LASER PHOTONICS INC, S-1/A, 1998-05-29

LASER PHOTONICS INC
S-1/A, 1998-05-29
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1998

REGISTRATION NO. 333-44937

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549

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AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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LASER PHOTONICS, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3845 59-2058100
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>

6865 FLANDERS DRIVE, SUITE G, SAN DIEGO, CALIFORNIA 92121
(619) 455-7030

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

RAYMOND A. HARTMAN
CHIEF EXECUTIVE OFFICER
LASER PHOTONICS, INC.
6865 FLANDERS DRIVE, SUITE G, SAN DIEGO, CALIFORNIA 92121
(619) 455-7030

(Name and address, including zip code, and telephone number, including area
code, of agent for service)

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COPIES TO:

MATTHIAS & BERG LLP
ATTN: JEFFREY P. BERG, ESQ.
1990 SOUTH BUNDY DRIVE, SUITE 790, LOS ANGELES, CALIFORNIA 90025
PHONE: (310) 820-0083
FAX: (310) 820-8313

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT

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If any of the securities being registered on this Form are to be offered on
a delayed basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box. /X/

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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE (1) PRICE(1) FEE
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share.......... 708,101 $1.25(2) $885,126 $261.12
Common Stock, par value $0.01 per share.......... 1,500,000 $4.00(2) $6,000,000 $1,770.00
Common Stock, par value $0.01 per share.......... 800,000 $2.70(2) $2,159,708 $637.11
Common Stock, par value $0.01 per share.......... 20,000 $1.00(2) $20,000 $5.90
Shares of Common Stock underlying Warrants....... 900,000 $4.00(3) $3,600,000 $1,062.00
Total............................................ 3,928,101 $12,664,834 $3,736.13(4)
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) This amount is based upon the per share purchase price of the shares from
the Company.

(3) This amount is based on the per share exercise price of the Warrants related
to these shares.

(4) The Company has previously paid $3,719.68 of this amount to the Commission.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE>

LASER PHOTONICS, INC.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(b) OF REGULATION S-K.

SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS 1 THROUGH 12, PART I, OF FORM S-1

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
- ----------------------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statements and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page of Prospectus

2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front and Outside Back Cover Pages of
Prospectus; Additional Information

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors; Selected Financial
Data

4. Use of Proceeds....................................... Use of Proceeds; Selling Stockholders and Plan of
Distribution

5. Determination of Offering Price....................... Plan of Distribution

6. Dilution.............................................. Not Applicable

7. Selling Security Holders.............................. Outside Front Cover Page of Prospectus; Selling
Stockholders and Plan of Distribution

8. Plan of Distribution.................................. Outside Front Cover Page of Prospectus; Selling
Stockholders and Plan of Distribution

9. Description of Securities to Be Registered............ Outside Front Cover Page of Prospectus; Dividend
Policy; Shares Eligible for Future Sale; Principal
Stockholders; Selling Stockholders and Plan of
Distribution; Description of Securities

10. Interests of Named Experts and Counsel................ Legal Matters

11. Information with Respect to the Registrant............ Outside Front Cover Page of Prospectus; Prospectus
Summary; Risk Factors; Dividend Policy;
Capitalization; Selected Financial Data;
Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business;
Management; Compensation of Executive Officers and
Directors; Certain Relationships and Related
Transactions; Shares Eligible for Future Sale;
Financial Statements

12. Disclosure of Commission Position on Indemnification
for Securities Act
Liabilities......................................... Not Applicable
</TABLE>

<PAGE>

SUBJECT TO COMPLETION DATED MAY 29, 1998

THIS PRELIMINARY PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO
COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
UNDER NO CIRCUMSTANCES SHALL THIS PRELIMINARY PROSPECTUS CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES, IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
SUCH JURISDICTION.

<PAGE>

LASER PHOTONICS, INC.
3,928,101 SHARES
COMMON STOCK
OFFERED BY SELLING STOCKHOLDERS

This Prospectus relates to 3,928,101 shares (the "Shares") of common stock,
par value $0.01 (the "Common Stock") of Laser Photonics, Inc., a Delaware
corporation (the "Company") to be offered (the "Offering") for the account of
certain selling stockholders (the "Selling Stockholders") of the Company. The
3,928,101 shares include 3,028,101 shares of Common Stock currently issued in
the name of the Selling Stockholders and 900,000 shares of Common Stock
underlying certain warrants (the "Warrants") issued in the name of certain of
the Selling Stockholders. The Selling Stockholders directly, through agents
designated from time to time, or through brokers, dealers, or through
underwriters to be designated, may sell the shares of Common Stock offered
hereby from time to time on terms to be determined at the time of sale. To the
extent required by applicable law, the specific shares to be sold, the terms of
the offering, including price, the names of any agent, dealer or underwriter,
and any applicable commission, discount or other compensation with respect to a
particular sale will be set forth in an accompanying Prospectus Supplement. See
"Selling Stockholders and Plan of Distribution."

The Company will receive none of the proceeds from the sale of these Shares.
However, the Company may receive gross proceeds of up to $3,600,000 upon the
exercise of the Warrants, if at all. The Selling Stockholders and any
broker-dealer, agents or underwriters that participate with the Selling
Stockholders in the distribution of the Common Stock may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended
("Securities Act") and any commission received by them and any profit on the
resale of the Common Stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Company has paid all of
the costs of the Offering with respect to the Shares to be offered by the
Selling Stockholders. See "Use of Proceeds" and "Selling Stockholders and Plan
of Distribution."

The Company's Common Stock is currently listed for trading in the
Over-the-Counter Market under the symbol "LSPT." On May 28, 1998, the market
price for the Common Stock in the Over-the-Counter Market was approximately
$2.50 per share. See "Price Range of Common Stock."

THESE SECURITIES ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE SECTION ENTITLED
"RISK FACTORS" (AT PAGE 7 OF THIS PROSPECTUS) CONCERNING THE
COMPANY AND THIS OFFERING.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 1998.

<PAGE>

This Prospectus may be deemed to contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). Forward-looking statements in this Prospectus or
hereafter included in other publicly available documents filed with the
Securities and Exchange Commission (the "Commission"), reports to the
Company's stockholders and other publicly available statements issued or
released by the Company involve known and unknown risks, uncertainties and
other factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ from the future results,
performance (financial or operating) or achievements expressed or implied by
such forward-looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations. These risks include, but are not limited to, the risks
set forth herein, each of which could adversely affect the Company's business
and the accuracy of the forward-looking statements contained herein.

<PAGE>

PROSPECTUS SUMMARY

The following is a summary of certain information in this Prospectus.
This summary should be read in conjunction with, and is qualified in its
entirety by, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. The
Shares offered hereby involve a high degree of risk. Investors should
carefully consider the information set forth under the heading "Risk Factors."

THE COMPANY

The Company is engaged in the development of proprietary excimer laser
and fiberoptic equipment and techniques directed initially toward the
treatment of coronary heart disease and psoriasis, as well as other medical
and non-medical applications. The Company also designs, develops,
manufactures and markets solid-state, diode and gas laser systems and
accessories for use in both "medical" and "scientific" applications.

Unless the context otherwise requires, the term "Company" refers to
Laser Photonics, Inc., a Delaware corporation ("Laser Photonics"), its
wholly-owned subsidiary, Laser Analytics, Inc., a Massachusetts corporation
("Laser Analytics"), and its 76%-owned subsidiary, AccuLase, Inc., a
California corporation ("AccuLase").

The Company filed a Petition for Reorganization (the "Bankruptcy
Proceeding") under Chapter 11 of the Federal Bankruptcy Act on May 13, 1994
(Case No. 94-02608-611 - Federal Bankruptcy Court - Middle District,
Florida). An order was issued on May 22, 1995 confirming the Company's Third
Amended Plan of Reorganization (the "Bankruptcy Reorganization").

In connection with the Bankruptcy Reorganization, Helionetics, Inc.
("Helionetics") of Van Nuys, California, transferred to the Company ownership
of approximately 76% of the issued and outstanding common stock of AccuLase.
AccuLase was founded in 1985 for the purpose of commercializing products
that utilize its proprietary excimer laser and fiberoptic technologies.
AccuLase has focused primarily on the development of medical products for the
treatment of coronary heart disease.

The Company's strategy has changed in 1997 to focusing its efforts on
the Company's excimer laser technology and expertise in order to develop a
broad base of laser and laser delivery products for both medical and
non-medical applications.

The Company has entered into certain agreements with respect to the
manufacturing and marketing of its excimer lasers and delivery systems in
1997 with Baxter Healthcare Corporation ("Baxter") and Massachusetts General
Hospital.

The Company's initial medical applications are intended to be used in
the treatment of cardiovascular disease and treatment of psoriasis. The
current cardiovascular and vascular applications are in an experimental
procedure known as Transmyocardial Revascularization ("TMR"), in which the
Company's laser system is currently in Phase I Human Clinical trials. A
proposed excimer laser system to treat psoriasis is anticipated to commence
during 1998 by going through the first phase of Human Clinical trials to
demonstrate the laser's effectiveness as a replacement to current Ultraviolet
Light Phototherapy being used to control psoriasis.

In the non-medical applications of the excimer laser technology, the
Company intends to evaluate its technology as it applies as an illumination
source for use in the deep ultraviolet ("DUV") photolithography systems for
the semiconductor manufacturing industry. There can be no assurances that the
Company's excimer laser systems will be developed into marketable products.

2
<PAGE>

The Company's strategy is to apply its extensive solid-state and excimer
laser expertise to develop a broad base of laser products focused on medical
and non-medical applications. The Company believes that its excimer laser
technology provides the basis for reliable cost-effective systems that will
increasingly be used in connection with a variety of medical and non-medical
applications.

