  acquisition by Premier and all other actions  contemplated by the
Merger  Agreement,  the Board,  after considering  various factors,  amended the
Company's Rights Agreement effective in October 1999.

In addition,  the Company and Premier entered into two stock purchase agreements
on October  21, 1999 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.

As a result of the foregoing transactions, Premier currently owns 49 1/2% 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.

The Company's results of operations have historically fluctuated from quarter to
quarter due to a number of factors  and are not  necessarily  indicative  of the
results to be expected  for any future  period or  expected  for the fiscal year
ending  August  31,  2000.  There can be no  assurance  that  revenue  growth or
profitability can be achieved or sustained in the future.

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

Results of Operations

The Company  incurred a net loss of $692,364,  or $.16 per share,  for the first
quarter of fiscal 2000 as compared to a net loss of $557,362, or $.13 per share,
for the first quarter of fiscal 1999. The per share figures are basic amounts in
accordance with Financial  Accounting  Standards No. 128 (see Note 2 of Notes to
Condensed Financial Statements included in Item 1 of this Form 10-QSB).

The  1999  figures  reflect  the  negative  impact  attributable  to  continuing
diversion of the Company's  resources and management's  attention to acquisition
matters  during the period.  The results of operations  for the first quarter of
2000 figures  reflect the adverse  impact on revenues and  corporate  operations
resulting from delays in delivery of the Company's products  associated with the
outsourcing of the manufacture and assembly of the Company's products during the

<PAGE>13

period under the Manufacturing  Agreement with Premier. In addition, the Company
has  incurred  higher than normal  costs and  professional  fees and expenses in
connection  the  contemplated  transactions  with  Premier,  while  diverting  a
significant  amount of the Company's  resources and  management's  attention and
selling efforts away from the Company's core operations during this period.

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
$1.3 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.

The  Company's  revenues  for the first  quarter of fiscal  2000 were  $1,01,168
representing a decrease of approximately 32% from revenues of $1,490,234 for the
first  quarter of fiscal 1999.  The reduced  revenue  levels  during fiscal 2000
resulted,  in large part,  from delays in  delivery  of the  Company's  products
associated with the outsourcing of the manufacture and assembly of the Company's
products during the period under the  Manufacturing  Agreement with Premier.  In
addition,  this  reduction  reflects,  to some  extent,  the  adverse  impact of
management's  efforts being directed to the negotiation of the Merger  Agreement
with Premier during the period and less time devoted to the generation of sales.
Lastly, the fiscal 2000 first quarter revenue levels were negatively affected by
the allocation of the Company's  selling resources away from its core WinStation
products.  Substantial  selling  resources were  allocated  during the period to
EyeSys  products in support of  co-marketing  and co-selling  arrangements  with
Premier as well as the Company's low-cost digital imaging systems  incorporating
its recently  developed  ocular  imaging  devices,  the DFI and the DSLI.  These
low-cost  digital  imaging  products were introduced at the 1998 AAO Meeting and
the Company has received  significant  purchase  commitments for these products.
While the  Company  made its initial  commercial  deliveries  of these  products
during the fourth quarter of fiscal 1999, revenues from the sales of these units
to date have been  below  management's  initial  expectations  for a variety  of
reasons,  including  those noted above as well as certain delays inherent in the
launch  of new  technology-based  products.  As a result of the  foregoing,  the
Company currently has a significant backlog of orders.

Gross margins were approximately 26% during the first quarter ended November 30,
1999  versus  approximately  35%  for  the  comparable  quarter  of  1999.  As a
consequence of fixed expense levels representing a higher percentage of revenues
during the first quarter of fiscal 2000 versus the  comparable  period of fiscal
1999, the lower gross margin  percentage during the first quarter of 2000 is due
in large  measure to the  significantly  reduced  revenue  levels.  The  Company
continues  to evaluate  its  expenses in this area  consistent  with current and
anticipated  business  conditions.  The Company hopes its current  manufacturing
relationship  with Premier will provide certain  efficiencies  and improve gross
margins. To date, however,  the Company has expended  considerable  resources in
connection with the outsourcing  arrangements under the Manufacturing  Agreement

<PAGE>14


and has  experienced  delays in the timely  delivery of certain of its  products
during the  transition  period,  both of which  have  adversely  impacted  gross
margins.  While both companies are  collaborating to maximize  efficiencies with
respect to the  production of the  Company's  products  under the  Manufacturing
Agreement,  continued  delays in  delivering  products,  if  significant,  would
adversely impact the Company.