To facilitate the Company's new focus on excimer laser technology, in
October, 1997, the Company's Board of Directors authorized management to
pursue the sale or closure of the Company's non-excimer laser businesses.

On April 8, 1998, the Company entered into a letter of intent with an
unaffiliated third party to sell the operational assets of the Company's
business operations conducted in Massachusetts and Florida. The purchaser
has also agreed to assume certain liabilities of such business operations.
The Company will retain its excimer lasers and laser delivery systems related
to the business operations of AccuLase in San Diego, California. There can
be no assurances that the transactions contemplated by this letter of intent
will be completed on these terms or at all.

Management's decision to sell the assets of the business operations
related to the Company's Massachusetts and Florida operations will divest the
Company of the business operations which have generated substantially all
sales revenues before December 31, 1997.

Although the Company has developed strategic alliances with Baxter and
Massachusetts General Hospital related to the Company's excimer lasers, there
can be no assurances that the Company will ever develop significant revenues
or profitable operations with respect to this new business plan.

The Company's principal executive offices are located at 6865 Flanders
Drive, Suite G, San Diego, California 92121, (619) 455-7030.

<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Securities Offered by the
Selling Stockholders............... 3,928,101 Shares of Common Stock to
be offered, including 3,028,101 shares
issued in the name of the Selling
Stockholders and 900,000 shares which
may be issued upon the exercise of the
Warrants for the account of certain
Selling Stockholders. See "Description
of Securities" and "Selling
Stockholders and Plan of
Distribution."
Common Stock Outstanding(1):
Before the Offering.......... 9,295,694 shares
After the Offering........... 9,295,694 shares (2)

Use of Proceeds................ The Company will receive none of the
proceeds from the sale of the Shares
offered hereby for the benefit of the
Selling Stockholders. However, the
Company may receive up to a maximum
of $3,600,000 of gross proceeds from
the exercise of the Warrants, if at
all. The Company intends to use the
net proceeds of this Offering received
from the exercise of the Warrants for
working capital and general corporate
purposes. See "Use of Proceeds" and
"Selling Stockholders and Plan of
Distribution."

Risk Factors and Dilution..... The securities offered hereby are
highly speculative and involve a high
degree of risk. These factors
include, but are not limited to risks
related to the Company's historical
lack of profitability, legislative
and regulatory restrictions impacting
the Company's business operations and
industry and the market for the
securities offered hereby. An
investment in these securities should
be made only by investors who can
afford the loss of their entire
investment. See "Risk Factors."

Over-the-Counter Market
Symbol

Common Stock.................. LSPT
</TABLE>
- ----------------------
(1) Does not include shares of Common Stock that are reserved
for issuance pursuant to certain stock option plans of the
Company and certain other options of the Company. See "Price
Range of Common Stock," "Compensation of Executive Officers and
Directors - 1995 Non-Qualified Stock Option Plan; - Compensation
of Directors," "Certain Relationships and Related Transactions"
and "Description of Securities."

(2) Does not give effect to 900,000 shares of Common Stock
which may be issued upon the exercise of the Warrants. See
"Selling Stockholders and Plan of Distribution" and "Description
of Securities."

<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)

The Summary Financial Information set forth below should be read in
conjunction with the audited Consolidated Financial Statements included
elsewhere herein:

THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31
------------------------------------------------------------ -----------------
1/1-5/22 5/23-12/31
1993(1) 1994 1995(2) 1995(2) 1996 1997 1997(1) 1998(1)
------------------------------------------------------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA

Revenues $6,090 $5,715 $1,242 $1,408 $2,901 $3,815 $937 $1100
Net income (loss) (3,718) (2,234) 4,839(3) (2,124) (5,358) (2,307) (375) (570)

Basic and diluted loss
per share * * * (0.42) (0.95) (0.35) (0.06) (0.06)

Weighted average
shares
outstanding(4) 6,312 6,312 6,312 5,000 5,620 6,531 6,173 9,267

</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1/1-5/22 5/23-12/31
1993(1) 1994 1995(2) 1995(2) 1996 1997 MARCH 31, 1998(1)
-------------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA

Working capital (deficit) ($1,089) $960 ($99) ($610) ($1,728) $15 ($324)

Total assets 4,546 2,144 1,715 5,796 3,195 7,808 7,112

Long-term debt (net
of current portion) 4,615 -- -- 867 283 283 283

Liabilities subject
to compromise -- 7,930 7,564 -- -- -- --

Total stockholders'
equity (deficit) (4,409) (6,643) (7,404) 686 (2,090) 4,929 4,415

</TABLE>
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(FOOTNOTES ARE ON FOLLOWING PAGE)

<PAGE>

(FOOTNOTES FROM PREVIOUS PAGE)

* Not comparable due to Bankruptcy Reorganization.

(1) These amounts have been derived from certain unaudited
financial statements of the Company.

(2) In connection with the confirmation of the Bankruptcy Reorganization on
May 22, 1995, the Company was required to adopt fresh start reporting
as of May 23, 1995 since the reorganization value (approximate fair
value at the date of reorganization) was less than the total of all
postpetition liabilities and allowed claims, and holders of existing
voting shares before May 23, 1995 received less than 50% of the voting
shares of the emerging entity. Accordingly, the statement of operations
for the period ended May 22, 1995 reflects the effects of the
forgiveness of debt resulting from the confirmation of the Bankruptcy
Reorganization and the effects of the adjustments to restate assets and
liabilities to reflect the reorganization value. In addition, the
accumulated deficit of the Company was eliminated and its capital
structure was recast in conformity with the Bankruptcy Reorganization.
As such, the consolidated financial statements of the Company as of
December 31, 1995, 1996 and 1997, and March 31, 1998 and for the period
from May 23, 1995 to December 31, 1995, and the years ended December
31, 1996 and 1997, and the three (3) months ended March 31, 1997 and
1998, reflect that of the Company on and after May 23, 1995, which, in
effect, is a new entity for financial reporting purposes with assets,
liabilities, and a capital structure having carrying values not
comparable with prior periods. The consolidated balance sheet as of
December 31, 1993 and 1994 and as of May 22, 1995, and for the period
from January 1, 1995 to May 22, 1995 and the years ended December 31,
1993 and 1994 reflect that of the Company prior to May 23, 1995. See
"Business - Business of the Company" and "Business - Litigation."

(3) Includes an extraordinary gain of $5,768,405. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."

(4) Common Stock equivalents and convertible issues are antidilutive and,
therefore, are not included in the weighted shares outstanding during
the periods the Company incurred net losses.

<PAGE>

RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK AND SUBSTANTIAL DILUTION. AN INVESTMENT IN THESE SECURITIES
SHOULD BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. IN ADDITION TO THE FACTORS SET FORTH ELSEWHERE IN THIS
PROSPECTUS, PROSPECTIVE INVESTORS SHOULD GIVE CAREFUL CONSIDERATION TO THE
FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
PURCHASING THE SECURITIES OFFERED HEREBY.

THIS PROSPECTUS MAY BE DEEMED TO CONTAIN FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE REFORM ACT. FORWARD-LOOKING STATEMENTS IN THIS
PROSPECTUS OR HEREAFTER INCLUDED IN OTHER PUBLICLY AVAILABLE DOCUMENTS FILED
WITH THE COMMISSION, REPORTS TO THE COMPANY'S STOCKHOLDERS AND OTHER PUBLICLY
AVAILABLE STATEMENTS ISSUED OR RELEASED BY THE COMPANY INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE THE
COMPANY'S ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR
ACHIEVEMENTS TO DIFFER FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR
OPERATING) OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON MANAGEMENT'S BEST ESTIMATES
BASED UPON CURRENT CONDITIONS AND THE MOST RECENT RESULTS OF OPERATIONS.
THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, RISKS SET FORTH HEREIN, EACH OF
WHICH COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS AND THE ACCURACY OF THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.

There is a limited public market for the Company's Common Stock.
Persons who may own or intend to purchase shares of Common Stock in any
market where the Common Stock may trade should consider the following risk
factors, together with other information contained elsewhere in the Company's
reports, proxy statements and other available public information, as filed
with the Securities and Exchange Commission, prior to purchasing shares of
the Common Stock:

FINANCIAL RISKS

LACK OF PROFITABILITY AND HISTORY OF LOSSES; BANKRUPTCY PROCEEDING. The
Company historically has incurred significant net losses from operations. On
May 13, 1994, the Company filed a voluntary petition of reorganization (the
"Bankruptcy Proceeding") with the United States Bankruptcy Court for the
Middle District of Florida (the "Bankruptcy Court") pursuant to Chapter 11 of
the United States Bankruptcy Code. During the pendency of the Bankruptcy
Proceeding, the Company conducted its business operations as a
debtor-in-possession, subject to the jurisdiction of the Bankruptcy Court.
On May 22, 1995, the Bankruptcy Court confirmed the Bankruptcy
Reorganization. As of December 31, 1997, the Company had an accumulated
deficit of $9,788,883. The Company expects to continue to incur significant
operating losses over at least the following two years as it continues to
devote significant financial resources to product development activities and
as the Company expands its operations. In order to achieve profitability, the
Company will have to manufacture and market products which are accepted on a
widespread commercial basis. There can be no assurances that the Company
will manufacture or market any products successfully, operate profitably in
the future, or that Company will not require significant additional financing
in order to accomplish the Company's current business plan. See "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and "Financial Statements."

NEED FOR ADDITIONAL FINANCING. The Company has historically financed
its operations through working capital provided from operations, loans and
the private placement of equity and debt securities. The Company has
significant debt obligations which will require additional financing in order
to repay in full. The Company will not receive any of the proceeds from this
Offering, except to the extent that any of the Selling Stockholders exercise
the Warrants which relate to certain of the shares of Common Stock which are
the subject of this Prospectus. The Company continues to require such
financing in order to accomplish the Company's current business plan. The
Company believes that the Company has sufficient capital and anticipated
sources of revenues to finance the Company's current level of operations and
continued development of the Company's products for a period of at least
thirteen (13) months following the date of this

<PAGE>

Prospectus, based on the Company's current business plan. However, the
Company's ability to expand business operations is currently dependent on
financing from external sources. There can be no assurance that the Company
will be able to generate sufficient revenues prior to such date or at all, or
that the Company will not require additional financing at or prior to such
date in order to continue operations and product development. There can be no
assurances that any additional sources of financing will be available on
terms favorable to the Company, or at all, or that the business of the
Company will ever achieve profitable operations. Further, any additional
financing may be senior to the Company's Common Stock or result in
significant dilution to the holders of the Common Stock. In the event the
Company does not receive any such financing or generate profitable
operations, management may have to suspend or discontinue its business
activity or certain components thereof in its present form or cease
operations altogether. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources" and "Financial Statements."

SECURITIES RISKS

DISCLOSURE RELATING TO LOW-PRICED STOCKS. The Company's Common Stock is
currently listed for trading in the over-the-counter market (the
"Over-the-Counter Market") in the so-called "pink sheets" or the "Electronic
Bulletin Board" of the National Association of Securities Dealers, Inc. The
Company's securities are subject to the "penny stock rules" adopted pursuant
to Section 15 (g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The penny stock rules apply to non-NASDAQ companies whose
Common stock trades at less than $5.00 per share or which have tangible net
worth of less than $5,000,000 ($2,000,000 if the company has been operating
for three or more years). Such rules require, among other things, that
brokers who trade "penny stock" to persons other than "established customers"
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information concerning trading in the
security, including a risk disclosure document and quote information under
certain circumstances. Many brokers have decided not to trade "penny stock"
because of the requirements of the penny stock rules and, as a result, the
number of broker-dealers willing to act as market makers in such securities
is limited. Because the Company's securities are subject to the "penny stock
rules," there may develop an adverse impact on the market for the Company's
securities. See "Price Range of Common Stock."

EFFECTS OF CERTAIN REGISTRATION RIGHTS. The Company is registering
3,928,101 shares of Common Stock, including 900,000 shares underlying the
Warrants in connection with this Registration Statement. The Company
currently has 9,295,694 shares issued and outstanding. There can be no
assurances that this Registration Statement will not have a material adverse
effect on the market price for the Company's Common Stock resulting from the
increased number of free trading shares of Common Stock in the market. See
"Certain Relationships and Related Transactions" and "Description of
Securities."

LACK OF DIVIDENDS ON COMMON STOCK. The Company has paid no dividends on
its Common Stock to date and there are no plans for paying dividends in the
foreseeable future. The Company intends to retain earnings, if any, to
provide funds for the expansion of the Company's business. See "Dividend
Policy."

POTENTIAL ANTI-TAKEOVER EFFECT OF DELAWARE LAW. The Company is subject
to certain provisions of the Delaware General Corporation Law which, in
general, restrict the ability of a publicly held Delaware corporation from
engaging in certain "business combinations," with certain exceptions, with
"interested stockholders" for a period of three (3) years after the date of
transaction in which the person became an "interested stockholder." The
effect of such "anti-takeover" provisions may delay, deter or prevent a
takeover of the Company which the stockholders may consider to be in their
best interests, thereby possibly depriving holders of the Company's
securities of certain opportunities to sell or otherwise dispose of their
securities at above-market prices, or limit the ability of stockholders to
remove incumbent directors as readily as the stockholders may consider to be
in their best interests. See "Description of Securities - Certain Business
Combinations."

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE; ISSUANCE OF ADDITIONAL SHARES. Future
sales of shares of Common Stock by the Company and its stockholders could
adversely affect the prevailing market price of the Common Stock. There are
currently 105,000 restricted shares and 9,190,694 shares of Common Stock
which are freely tradeable, eligible to have the restrictive legend removed
pursuant to Rule 144(k) promulgated under the Securities Act or are the
subject of this Prospectus or other registration statements. Further, the
Company has granted options to purchase up to an additional 1,477,899 shares
of Common Stock, 1,107,899 of which are currently exercisable, and Warrants
to purchase up to 900,000 shares of Common Stock. Sales of substantial
amounts of Common Stock in the public market, or the perception that such
sales may occur, could have a material adverse effect on the market price of
the Common Stock. Pursuant to its Certificate of Incorporation, the Company
has the authority to issue additional shares of Common Stock. The issuance
of such shares could result in the dilution of the voting power of Common
Stock purchased in the Offering. See "Compensation of Executive Officers and
Directors," "Principal Stockholders," "Description of Securities" and
"Shares Eligible for Future Sale."

EFFECT OF OUTSTANDING WARRANTS. The holders of the Warrants are given an
opportunity to profit from a rise in the market price of the Common Stock,
with a resulting dilution in the interest of the other stockholders.
Further, the terms on which the Company might obtain additional financing
during the period may be adversely affected by the existence of the Warrants.
The holders of the Warrants may exercise the Warrants at a time when the
Company might be able to obtain additional capital through a new offering of
securities on terms more favorable than those provided herein. See
"Description of Securities."

LIMITATIONS ON DIRECTOR LIABILITY. The Company's Certificate of
Incorporation provides, as permitted by governing Delaware law, that a
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
with certain exceptions. These provisions may discourage stockholders from
bringing suit against a director for breach of fiduciary duty and may reduce
the likelihood of derivative litigation brought by stockholders on behalf of
the Company against a director. In addition, the Company's Certificate of
Incorporation and Bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. See
"Management."

CONSENT DECREE. In 1996, the Company entered into a Consent Decree with
the Commission where it neither admitted nor denied alleged securities law
violations in 1992 and early 1993 under prior management, but consented to
the issuance of an injunction against any future violation. The alleged
events occurred prior to the Company's Bankruptcy Reorganization and involve
events, which occurred prior to the change in the Company's management and
directors. There can be no assurance that the Consent Decree will not have
an adverse effect on the Company's ability to conduct financing in the
future. See "Business - Litigation."

GENERAL BUSINESS OPERATIONS RISKS

PENDING SALE OF REVENUE GENERATING ASPECTS OF BUSINESS OPERATIONS. On
April 8, 1998, the Company entered into a letter of intent with an
unaffiliated third party to sell the operational assets of the Company's
business operations conducted in Massachusetts and Florida. The purchaser
has also agreed to assume liabilities of such business operations, in an
amount to be determined. The Company will retain its excimer lasers and
laser delivery systems related to the business operations of AccuLase in San
Diego, California. As of the date of this Prospectus it is uncertain that
final terms between the Company and the prospective purchaser can be reached.
There can be no assurances that the transactions contemplated by this letter
of intent will be completed on these terms or at all. Management's decision
to sell the assets of the business operations related to the Company's
Massachusetts and Florida operations will divest the Company of the business
operations which, although have never been profitable, have generated
substantially all sales revenues before December 31, 1997. Although the
Company has developed strategic alliances with Baxter and Massachusetts
General Hospital related to the Company's excimer lasers, there can be no
assurances that the Company will ever develop significant revenues or
profitable operations with respect to this new business plan. See "Business."

9
<PAGE>

TECHNOLOGICAL UNCERTAINTY; NO ASSURANCE OF REGULATORY APPROVALS. Certain
of the Company's laser products will require significant clinical testing and
regulatory clearances from governmental agencies prior to the Company's
ability to market such products for medical use. The development of lasers
for medical use is a lengthy, expensive and uncertain process. The proposed
development of these products is subject to the risks of failure in the
development of devices and procedures based on innovative technologies.
These risks include the possibilities that the Company's lasers and/or
delivery system or the medical treatments they embody, will be found to be
ineffective, or otherwise fail to receive necessary regulatory clearances, or
uneconomical to market. Accordingly, management is unable to predict whether
its development activities will result in any commercially viable products or
applications. There can be no assurance that proposed products will prove to
be safe or effective or receive regulatory approvals that are required for
commercial sale. See "Business."

NEED TO DEVELOP AND POTENTIAL OBSOLESCENCE OF NEW PRODUCTS. The Company is
engaged in the business of developing new products and technologies for the
laser industry. Certain of the Company's lasers are marketable for
non-medical uses and certain lasers need to complete clinical testing and
obtain regulatory approval for medical uses. No assurance can be given that
the Company will be able to complete such testing or obtain such approvals.
The Company believes its future prospects depend on its ability not only to
enhance and successfully market its products, but also to develop and
introduce new products in a timely fashion that achieve market acceptance.
There can be no assurance that the Company will be able to identify, design,
develop, market or support such products successfully or that the Company
will be able to respond effectively to technological changes or product
announcements by competitors. Delays in new product introductions or product
enhancements, or the introduction of unsuccessful products, could have a
material adverse effect on the Company. No assurance can be given that
technologies developed by others will not render any product developed by the
Company obsolete, or otherwise significantly diminish the value of the
Company's products, or that there will still be a market for such product by
the time such product is ready for commercialization. If the Company does
not develop a market for the Company's products at a time when a market
window for such a product is still open, there would be a material adverse
effect on the Company's financial position. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."