Sales and  marketing  and  general and  administrative  expenses  accounted  for
approximately  79% of total revenues  during the first quarter of fiscal 2000 as
compared with  approximately  55% during the first quarter of fiscal 1999,  with
the  increased  percentage  resulting  principally  as a function of the reduced
revenue levels during the first quarter of 2000. Actual expense levels decreased
slightly,  to $795,995  during the first quarter of 2000 versus  $825,251 during
the  first  quarter  of 1999.  Primary  contributing  factors  to the  decreased
expenses were reduced  commissions  and other costs  associated  with  decreased
revenue  levels  during the first quarter of 2000 versus the  comparable  period
1999. The Company is currently  implementing  marketing and selling alternatives
in an effort to reduce costs and/or improve efficiencies in this area, including
consolidating  its current product  offerings and entering into co-marketing and
selling arrangements with Premier.

Research and development expenses decreased by approximately 41% to $122,420, or
approximately 12% of revenues in the first quarter of fiscal 2000 from $207,914,
or approximately 14% of revenues in fiscal 1999. The Company intends to continue
to focus its research and  development  efforts on its 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 whether  Premier and OIS consummate the  transactions  contemplated
under the Merger Agreement.

Other expense was $37,771 during the first quarter of fiscal 2000 versus $42,010
during the same period of 1999 and in both periods was comprised  principally of
interest expense associated with borrowings and unsecured advances from Premier,
as well as borrowings under credit facilities with the Company's bank.

Liquidity and Capital Resources

The Company's operating activities generated cash of $6,746 in the first quarter
of fiscal 2000 and used cash of $80,704 in the first quarter of fiscal 1999. The
cash  generated  from  operations  during the first  quarter of fiscal  2000 was
principally  from  increases in customer  deposits from orders  generated at the
recently completed 1999 Annual Meeting of the American Academy of Ophthalmology,
increased  accounts  payable  and accrued  liability  levels and  collection  of
accounts receivable,  which amounts essentially offset cash expended to fund the
net loss during the period. The cash used in operations during the first quarter
of 1999 was expended  principally  to fund the net loss during the period.  This
amount was  significantly  offset by increases in customer  deposits from orders
generated  at the  1998  AAO  Meeting  and  increases  in  accrued  liabilities,
including  those  liabilities  accrued in  connection  with  professional  costs
associated  with  on-going   negotiations  with  Premier  as  well  as  interest
associated  with  borrowings  from  Premier  (see  Note 4 of Notes to  Condensed


<PAGE>15

Financial Statements included in Item 1 of this Form 10-QSB).

Cash used in investing  activities  was $18,995 during the first quarter of 2000
as  compared  to $547 during the same  period for 1999.  The  Company's  primary
investing  activities consist of equipment and other capital asset acquisitions.
The Company does not currently have any pending material commitments for capital
expenditures  and the  Company  has  deferred  significant  capital  acquisition
decisions pending improved cash flow.

The Company generated cash from financing activities of $81,094 during the first
quarter of fiscal  2000 as  compared  to using  cash of $68,847  during the same
period of fiscal 1999. The cash generated from financing  activities  during the
first  quarter of fiscal 2000 was resulted from the exercise of stock options by
the Exercising  Directors during the period as well as an increase in the amount
of borrowings  under the credit  facility  with  Imperial Bank (the "Bank").  In
addition,  pursuant to certain  stock  purchase  agreements  with respect to the
Company's  Series  B  Preferred  Stock,  Premier  purchased  150  shares  of the
Company's  Series B Preferred  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.  The use of cash in financing  activities  during the 1999 period was
principally  repayments of borrowings  under the credit  facility with the Bank,
which  amount was  partially  offset by an increase in the amount of  borrowings
under  the  note  payable  to  and  unsecured  advances  by  Premier.  Principal
repayments  on notes  payable to parties  other than Premier were  negligible in
1999.