RISK OF MARKET ACCEPTANCE OF THE COMPANY'S PRODUCTS. The Company's
growth will depend on the Company's ability to identify, develop and
successfully market its products. The success of the Company's ability to
commercialize its products is dependent on the acceptance of the Company's
laser systems in their intended markets. Although such products may be safe
and effective for their intended use, there can be no assurances that members
of the market for the Company's products will not elect to use the Company's
technologies or elect to use technologies of the Company's competitors. The
identification of specific market needs is seldom made by any one company
alone, and no assurance can be given that there are not many other laser
companies actively engaged in developing products designed to solve the needs
identified by the Company or that one or more such companies could not
develop a product which has the effect of capturing the market which has been
targeted by management of the Company for its products or making obsolete a
product or technology developed by the Company. There can be no assurance
that any products, which may be developed by the Company, if at all, will
meet any specific needs then existing in the market or that such products
will obtain commercial acceptance in the market. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business" and "Financial Statements."

DIFFICULTY OF MARKETING THE COMPANY'S PRODUCTS. The Company faces a
number of obstacles to the successful marketing of certain of its products
which are ready for marketing, but which have not been successfully marketed
as of the date of this Prospectus. No assurance can be given that the
markets currently projected by the Company for such products will exist, or
if it does, that the products using the Company's technologies will achieve
acceptance in the market. Even in the event that the Company's products find
a level of market acceptance, there can be no assurance that the sale of such
products will generate significant revenue for, or result in profitability
to, the Company. The Company may face a formidable task in marketing such
products in the face of efforts by other companies to market their own
products, even if such companies' products do

10
<PAGE>

not, in the opinion of management of the Company, perform as effectively or
efficiently as the Company's products. Further, no assurance can be given
that any market share, which may be achieved by the Company, will not be
overtaken by products manufactured by other companies possessing far greater
technical and financial resources. See "Business - Products; -Competition."

DEPENDENCE ON THIRD PARTIES FOR MANUFACTURE AND MARKETING OF PRODUCTS AND
RISKS OF ACCESS TO ALTERNATIVE SOURCES AND DELAYS. The Company does not
currently have sufficient financial resources, by itself, to conduct human
clinical trials necessary to commercialize the application of the laser and
delivery system to cardiovascular and vascular applications for medical use.
The Company has entered into an agreement (the "Baxter Agreement") with
Baxter, pursuant to which Baxter has agreed to fund and market the Company's
laser technology for cardiovascular and vascular applications. However,
Baxter may terminate any such commitment pursuant to the Baxter Agreement and
cease further funding at any time. In the event that Baxter terminates the
Baxter Agreement, the Company may rely on other outside parties for the
marketing of its products. There can be no assurance that these third
parties will be willing or able to meet the Company's needs in a satisfactory
and timely manner. Although the Company believes that these third parties
would have an economic incentive to provide such assistance for the Company,
the amount and timing of resources to be devoted to these activities are not
within the control of the Company, and there can be no assurance that
manufacturing and marketing problems will not occur in the future.

Production of the Company's lasers requires specific component parts used
in the assembly of lasers from certain suppliers. In the event that such
suppliers cannot meet the Company's needs, the Company believes that
alternative suppliers could be found. However, a change in suppliers or any
significant delay in the Company's ability to have access to such resources
would have a material adverse effect on the Company's delivery schedules,
business, operating results and financial condition.

The Company maintains limited manufacturing facilities and will need to
expand such facilities to effectively manufacture its products on a
profitable basis. Although certain members of the Company's management have
manufacturing experience, the expansion of the Company's manufacturing
facilities and capabilities will subject the Company to numerous risks,
including unanticipated technological problems or delays. Such expansion
will also require additional sources of capital, which may not be available
on commercially reasonable terms, if at all. In the event that the Company
is unable to expand its manufacturing facilities and capabilities, the
Company may be required to enter into arrangements with others for the
manufacture and packaging of its proposed products. There can be no
assurance that the Company will be able to enter into any such arrangements
on commercially reasonable terms, or at all, or that the Company will ever be
able to establish the capability to manufacture its products on a commercial
basis, in which case the Company's business, results of operations and
financial condition would be materially adversely affected.

In addition, there can be no assurance that either the Company, Baxter or
any future prospective corporate partners, will be able to successfully
introduce the laser and delivery system so that it will achieve acceptance by
patients, health care providers and insurance companies, or that it can be
manufactured and marketed at prices that would permit the Company to operate
profitably. See "Business - Alliance with Baxter Healthcare Corporation;
- -Research and Development."

DEPENDENCE ON THE BAXTER AGREEMENT. The Company has entered into a
contract with Baxter which has the potential for generating revenue from the
sale or license of the Company's excimer laser products for certain uses. If
the Company is unable to meet its obligations under the Baxter Agreement, or
if the Baxter Agreement is terminated for any reason, there could be a
material adverse effect on the Company's financial condition, and the Company
may be compelled to curtail or cease business operations altogether. See
"Business - Alliance with Baxter Healthcare Corporation."

11
<PAGE>

DEPENDENCE ON EFFECTIVE PRODUCT DEVELOPMENT. In order to compete
successfully in the future, the Company anticipates that it will need to
continuously need to develop higher performance versions of lasers, and will
also need to develop future generations of products. Certain of the
Company's future products will require significant additional research and
development prior to their commercialization. The nature of the Company's
research and development activities is inherently complex, precluding
definitive statements as to the time required and costs involved in reaching
certain objectives. Consequently, actual research and development costs and
estimated time frames may require extension. Any delays or additional
research costs could require the raising of funds and, therefore, could have
a material adverse effect on the Company's business and results of
operations. There can be no assurance that any potential products will be
capable of being produced in commercial quantities on a timely basis at
acceptable costs or be successfully marketed, or that the Company will be
able to obtain such additional financing on terms favorable to the Company,
or at all. See "Business."

UNCERTAINTY RELATED TO THIRD-PARTY REIMBURSEMENT. In the United States,
health care providers, including hospitals and physicians, that purchase
devices with medical applications for treatment of their patients, generally
rely on third-party payors, principally federal Medicare, state Medicaid and
private health insurance plans, to reimburse all or a part of the costs and
fees associated with the procedures performed using these devices. The
Company's ultimate success will be dependent upon, among other things, the
ability of health care providers to obtain satisfactory reimbursement from
third-party payors for medical procedures in which the laser and delivery
system products are used. Third-party payors may deny reimbursement if they
determine that a prescribed device has not received appropriate regulatory
clearances or approvals, is not used in accordance with cost-effective
treatment methods as determined by the payor, or is experimental, unnecessary
or inappropriate. If United States Food and Drug Administration ("FDA")
clearance or approval is received, third-party reimbursement would also
depend upon decisions by Health Care Financing Administration ("HCFA") for
Medicare, as well as by individual health maintenance organizations, private
insurers and other payors.

Reimbursement systems in international markets vary significantly by
country and by region within some countries, and reimbursement approvals must
be obtained on a country-by-country basis. Many international markets have
government managed health care systems that control reimbursement for new
devices and procedures. In most markets, there are private insurance systems
as well as government managed systems. There can be no assurance that
reimbursement for the Company's products will be available in the United
States or in international markets under either government or private
reimbursement systems, or that physicians will support and advocate
reimbursement for procedures using the Company's products. Failure by
hospitals and other users of the Company's products to obtain reimbursement
from third-party payors, or changes in government and private third-party
payors' policies toward reimbursement for procedures employing the Company's
products, would have a material adverse effect on the Company's ultimate
business prospects. Moreover, management is unable to predict what
additional legislation or regulation, if any, relating to the health care
industry or third-party coverage and reimbursement may be enacted in the
future, or what effect such legislation or regulation would have. See
"Business."

UNCERTAINTY RELATED TO HEALTH CARE REFORM. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to a fundamental change. Management anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative health care delivery and payment systems. Potential approaches
that have been considered include mandated basic health care benefits,
controls on health care spending through limitations on the growth of private
health insurance premiums and Medicare and Medicaid spending, the creation of
large insurance purchasing groups, price controls and other fundamental
changes to the health care delivery system. Legislative debate is expected
to continue in the future, and market forces are expected to demand reduced
costs. Management cannot predict what impact the adoption of any federal or
state health care reform measures, future private sector reform or market
forces may have on its business. See "Business - Government Regulation."

12
<PAGE>

PRODUCT DEFECTS; LIMITS OF PRODUCT LIABILITY INSURANCE. One or more of the
Company's products may be found to be defective after the Company has already
shipped in volume, requiring a product replacement, which might cure such
defect. Product returns and the potential need to remedy defects or provide
replacement products or parts could impose substantial costs to the Company
and have a material adverse effect on the Company. The clinical testing,
manufacturing and marketing of the Company's devices and procedures may
expose the Company to product liability claims. The Company maintains
liability insurance with coverage limits of $1,000,000 per occurrence and
$2,000,000 in the annual aggregate amount. Although the Company has never
been subject to a product liability claim, there can be no assurance that the
coverage limits of the Company's insurance policies will be adequate or that
one or more successful claims brought against the Company would not have a
material adverse effect upon the Company's business, financial condition and
results of operations. See "Business - Product Liability Insurance."

LARGER AND MORE ESTABLISHED COMPETITION. The market for the Company's
products is extremely competitive. The Company directly and indirectly
competes with other businesses, including businesses in the laser industries.
In some cases, these competitors are substantially larger and more firmly
established, have greater marketing and development budgets and substantially
greater capital resources than the Company. Accordingly, there can be no
assurance that the Company will be able to achieve and maintain a competitive
position in the Company's industry.

Many companies, research institutes and universities are working in a
number of disciplines to develop therapeutic devices and procedures aimed at
vascular and cardiovascular disease. Most of these companies, research
institutes and universities have substantially greater financial, technical,
manufacturing, marketing, distribution and/or other resources than the
Company. In addition, many of such companies have experience in underlying
human clinical trials of new or improved therapeutic devices and procedures
and obtaining FDA and other regulatory clearances of devices and procedures
for use in human health care. The Company has limited experience in
conducting and managing clinical testing and in preparing applications
necessary to gain regulatory clearances. Accordingly, other companies may
succeed in developing devices and procedures that are safer or more effective
than those proposed to be developed by the Company and in obtaining FDA
clearances for such devices and procedures more rapidly than the Company.

The Company's competitors spend substantial sums on research and
development for laser products in order to maintain their respective market
positions. The Company does not have comparable resources with which to
invest in research and development and is at a competitive disadvantage with
respect to its ability to develop products. The Company may also encounter
difficulties in customer acceptance because it is likely to be perceived as a
new laser supplier whose identity is not yet well known and whose reputation
and commercial longevity are not yet established. Substantial marketing and
promotional costs, possibly in excess of what the Company can afford, may be
required to overcome these barriers. There can be no assurance that the
Company will be able to overcome such barriers. The failure to gain customer
acceptance of the Company's lasers and related technology would have a
material adverse effect on the Company. See "Business - Competition."

NO MARKETING STUDIES. No independent studies with regard to feasibility
of the Company's proposed business plan have been conducted at the expense of
the Company or by any independent third parties with respect to the Company's
present and future business prospects and capital requirements. In addition,
there can be no assurances that the Company's products will find sufficient
commercial acceptance in the marketplace to enable the Company to fulfill its
long and short term goals, even if adequate financing is available and
products are ready for market, of which there can be no assurance. See
"Business."

<PAGE>

DEPENDENCE ON KEY PERSONNEL. The Company is dependent upon the skills of
its management and technical team. There is strong competition for qualified
personnel in the laser industry, and the loss of key personnel or an
inability to continue to attract, retain and motivate key personnel could
adversely affect the Company's business. There can be no assurances that the
Company will be able to retain its existing key personnel or to attract
additional qualified personnel. The Company does not have key-person life
insurance on any of its employees. See "Management."

RELIANCE ON PATENT PROTECTION AND PROPRIETARY TECHNOLOGY. The Company's
business could be adversely affected if it is unable to protect its
intellectual property, including patented and other proprietary technology,
certain of which is licensed by the Company and certain of which is owned by
the Company. To the extent the Company or the owners of the patented
technology are unsuccessful in protecting proprietary rights to such
technology or such technology may infringe on proprietary rights of third
parties, that portion of the Company's business could suffer. The Company's
more significant proprietary technology is based on unpatented trade secrets
and know-how. To the extent that the Company relies upon unpatented trade
secrets and know-how and the development of new products and improvements
thereon in establishing and maintaining a competitive advantage in the market
for the Company's products, there can be no assurances that such proprietary
technology will remain a trade secret or that others will not develop
substantially equivalent or superior technologies to compete with the
Company's products. In addition, there can be no assurances that others will
not independently develop similar or superior technologies, which will enable
them to provide superior products or services. Further, there can be no
assurances that patentable improvements on such technology will be developed
or that existing or improved technology will have competitive advantages or
not be challenged by third parties. Further, the laser industry has been
marked by costly and time-consuming litigation with respect to intellectual
property rights between competitors. There can be no assurances that third
parties will not claim that some or all of the Company's technology infringes
on proprietary rights of others. Such litigation may be used to seek damages
or to enjoin alleged infringement of proprietary rights of others. Further,
the defense of any such litigation, whether or not meritorious, may divert
financial and other resources of the Company, which may otherwise be devoted
to development of the Company's business plan, and therefore, may have a
material adverse effect on the financial condition of the Company. An
adverse decision to the Company in any such litigation may result in a
significant damages award payable by the Company or enjoin the Company from
marketing its then existing products, and therefore, would have an adverse
effect on the Company's ability to continue in business. In the event of an
adverse result in such litigation, the Company would be required to expend
significant resources to develop non-infringing technology or to obtain
licenses to the disputed technology from third parties. There can be no
assurances that the Company will have the resources to develop or license
such technology, or if so, that the Company would be successful in such
development or that any such licenses would be available on commercially
reasonably terms.

Further, the Company may be required to commence litigation against third
parties to protect any proprietary rights of the Company. There can be no
assurances that the Company will be able to afford to prosecute such
litigation, or if so, that such litigation will be successful. See "Business
- - Patents and Trademarks."

14
<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the shares of
Common Stock offered hereunder. However, the Company may receive up to
$3,600,000 of gross proceeds from the exercise of the Warrants, if at all.
The net proceeds to the Company from the exercise of the 900,000 Shares which
may be issued upon the exercise of the Warrants will be used for working
capital and general corporate purposes.

Management believes that, based on the Company's current business plan,
the Company has sufficient operating capital for a period of at least
thirteen (13) months following the date of this Prospectus, excluding any
proceeds which may be received from the exercise of the Warrants, if at all.
However, there can be no assurance that changes in the Company's research and
development plans or other changes affecting the Company's operating expenses
and business strategy will not result in the expenditure of such resources
before such time or that the Company will be able to develop profitable
operations prior to such date, or at all, or that the Company will not
require additional financing at or prior to such time in order to continue
operations and product development. There can be no assurance that
additional capital will be available on terms favorable to the Company, if at
all. To the extent that additional capital is raised through the sale of
additional equity or convertible debt securities, the issuance of such
securities could result in additional dilution to the Company's stockholders.
Moreover, the Company's cash requirements may vary materially from those now
planned because of results of research and development, product testing,
relationships with manufacturers, changes in the focus and direction of the
Company's research and development programs, competitive and technological
advances, the level of working capital required to sustain the Company's
planned growth, litigation, operating results, including the extent and
duration of operating losses, and other factors. In the event that the
Company experiences the need for additional capital, and is not able to
generate capital from financing sources or from future operations, management
may be required to modify, suspend or discontinue the business plan of the
Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources" and "Financial
Statements."

Pending full utilization of the proceeds which may be obtained from the
exercise of the Warrants, if at all, the Company may invest the net proceeds
in short-term, investment grade, interest bearing securities. See "Business."

DIVIDEND POLICY

No dividend has been declared or paid by the Company since inception on
the Company's Common Stock. The Company does not anticipate that any
dividends will be declared or paid in the future on the Company's Common
Stock. See "Description of Securities."

PRICE RANGE OF COMMON STOCK

As of the date of this Prospectus, the Company had 9,295,694 shares of
Common Stock issued and outstanding. Further, the Company has issued and
outstanding options to purchase an additional 1,477,899 shares of Common
Stock and Warrants to purchase up to 900,000 shares of Common Stock. See
"Description of Securities."

The Company's Common Stock is listed for trading in the Over-the-Counter
Market under the symbol "LSPT." The Company's Common Stock, subsequent to
the confirmation of the Bankruptcy Reorganization on May 22, 1995, has been
quoted on the Electronic Bulletin Board since approximately January 22, 1996
under the stock symbol "LSPT." The Company's "old" Common Stock, prior to
the confirmation of the Bankruptcy Reorganization, was also quoted on the
Electronic Bulletin Board in 1993, and during the period from May 13, 1994 to
May 22, 1995, during the pendency of the related Bankruptcy Proceeding, in
the "pink sheets" under the stock symbol "LAPHQ."

15
<PAGE>

The following table sets forth quotations for the bid and asked
prices for the Common Stock for the periods indicated below, based upon
quotations between dealers, without adjustments for stock splits, dividends,
retail mark-ups, mark-downs or commissions, and therefore, may not represent
actual transactions:

<TABLE>
<CAPTION>
Bid Prices Asked Prices
--------------------- ---------------------
High Low High Low
------- ------ ------ ------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996

1st Quarter 7 3/4 4 1/2 8 1/4 5 3/4
2nd Quarter 8 1/4 3 3/4 8 1/2 4 1/4
3rd Quarter 5 3/8 3 5/8 5 5/8 4
4th Quarter 3 11/16 11/16 4 1/8 13/16

YEAR ENDED DECEMBER 31, 1997

1st Quarter 2 9/32 5/16 2 5/16 3/8
2nd Quarter 1 5/16 5/16 1 7/16 13/32
3rd Quarter 4 3/8 7/8 4 9/16 1 1/16
4th Quarter 6 1/8 2 31/32 6 3/8 3 1/8

YEAR ENDING DECEMBER 31, 1998

1st Quarter 4 1/8 2 1/2 4 3/8 2 11/16

</TABLE>

On May 28, 1998, the closing market price for the Company's Common Stock
in the Over-the-Counter Market was approximately $ 2.50 share. As of April 8,
1998, without giving effect to the number of stockholders whose shares are
held in "street name," the Company had approximately 1,063 stockholders of
record.

16
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1998. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Certain Relationships and Related
Transactions" and " Selling Stockholders and Plan of Distribution." This
table should be read in conjunction with the Consolidated Financial
Statements and related Notes included elsewhere in this Prospectus:

<TABLE>
<CAPTION>
MARCH 31, 1998
<S> <C>
NOTES PAYABLE:

Current portion $535,875
Long term 282,559

STOCKHOLDERS' EQUITY:

Common Stock, par value
$0.01; 15,000,000 shares
authorized(1); issued and
outstanding 9,295,694 shares(2)(3) 92,957

Additional paid-in-capital 14,680,829

Accumulated deficit (10,358,680)
------------

Total stockholders'
equity 4,415,106
------------
Total capitalization $5,233,540
------------
------------
</TABLE>
- ------------------------

(1) On February 4, 1998, the Company's stockholders approved a resolution
to increase the authorized capital of the Company to 15,000,000 shares of
Common Stock. See "Description of Securities."