As  discussed in further  detail in Note 3 of the Notes to  Condensed  Financial
Statements included in Item 1 of this Form 10-QSB, on July 13, 1999, the Company
entered into an accounts  receivable  credit agreement (the "Credit  Agreement")
with the Bank.  The Credit  Agreement  allows for up to an 80%  advance  rate on
eligible accounts  receivable  balances.  The Bank has full recourse against the
Company under the Credit  Agreement and the Credit  Agreement  remains in effect
from year to year  unless  terminated  in  writing  by the  Company or the Bank.
Borrowings  under the Credit Agreement bear interest at the Bank's prime lending
rate plus 10%. The minimum  monthly amount charged by the Bank is the greater of
interest calculated in the manner described above or $1,200.  Under the terms of
the  Credit  Agreement,  borrowings  are  secured  by  substantially  all of the
Company's  assets.  Approximately  $24,800  was  outstanding  under  the  Credit
Agreement at November 30, 1999.

Additionally, as discussed further in Note 4 of the Notes to Condensed Financial
Statements  included  in Item 1 of this  Form  10-KSB,  on April 30,  1998,  the
Company executed a promissory note in favor of Premier (the "Premier Note"). The
Company has borrowed the maximum  principal  amount of $500,000  available under
the Premier Note, which principal amount outstanding,  together with any and all
accrued interest,  was payable the earlier of written demand by Premier or April
30, 1999.  Under the terms of the Premier Note,  borrowings bear interest at the
rate of 8 1/2% per annum, are secured by certain of the Company's assets and are
subordinate to borrowings under the Credit Agreement with the Bank. Premier also
has made certain  unsecured  advances to the Company which are not  specifically
covered by the Premier  Note.  At November  30,  1999,  the Company had recorded

<PAGE>16

approximately $1.5 million of indebtedness to Premier,  including  principal and
interest  outstanding under the Note and unsecured advances,  as well as charges
and credits pursuant to the terms of the Manufacturing  Agreement, and excluding
a $500,000  termination  fee in connection  with the  terminated  Stock Purchase
Agreement  in 1998 over which  there is  disagreement  between  Premier  and the
Company as to  whether  the  Company is  entitled  to said  termination  fee and
whether such  termination  fee can be used as an offset to the Company's debt to
Premier. Pursuant to terms of the Merger Agreement, the parties have agreed that
no payments will be required with respect to amounts owing as of August 31, 1999
during the term of the Merger Agreement. If the transactions  contemplated under
the Merger  Agreement  are not  consummated  and  demand for  payment is made by
Premier, the Company's ability to continue as a going concern could be seriously
jeopardized,  and would depend upon its ability to obtain new financing to repay
the debt to Premier.

At November 30, 1999,  the Company's  cash and cash  equivalents  were $246,852.
Even if no demand is made for payment of amounts  owing  under the Premier  Note
and the  transactions  contemplated  under the Merger Agreement are consummated,
the Company's  existing cash balances  together with ongoing  collections of its
accounts  receivable and available borrowing capacity under the Credit Agreement
may not be  adequate  to meet its  liquidity  and  capital  requirements  in the
immediate term.  Substantial  delays in the delivery of the Company's  products,
including the mass  introduction  of its DFI and DSLI products,  would result in
reduced  anticipated  cash flow from sales of such products as well as potential
increased costs  associated  therewith.  Additionally,  such delays could prompt
customers to request return  deposits which would further  adversely  impact the
Company's  cash  position.  Further,  demand for  payment by the Bank of amounts
claimed pursuant to a stock appreciation right granted to the Bank in connection
with a Credit  Agreement  could also result in the immediate need for additional
cash. At November 30, 1999,  the Company had accrued  approximately  $300,000 in
contingent liability under the stock appreciation right.

Under  the terms of the  Merger  Agreement,  the  Company  would  need to obtain
Premier's prior consent with respect to securing  additional capital beyond that
generated from operations,  and the Company has requested Premier's  cooperation
and  assistance  in that regard.  There can be no assurance,  however,  that any
financing  arrangements for securing additional capital will be available,  and,
if available,  can be obtained on terms  favorable to the Company and acceptable
to Premier.