(2) Does not include shares of Common Stock that are reserved for
issuance pursuant to certain stock option plans of the Company and certain
other options of the Company. See "Compensation of Executive Officers and
Directors - 1995 Non-Qualified Stock Option Plan; - Compensation of
Directors," "Certain Relationships and Related Transactions," "Description of
Securities" and "Selling Stockholders and Plan of Distribution."

(3) Does not give effect to the 900,000 shares of Common Stock underlying
the Warrants. See "Description of Securities."

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The Selected Consolidated Financial Data for 1993 through 1997 set forth
below are derived from the Consolidated Financial Statements of the Company
and Notes thereto. The Consolidated Financial Balance Sheets at March 31,
1998, and the related Consolidated Statements of Operations, Stockholders'
Equity (Deficit) and Cash Flows for the three (3) months ended March 31, 1998
and 1997, and for the years ended December 31, 1997 and 1996, and the periods
from January 1, 1995 to May 22, 1995 and May 23, 1995 to December 31, 1995,
appear elsewhere in this Prospectus. The Selected Consolidated Financial
Data are qualified in their entirety by reference to, and should be read in
conjunction with, the Consolidated Financial Statements and related Notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED JANUARY 1, MAY 23, TO YEAR ENDED ENDED
DECEMBER 31, TO MAY 22, DECEMBER 31, DECEMBER 31, MARCH 31,

1993(1) 1994 1995(2) 1995(2) 1996 1997 1997(1) 1998(1)
--------- ------ --------- --------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
DATA:
Revenues............................... $6,090 $5,715 $1,242 $1,408 $2,901 $3,815 $ 937 $1,100

Costs and Expenses..................... 11,501 6,713 2,082 3,351 7,704 5,746 1,182 1,635
-------- ------ --------- --------- ------ ------ ------ ------

Loss from operations................... (5,411) (998) (840) (1,942) (4,802) (1,931) (245) (535)
-------- ------ --------- --------- ------ ------ ------ ------

Other income (expenses)................ 1,693 (1,236) (89) (181) (556) (372) (130) (33)

Income tax expense..................... -- -- -- -- -- (4) -- (1)
-------- ------ --------- --------- ------ ------ ------ ------

Extraordinary item-gain
from reorganization................... -- -- 5,768 -- -- -- -- --
-------- ------ --------- --------- ------ ------ ------ ------

Net income (loss)...................... (3,718) (2,234) 4,839(3) (2,124) (5,358) (2,307) (375) (569)
-------- ------ --------- --------- ------ ------ ------ ------
-------- ------ --------- --------- ------ ------ ------ ------

Basic and diluted loss
per share............................. * * * (0.42) (0.95) (0.35) (0.06) (0.06)

Weighted average shares
outstanding(4)........................ * * * 5,000 5,620 6,531 6,173 9,267

BALANCE SHEET DATA (AT PERIOD END):

Working capital (deficit).............. ($1,089) $960 ($99) ($610) ($1,728) $15 ($1,848) ($324)

Total assets........................... 4,546 2,144 1,715 5,796 3,195 7,808 3,024 7,112

Long-term debt (net of
current portion)...................... 4,615 -- -- 867 283 283 283 283

Liabilities subject to
compromise............................ -- 7,930 7,564 -- -- -- -- --

Total stockholders'
equity (deficit)...................... (4,409) (6,643) (7,404) 686 (2,090) 4,929 (2,426) 4,415

</TABLE>
- --------------------------------
(FOOTNOTES ARE ON FOLLOWING PAGE)

18
<PAGE>

(FOOTNOTES FROM PREVIOUS PAGE)

* Not comparable due to Bankruptcy Reorganization.

(1) These amounts have been derived from certain unaudited financial
statements of the Company.

(2) In connection with the confirmation of the Bankruptcy Reorganization on
May 22, 1995, the Company was required to adopt fresh start reporting as
of May 23, 1995 since the reorganization value (approximate fair value at
the date of reorganization) was less than the total of all postpetition
liabilities and allowed claims, and holders of existing voting shares
before May 23, 1995 received less than 50% of the voting shares of the
emerging entity. Accordingly, the statement of operations for the period
ended May 22, 1995 reflects the effects of the forgiveness of debt
resulting from the confirmation of the Bankruptcy Reorganization and the
effects of the adjustments to restate assets and liabilities to reflect
the reorganization value. In addition, the accumulated deficit of the
Company was eliminated and its capital structure was recast in conformity
with the Bankruptcy Reorganization. As such, the consolidated financial
statements of the Company as of December 31, 1995, 1996 and 1997, and
March 31, 1998 and for the period from May 23, 1995 to December 31, 1995,
and the years ended December 31, 1996 and 1997, and the three (3) months
ended March 31, 1997 and 1998, reflect that of the Company on and after
May 23, 1995, which, in effect, is a new entity for financial reporting
purposes with assets, liabilities, and a capital structure having carrying
values not comparable with prior periods. The consolidated balance sheet
as of December 31, 1993 and 1994 and as of May 22, 1995, and for the
period from January 1, 1995 to May 22, 1995 and the years ended December
31, 1993 and 1994 reflect that of the Company prior to May 23, 1995. See
"Business - Business of the Company" and "Business - Litigation."

(3) Includes an extraordinary gain of $5,768,405. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

(4) Common Stock equivalents and convertible issues are antidilutive and,
therefore, are not included in the weighted shares outstanding during the
years the Company incurred net losses.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

THIS PROSPECTUS, INCLUDING THE DISCLOSURES BELOW, CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES.
WHEN USED HEREIN, THE TERMS "ANTICIPATES," "EXPECTS," "ESTIMATES," "BELIEVES"
AND SIMILAR EXPRESSIONS, AS THEY RELATE TO THE COMPANY OR ITS MANAGEMENT, ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS MAY DIFFER MATERIALLY FROM THOSE
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH MATERIAL DIFFERENCES INCLUDE THE FACTORS
DISCLOSED IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS, WHICH PROSPECTIVE
PURCHASERS OF THE SECURITIES OFFERED HEREBY SHOULD CONSIDER CAREFULLY.

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related Notes included elsewhere in
this Prospectus.

OVERVIEW OF BUSINESS OPERATIONS

In connection with the Bankruptcy Reorganization, Helionetics
transferred to the Company ownership of approximately 76% of the issued and
outstanding common stock of AccuLase. AccuLase was founded in 1985 for the
purpose of commercializing products that utilize its proprietary excimer
laser and fiberoptic technologies. AccuLase has focused primarily on the
development of medical products for the treatment of coronary heart disease.

During the pendency of the Bankruptcy Proceeding, Helionetics
contributed $1,000,000 dollars in cash to the Company, which funds were
utilized for cash payments under the Bankruptcy Reorganization. Helionetics
further loaned to the Company $300,000 to fund the cost of research and
development of the Company's excimer lasers. In connection with the
Bankruptcy Reorganization: (i) Helionetics received 3,750,000 shares of
Common Stock of the Company, which represented 75% of the then total issued
and outstanding shares of Common Stock, (ii) certain of the Company's
unsecured creditors received 1,000,000 shares of Common Stock, which
represented 20% of the then total issued and outstanding shares of Common
Stock, and (iii) the shares of Common Stock of the Company's prior existing
stockholders were cancelled and reissued into 250,000 shares of Common Stock,
which represented 5% of the then total issued and outstanding shares of
Common Stock. As of the date of this Prospectus, Helionetics does not own
any shares of the Company's Common Stock.

<PAGE>

The Company's initial medical applications are intended to be used in
the treatment of cardiovascular disease and treatment of psoriasis. The
current cardiovascular and vascular applications are in an experimental
procedure known as Transmyocardial Revascularization ("TMR"), in which the
Company's laser system is currently in Phase I Human Clinical trials. A
proposed excimer laser system to treat psoriasis commenced in May, 1998 by
going through the first phase of Human Clinical trials to demonstrate the
laser's effectiveness as a replacement to current Ultraviolet Light
Phototherapy being used to control psoriasis.

The Company's strategy is to apply its extensive solid-state and excimer
laser expertise to develop a broad base of excimer laser products focused on
medical and non-medical applications. The Company believes that its excimer
laser technology provides the basis for reliable cost-effective systems that
will increasingly be used in connection with a variety of medical and
non-medical applications.

BASIS FOR PREPARATION OF FINANCIAL STATEMENTS.

The consolidated financial statements filed elsewhere herein have been
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business,
and, where applicable, in conformity with Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization under the Bankruptcy
Code," issued in November, 1990, by the American Institute of Certified
Public Accountants ("SOP 90-7").

Under the provisions of SOP 90-7 and in connection with the confirmation
of the Bankruptcy Reorganization on May 22, 1995, the Company was required to
adopt fresh start reporting as of May 23, 1995 since the reorganization value
(approximate fair value at the date of reorganization) was less than the
total of all postpetition liabilities and allowed claims, and holders of
existing voting shares before May 23, 1995 received less than 50% of the
voting shares of the emerging entity. Accordingly, the consolidated
statements of operations for the period from January 1, 1995 to May 22, 1995
reflects the effects of the forgiveness of debt resulting from the
confirmation of the Bankruptcy Reorganization and the adjustments to restate
assets and liabilities to reflect the reorganization value.

In adopting fresh start reporting, the Company was required to determine
its reorganization value, which represented the fair value of the Company
before considering liabilities and the approximate amount a willing buyer
would pay for the assets of the Company immediately after the Bankruptcy
Reorganization. The reorganization value was based upon the consideration
given by Helionetics to acquire a 75% interest in the Company. The purchase
price of $1,894,122 was determined based upon cash paid and the carrying
value of the 76.1% interest in AccuLase previously owned by Helionetics,
which was transferred to the Company in connection with the Bankruptcy
Reorganization.

<PAGE>

All assets and liabilities were restated to reflect their reorganization
value in accordance with procedures specified in Accounting Principles Board
Opinion 16 "Business Combinations," as required by SOP 90-7. The portion of
the reorganization value that could not be attributed to specific tangible or
identified intangible assets was classified as reorganization value in excess
of amounts allocable to identifiable assets ("Reorganization Goodwill") and
was being amortized over five years. Because of the magnitude of the
Company's losses since emerging from the Bankruptcy Reorganization, the
balance of the Reorganization Goodwill was written off as of December 31,
1996.

In addition, the accumulated deficit of the Company was eliminated and
its capital structure was recast in conformity with the Bankruptcy
Reorganization. As such, the consolidated balance sheets of the Company as of
December 31, 1996 and 1997 and March 31, 1998, and the consolidated
statements of operations for the period from May 23, 1995 to December 31,
1995, for the two (2) years ended December 31, 1996 and 1997 and for the
three (3) months ended March 31, 1997 and 1998, reflect in effect a new
entity for financial reporting purposes, as of May 23, 1995, with assets,
liabilities, and a capital structure having carrying values not comparable
with prior periods. The consolidated statements of operations for the period
from January 1, 1995 to May 22, 1995 reflect that of the Company prior to May
23, 1995.

Further, the Company's consolidated income statements for the years
ended December 31, 1995, 1996 and 1997, which form a part of the Company's
consolidated financial statements for such years, reflect the results of
operations of Laser Photonics and Laser Analytics for the period prior to May
23, 1995 and the consolidated results of operations of Laser Photonics, Laser
Analytics and AccuLase for the periods subsequent to May 22, 1995.

For purposes of the following discussion and analysis, the results of
operations of Laser Photonics and Laser Analytics for the period from January
1, 1995 to May 22, 1995 and the consolidated results of operations of Laser
Photonics, Laser Analytics and AccuLase for the period from May 23, 1995 and
December 31, 1995 have been combined as one fiscal year and presented in
comparison to the consolidated results of operations of Laser Photonics,
Laser Analytics and AccuLase for the years ended December 31, 1996 and 1997.
This method of presentation was set forth herein to permit useful comparison
with respect to the consolidated results of operations of the Company between
the three (3) months ended March 31, 1998 and 1997 and the one year periods
ended December 31, 1995, 1996 and 1997, with certain matters affecting the
Company's consolidated statements of operations in such years arising from
the Bankruptcy Reorganization described below.

<PAGE>

RESULTS OF OPERATIONS

The following table presents selected consolidated financial information
stated as a percentage of revenues for the years ended December 31, 1995, 1996
and 1997 and for the three (3) months ended March 31, 1997 and 1998:

YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
MARCH 31,
1995 1996 1997(1) 1997 1998
---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues 100% 100% 100% 100% 100%
Cost of sales 94 80 55 69 42
---- ---- ----- ---- ----
Gross profit 6 20 45 31 58
---- ---- ----- ---- ----
Selling, general and
administrative expenses 48 40 57 24 55
Research and development 35 30 18 14 27
Bad debt expense related to
related party receivable -- 23 1 -- --
Writeoff of reorganization
goodwill -- 51 -- -- --
Depreciation and amortization 28 42 19 18 24
---- ---- ----- ---- ----
Loss from operations (105) (166) (50) (26) (49)
Other income (expense) (10) (19) (10) (14) (3)
---- ----- ---- ----
Loss before extraordinary item (115) (185) (60) (40) (52)
Extraordinary item-gain
from reorganization 218 -- -- -- --
Income tax expense -- -- -- -- --
---- ---- ----- ---- ----
Net income (loss) 103% (185)% (60)% (40)% (52)%
---- ---- ----- ---- ----
---- ---- ----- ---- ----

</TABLE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
MARCH 31, 1997. Total revenues for the three months ended March 31, 1998
increased approximately 17% to $1,099,500 from $937,368 for the three months
ended March 31, 1997. Total revenues for the three months ended March 31,
1998 primarily consisted of sales of the Company's excimer lasers to Baxter,
the payment for the accomplishment of certain development milestones and the
recognition of certain payments made by Baxter to commercialize the Company's
excimer lasers in connection with the Baxter Agreement, and sales of
scientific and medical lasers from the operations of the Company's Florida
and Massachusetts facilities. Total revenues for the three months ended
March 31, 1997 primarily consisted of sales of scientific and medical lasers
from the operations of the Company's Florida and Massachusetts facilities.

Total costs and expenses during the three months ended March 31, 1998
increased 38% to $1,634,625 from $1,182,153 during the three months ended
March 31, 1997. Total costs and expenses include: (i) cost of sales, (ii)
selling, general and administrative expenses, (iii) research and development,
and (iv) depreciation and amortization, as follows:

Cost of sales during the three months ended March 31, 1998 decreased
approximately 28% to $466,832 from $649,313 during the three months ended
March 31, 1997. This decrease primarily resulted from the decrease of sales
volumes and related costs of operations with respect to the Company's Florida
and Massachusetts facilities.

<PAGE>

As a result, including the increased gross margin related to the meeting,
by the Company, of certain milestones, cost of sales as a percentage of sales
decreased to approximately 46% in the three months ended March 31, 1998 from
69% in the three months ended March 31, 1997.

Selling, general and administrative expenses during the three months
ended March 31, 1998 increased approximately 167% to $603,618 from $226,445
during the three months ended March 31, 1997. This increase primarily
resulted from the increased focus of the Company's excimer laser business
operations to marketing in connection with the execution of the Baxter
Agreement in August, 1997.

Research and development during the three months ended March 31, 1998
increased to $296,713 from $132,541 during the three months ended March 31,
1997. This increase primarily related to the availability of funds in 1998
from equity financings conducted in the fourth quarter of 1997 as a source
funding for research and development activities, as compared to the limited
availability of cash resources in the first quarter of 1997 for such purposes.

Depreciation and amortization during the three months ended March 31,
1998 increased to $267,462 from $173,854 during the three months ended March
31, 1997. This increase primarily related to the amortization of the prepaid
license fee and the depreciation of newly acquired equipment.

Other expenses decreased during the three months ended March 31, 1998 to
$34,672 from $130,653 during the three months ended March 31, 1997. This
decrease in other expenses between the respective periods resulted primarily
from decreased interest expense of $42,991 in the three months ended March
31, 1998 from $93,294 in the three months ended March 31 1997 and other
income of $8,319 during the three months ended March 31, 1998 as compared to
other expenses of $37,359 during the three months ended March 31, 1997.

As a result of the foregoing, the Company experienced a net loss of
$569,797 during the three months ended March 31, 1998, as compared to a net
loss of $375,439 during the three months ended March 31, 1997. The Company
also experienced a net loss from operations of $535,125 during the three
months ended March 31, 1998, as compared to a net loss from operations of
$244,785 during the three months ended March 31, 1997. See "Liquidity and
Capital Resources."

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER
31, 1996. Total revenues for the year ended December 31, 1997 increased
approximately 32% to $3,815,330 from $2,901,454 for the year ended December
31, 1996. Total revenues for the years ended December 31, 1997 and 1996
primarily consisted of sales of $2,960,330 and $2,901,454, in the respective
years, of the Company scientific and medical lasers from the operations of
the Company's Florida and Massachusetts facilities. However, the Company
generated revenues in 1997 of $855,000 relating to the sale of its excimer
lasers to Baxter and the recognition of certain payments made by Baxter to
commercialize the Company's excimer lasers in connection with the Baxter
Agreement, which did not occur in 1996, and which primarily resulted in the
increased revenues for 1997 as compared to 1996.

Total costs and expenses during the year ended December 31, 1997
decreased 25% to $5,746,170 from $7,703,607 during the year ended December
31, 1996. Total costs and expenses include: (i) cost of sales, (ii)
selling, general and administrative expenses, (iii) research and development,
(iv) depreciation and amortization, and (v) certain bad debt expenses, as
follows:

<PAGE>

Cost of sales during the year ended December 31, 1997 decreased
approximately 10% to $2,090,276 from $2,329,299 during the year ended
December 31, 1996. This decrease primarily resulted from increased
efficiency in the Company's focus on the marketing of laser products with
lower margins and the purchasing of materials at volume discounts due to
improved relations with vendors as part of the restructuring of cost controls
instituted by new management following the Bankruptcy Reorganization.

As a result, cost of sales as a percentage of sales decreased to
approximately 55% in 1997 from 80% in 1996.

Selling, general and administrative expenses during the year ended
December 31, 1997 increased approximately 88% to $2,181,304 from $1,158,841
during the year ended December 31, 1996. This increase primarily resulted
from: (i) compensation of $671,323 recognized upon issuance of stock options
and $95,625 of Common Stock issued as payment for professional services in
1997, as compared to $326,250 of Common Stock issued as payment of a
litigation settlement (and recorded as rental expense) and employee
compensation in 1996, (ii) payment of $71,000 in federal tax penalties in
1997 which did not occur in 1996, and (iii) the increased focus of the
Company's excimer laser business operations to marketing in 1997 from
research and development in 1996 in connection with the execution of the
Baxter Agreement in August, 1997. The Company believes that the issuance of
securities as related to compensation and rental expenses and the cash
payment of tax penalties will be nonrecurring expenses in the future.

Research and development during the year ended December 31, 1997
decreased to $685,109 from $850,993 during the year ended December 31, 1996.
This decrease primarily related to the Company's increased focus of the
Company's excimer laser business operations to marketing in 1997 from
research and development in 1996 in connection with the execution of the
Baxter Agreement in August, 1997.