In  addition,  as a  consequence  of the Merger  Agreement,  certain  holders of
options to purchase  shares of the  Company's  common stock may  exercise  those
options.  The Company  could receive  substantial  proceeds from the exercise of
these stock options;  however,  there can be no assurance that any stock options
will be exercised in the near term, if at all.

In the event that the transactions  contemplated  under the Merger Agreement are
not  consummated,  the  Company  will  likely  have  difficulty  in meeting  any
significant  demand for its  products  without an  infusion  of capital or other
improvements  in its  liquidity  position.  Its  ability to  continue as a going
concern  would be  seriously  jeopardized,  and would depend upon its ability to
restructure  payment terms and/or obtain  substantial new financing to repay its
debts and ensure continued supply of materials and services.

<PAGE>17


                            PART II OTHER INFORMATION

ITEM 1.             LEGAL PROCEEDINGS
                    None.

ITEM 2.             CHANGES IN SECURITIES
                    On October 18, 1999,  the Company filed with the  California
                    Secretary   of   State  a   certificate   of   determination
                    establishing  the rights  and  privileges  of the  Company's
                    convertible  Series B Preferred Stock.  Reference is made to
                    the   Company's   Form  8-K  filed  on  November   24,  1999
                    summarizing those rights and privileges.

                    On October 21,  1999,  the  Company  and Premier  executed a
                    Series B Preferred Stock Purchase Agreement  whereby,  among
                    other things,  the Company  agreed to sell to Premier,  upon
                    the  issuance by the  Company of shares of its common  stock
                    pursuant  to the  exercise of stock  options,  shares of the
                    Company's  Series  B  Preferred  Stock at a price of $25 per
                    share with each  share  carrying  the voting  power of 1,000
                    shares of the Company's common stock.

                    Also on October 21, 1999, the Company,  Premier and three of
                    the Company's outside directors (the "exercising Directors")
                    entered into a stock purchase  agreement  (the  "Agreement")
                    pursuant  to  which,  among  other  things,  the  Exercising
                    Directors each exercised  options to purchase  50,000 shares
                    of common  stock at an  exercise  price of $0.375  per share
                    resulting in net proceeds to the Company of $56,250.

                    The  stock   purchased  by  the   Exercising   Directors  is
                    restricted  and subject to  repurchase  by the Company until
                    the  earlier  of May 9,  2000 or the  Effective  date of the
                    Company's  acquisition by Premier,  as defined in the Merger
                    Agreement  (see  Note  6).  Also  under  the  terms  of  the
                    Agreement,  Premier  purchased  150 shares of the  Company's
                    Series  B  Preferred  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.  These 150
                    shares of Series B Preferred  Stock are also  restricted and
                    subject  to   repurchase  by  the  Company  if  the  Company
                    repurchases  any  of  the  common  stock  purchased  by  the
                    Exercising Directors.

                    As a result  of the  foregoing  transactions,  Premier  owns
                    approximately  49 1/2% of the Company's  outstanding  common
                    stock and all 150 outstanding shares of the Company's Series
                    B  Preferred  Stock,  resulting  in  sole  voting  power  of
                    approximately 53%.

                    The sale of Series B  Preferred  Stock to Premier was exempt
                    under the federal securities laws by virtue of Regulation D.
                    Premier is a  corporation  with total assets in excess of $5
                    million, the total purchase price was of the transaction was
                    less than $1 million  and there was no general  solicitation

<PAGE>18
                    with respect to the transaction.

ITEM 3.             DEFAULTS UPON SENIOR SECURITIES
                    As indicated  in Note 4 of the Notes to Condensed  Financial
                    Statements,  and  addressed  further  in the  Liquidity  and
                    Capital  Resources  discussion  of  Item 2 of Part I of this
                    report,  the  Company  is in default  of its  principal  and
                    interest payment obligations under the Note with Premier.

                    In  addition,  the Company  also has  recorded  liability to
                    Premier  for  unsecured  advances  made  to the  Company  by
                    Premier.

                    The aggregate  amount  recorded as liability at November 30,
                    1999  under  the  Note  and  unsecured  advances,  including
                    principal and interest, was approximately $1,508,000,  which
                    amount was net of certain  offset  charges  pursuant  to the
                    terms of the Manufacturing  Agreement described in Note 5 of
                    the Notes to Condensed Financial Statements.

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)      The exhibits  listed on the  accompanying  Index to
                             Exhibits  below are filed as a part  hereof and are
                             incorporated by reference as noted.
                    (b)      On November  15,  1999,  Issuer filed a Form 8-K to
                             report that its past results of  operations  do not
                             include   any   charges   related  to  a  potential
                             contingent  liability for sales taxes payable in an
                             amount to be  estimated  on the  basis of  numerous
                             probabilities  that might,  in the least  favorable
                             combination, reach $1.3 million.

                             On November  24,  1999,  Issuer filed a Form 8-K to
                             report   (a)  the  filing  of  a   certificate   of
                             determination  with  the  California  Secretary  of
                             State on October 18, 1999,  establishing the rights
                             and  privileges  of Issuer's  convertible  Series B
                             Preferred  Stock;  (b)  the  further  amendment  of
                             Issuer's  Right's  Agreement;  (c) the execution of
                             that  certain  Series B  Preferred  Stock  Purchase
                             Agreement,  dated  October 21, 1999, by and between
                             Issuer and  Premier,  allowing  Premier to purchase
                             shares of Series B Stock; (d) the execution of that
                             certain  Agreement,  dated October 21, 1999, by and
                             among the  Issuer,  Premier  and three of  Issuer's
                             outside  directors,  and the resulting  issuance of
                             150  shares of Series B Stock to Premier on October
                             21,  1999;  and (e)  the  execution  of the  Merger
                             Agreement.


<PAGE>19



                                   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/  STEVEN R. VERDOONER
                                              ----------------------------------
                                              Steven R. Verdooner,
                                              Chief Executive Officer


                                    By:  /s/  STEVEN C. LAGORIO
                                              ----------------------------------
                                              Steven C. Lagorio,
                                              Chief Financial Officer (principal
                                              accounting officer)



Dated:  January 19, 2000



<PAGE>20



                                INDEX TO EXHIBITS
<TABLE>
  <S>               <C>                                                                                       <C>


                                                                                                                Footnote
  Exhibit Number                                    Description of Exhibit                                      Reference
  ---------------                                   ----------------------                                      ---------

       2.1           Stock  Purchase  Agreement,  dated as of  February  25,  1998,  by and between OIS and       (13)
                     Premier.

       2.2           Agreement and Plan of  Reorganization  By and Among  Premier,  Ophthalmic  Acquisition       (18)
                     Corporation and OIS, dated as of October 21, 1999.

       2.3           Series B Preferred Stock Purchase  Agreement dated as of October 21, 1999 by and among       (19)
                     OIS and Premier.

       2.4           Agreement  dated as of October  21,  1999 by and among OIS,  Premier,  Walt  Williams,       (20)
                     Daniel S. Durrie and Randall C. Fowler.

       3.1           Articles of Incorporation of OIS, as amended.                                                  *

       3.2           Amendment to Articles of  Incorporation  (Certificate of  Determination of Preferences       (11)
                     of Series A Junior Participating Preferred Stock of OIS).

       3.3           Amendment to Articles of  Incorporation  (Certificate of  Determination of Preferences       (21)
                     of Series B Preferred Stock of OIS).

       3.4           Amended Bylaws of OIS.                                                                         *

       3.5           Amendment to Amended Bylaws of OIS dated January 28, 1998.                                   (16)

       4.1           Specimen of Stock Certificate.                                                                 *

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

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

       4.4           Second Amendment to Rights  Agreement,  effective as of October 20, 1999,  between OIS       (22)
                     and American Securities Transfer, Inc.

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

       10.2          Seventh Amendment to Lease Agreement, effective as of July 18, 1996.                          (7)


<PAGE>21

       10.3          Confidentiality Agreement, dated March 27, 1992 between OIS and Steven R. Verdooner.           *

       10.4          Assignment dated October 23, 1990 of U.S. Patent  Application for Apparatus and Method         *
                     for  Topographical  Analysis  of the  Retina to the  Issuer  by  Steven R.  Verdooner,
                     Patricia  C.  Meade and Dennis J. Makes (as  recorded  on Reel 5490,  Frame 423 in the
                     Assignment Branch of the U.S. Patent and Trademark Office).

       10.5          Form of International  Distribution  Agreement used by OIS and sample form of End User         *
                     Software License Agreement.

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

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

       10.8          The  Company's  1992  Nonstatutory  Stock Option Plan and sample form of  Nonstatutory         *
                     Stock Option Agreement.

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

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

       10.11         Stock Option Plan.                                                                            (1)

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

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

       10.14         General  Security  Agreement  dated  April 12,  1995 by and  between  the  Issuer  and        (3)
                     Imperial Bank.

       10.15         Warrant  dated  November  1, 1995  issued by the Issuer to  Imperial  Bank to purchase        (4)
                     67,500 shares of common stock.

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

       10.17         Registration  Rights  Agreement dated November 1, 1995 between the Issuer and Imperial        (4)
                     Bank.

<PAGE>22

       10.18         Amended Loan and Security  Agreement (with Credit Terms and Conditions) dated April 4,        (6)
                     1996.

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

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

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

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

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

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

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

       10.26         Agreement of Purchase of Receivable  (Full  Recourse)  dated November 18, 1997 between        (9)
                     the Issuer and Imperial Bank.

       10.27         Agreement  of  Purchase  of  Receivable  dated July 13,  1999  between  the Issuer and       (23)
                     Imperial Bank.

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

       10.29         Amendment  dated  effective July 14, 1997 to Employment  Agreement  dated November 20,       (16)
                     1995 between the Issuer and Steven R. Verdooner.

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

       10.31         The  Company's  1997  Nonstatutory  Stock Option Plan and sample form of  Nonstatutory       (12)
                     Stock Option Agreement.

       10.32         Promissory  Note dated April 30, 1998 from the Issuer to Premier Laser  Systems,  Inc.       (15)
                     in the maximum  amount of $500,000 due in full upon the earlier of (i) written  demand
                     by Premier or (ii) April 30, 1999.

       10.33         Security  Agreement  dated April 30, 1998 by and between the Issuer and Premier  Laser       (15)
                     Systems, Inc.

<PAGE>23

       10.34         Form of  Indemnification  Agreement  between  the  Issuer  and each of its  directors,       (16)
                     officers and certain key employees.

       10.35         Manufacturing  Agreement  dated March 7, 1999  between  the Issuer and  Premier  Laser       (17)
                     Systems, Inc.

       27            Financial Data Schedule (for SEC use only).                                                  (23)


</TABLE>

        *       Incorporated by reference to the Company's  Registration
                Statement on Form S-18, number 33-46864-LA.

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

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

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

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

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

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

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

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

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

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

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

<PAGE>24

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

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

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

       (15)      Incorporated by reference to the Company's  Quarterly Report on
                 Form 10-QSB for the quarterly  period ended May 31, 1998, filed
                 on July 15, 1998.

       (16)      Incorporated  by reference to the  Company's  Annual  Report on
                 Form 10-KSB for the fiscal year ended August 31, 1998, filed on
                 December 15, 1998.

       (17)      Incorporated by reference to the Company's  Quarterly Report on
                 Form 10-QSB for the quarterly  period ended  February 28, 1999,
                 filed on April 14, 1999.

       (18)      Incorporated by reference to Exhibit 2.1 of the Company's
                 Form 8-K, filed on November 24, 1999.

       (19)      Incorporated by reference to Exhibit 4.2 of the Company's
                 Form 8-K, filed on November 24, 1999.

       (20)      Incorporated by reference to Exhibit 4.3 of the Company's
                 Form 8-K, filed on November 24, 1999.

       (21)      Incorporated by reference to Exhibit 3.1 of the Company's
                 Form 8-K, filed on November 24, 1999.

       (22)      Incorporated by reference to Exhibit 4.1 of the Company's
                 Form 8-K, filed on November 24, 1999.

       (23)      Incorporated  by reference to the  Company's  Annual  Report on
                 Form 10-KSB for the fiscal year ended August 31, 1999, filed on
                 November 29, 1999.