Bad debt expense related to related party receivables during the year
ended December 31, 1997 decreased to $48,000 from $662,775 during the year
ended December 31, 1996. The Company incurred a bad debt expense of $662,775
in 1996 related to the write-off of a receivable from Helionetics and of
$48,000 in 1997 related to the write-off of a receivable from a subsidiary of
Helionetics. These items will be nonrecurring expenses in the future.

The Company incurred an expense of the write-off of Reorganization
Goodwill initially recognized in connection with the Bankruptcy
Reorganization of $1,486,823 during the year ended December 31, 1996, which
did not occur during the year ended December 31, 1997. The Reorganization
Goodwill recognized in connection with the Bankruptcy Reorganization
represented the portion of the reorganization value that could not be
attributed to specific tangible or identified assets, which were being
amortized over five (5) years. The Reorganization Goodwill was written-off
as of December 31, 1996 because of the magnitude of the Company's losses
following the Bankruptcy Reorganization.

Depreciation and amortization during the year ended December 31, 1997
decreased to $741,481 from $1,214,876 during the year ended December 31,
1996. This decrease related to the reduction of $1,486,823 of Reorganization
Goodwill on the Company balance sheet as of December 31, 1996.

Other expenses decreased during the year ended December 31, 1997 to
$372,361 from $555,815 during the year ended December 31, 1996. This
decrease in other expenses between the respective years resulted primarily
from increased interest income of $52,280 in 1997 from none in 1996.

As a result of the foregoing, the Company experienced a net loss of
$2,307,101 during the year ended December 31, 1997, as compared to a net loss
of $5,357,968 during the year ended December 31, 1996. The Company also
experienced a net loss from operations of $1,930,840 during the year ended
December 31, 1997, as compared to a net loss from operations of $4,802,153
during the year ended December 31, 1996. See "Liquidity and Capital
Resources."

<PAGE>

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND DECEMBER
31, 1995. Total revenues for the year ended December 31, 1996 increased
approximately 10% to $2,901,454 from $2,650,273 for the year ended December
31, 1995, which consisted of sales, in the respective years, of the Company
scientific and medical lasers from the operations of the Company's Florida
and Massachusetts facilities. The Company did not generate any revenues in
1996 or 1995 relating to the sale of its excimer lasers in connection with
the operations of AccuLase.

Total costs and expenses during the year ended December 31, 1996
increased 42% to $7,703,607 from $5,432,726 during the year ended December
31, 1995. Total costs and expenses include: (i) cost of sales, (ii)
selling, general and administrative expenses, (iii) research and development,
(iv) depreciation and amortization, and (v) certain bad debt expenses, as
follows:

Cost of sales during the year ended December 31, 1996 decreased
approximately 6% to $2,329,299 from $2,488,714 during the year ended December
31, 1995. This decrease primarily resulted from increased efficiency in the
Company's focus on the marketing of laser products with lower margins
instituted by new management following the Bankruptcy Reorganization. Severe
cash flow restrictions in 1996 and 1995 limited the Company's ability to
purchase materials at volume discounts from vendors and to advertise and
market the Company's products.

As a result, cost of sales as a percentage of sales decreased to
approximately 80% in 1996 from 94% in 1995.

Selling, general and administrative expenses during the year ended
December 31, 1996 decreased approximately 8% to $1,158,841 from $1,262,870
during the year ended December 31, 1995. This decrease primarily resulted
from policies instituted by new management of the Company following the
Bankruptcy Reorganization in May, 1995 to reduce selling, general and
administrative expenses, including reducing staff, budgeting and corporate
planning.

Research and development during the year ended December 31, 1996
decreased to $850,993 from $942,232 during the year ended December 31, 1995.
Research and development in each of 1996 and 1995 primarily related to the
excimer laser systems acquired through AccuLase following the Bankruptcy
Reorganization in May, 1995. Research and development expenses incurred in
connection with product lines existing prior to the Bankruptcy Reorganization
were focused on reducing costs of existing products and product improvement.
Due to cash flow limitations, management did not expend significant funds on
new product development, although several new versions of existing products
were developed for OEM application.

Bad debt expense related to related party receivables during the year
ended December 31, 1996 increased to $662,775 from none during the year ended
December 31, 1995. The Company incurred a bad debt expense of $662,775 in
1996 related to the write-off of a receivable from Helionetics.

The Company incurred an expense of the write-off of Reorganization
Goodwill initially recognized in connection with the Bankruptcy
Reorganization of $1,486,823 during the year ended December 31, 1996, which
did not occur during the year ended December 31, 1995. The Reorganization
Goodwill recognized in connection with the Bankruptcy Reorganization
represented the portion of the reorganization value that could not be
attributed to specific tangible or identified assets, which were being
amortized over five (5) years. The Reorganization Goodwill was written-off
as of December 31, 1996 because of the magnitude of the Company's losses
following the Bankruptcy Reorganization.

<PAGE>

Depreciation and amortization during the year ended December 31, 1996
increased to $1,214,876 from $738,910 during the year ended December 31,
1995. This increase principally related to the recognition of $205,000 of
additional amortization of Reorganization Goodwill on the Company's balance
sheet following the Bankruptcy Reorganization and $217,000 of additional
amortization of goodwill related to the acquisition of AccuLase.

Other expenses increased during the year ended December 31, 1996 to
$555,815 from $270,310 during the year ended December 31, 1995. This
increase in other expenses between the respective years resulted primarily
from increased interest expense of $392,000 in 1996 from $325,786 in 1995.

As a result of the foregoing, the Company experienced a net loss of
$5,357,968 during the year ended December 31, 1996, as compared to net income
of $2,715,642 during the year ended December 31, 1995, after giving effect to
a gain of $5,768,405 arising from debt forgiveness in connection with the
Bankruptcy Reorganization in 1995. The Company also experienced a net loss
from operations of $4,802,153 during the year ended December 31, 1996, as
compared to a net loss from operations of $2,782,453 during the year ended
December 31, 1995. See "Liquidity and Capital Resources."

LIQUIDITY AND CAPITAL RESOURCES. At March 31, 1998, the ratio of
current assets to current liabilities was 0.87 to 1.00 compared to 1.01 to
1.00 at December 31, 1997.

The Company has historically financed its operations through the use of
working capital provided from operations, loans and equity and debt financing
to the Company. The Company's cash flow needs for the three (3) months ended
March 31, 1998 and the year ended December 31, 1997 were primarily provided
from operations, loans and equity financing.

The Company experienced severe cash flow problems during the first three
(3) quarters of 1997 and throughout 1996 and 1995. These cash flow problems
limited the Company's ability to purchase materials and parts incorporated in
the Company's laser products, and further restricted the Company's ability to
purchase such materials at volume discounts, thereby reducing revenues from
potential sales and gross profits form concluded sales. New management
instituted policies of cost controls, improved product selection, staff
reduction, budgeting and corporate planning in 1997, which have increased the
Company's business efficiencies, including decreases in cost of sales as a
percentage of sales, reduction in net losses and losses from operations and
the focusing on a business plan aimed at excimer laser products which
management believes has greater potential of success than the Company's laser
products preceding the Bankruptcy Reorganization.

However, management's decision to sell the assets of the business
operations related to the Company's Massachusetts and Florida operations will
divest the Company of the business operations which have generated
substantially all sales revenues before December 31, 1997.

The Company entered into a secured accounts receivable factoring
agreement (the "Factoring Agreement") in June, 1997 with Altres Financial
L.P. ("Altres") to factor up to $600,000 in accounts receivable, with a
minimum purchase volume of $150,000 per month. The base commission on
amounts factored is 1.5% of the face amount of each account for the first
thirty (30) day period, plus an additional 1.375% on the face amount of each
account for every thirty (30) day period or part thereof until payment of the
account is received by Altres. The daily funds rate is the prime rate plus
3% divided by 360. Altres may withhold a reserve against the face value of
accounts outstanding at its discretion. The obligation under the Factoring
Agreement is the subject of a personal guarantee, under certain
circumstances, by Steven A. Qualls,

<PAGE>

a director and officer of the Company, so long as Mr. Qualls remains an
officer of the Company. As of December 31, 1997, the face amount of
receivables sold was $160,235.

In September and November, 1997, the Company privately sold a total of
679,500 shares of its Common Stock in a private placement at a price of $1.25
per share through the Company's investment banker, Pennsylvania Merchant
Group, Ltd. ("PMG"). The Company issued an additional 28,601 shares in the
first quarter of 1998 at a price of $1.25 per share. These funds were used
in part to pay outstanding accounts payable and delinquent federal and state
taxes outstanding.

During October, 1997, the Company purchased from PMG a note payable of
its subsidiary, AccuLase, in the amount of $2,159,708 for 800,000 shares of
Common Stock. The effect on the Company's financial statements reduced
long-term debt with a corresponding increase in stockholders' equity in the
amount of $2,159,708.

In November, 1997, the Company issued 1,500,000 shares of Common Stock
and 750,000 Warrants in connection with a private financing of $6,000,000 to
the Company through PMG. The Company used $4,000,000 of these proceeds to
acquire a license from Baxter related to the Company's excimer lasers in
connection with the Baxter Agreement.

Cash and cash equivalents were $814,647 as of March 31, 1998, as
compared to $1,225,932 as of December 31, 1997. This decrease was primarily
attributable to the utilization of cash raised in connection with the series
of equity financings by PMG and cash generated from the Baxter Agreement in
1997 to fund marketing activities, increased research and development
activities, to make investments in inventory to support anticipated sales of
excimer lasers to Baxter and to pay off certain liabilities.

As of March 31, 1998, the Company had long-term borrowing in the
aggregate amount of $818,434, the current portion of which was $535,875. As
of December 31, 1997, the Company had long-term borrowings of $892,563, the
current portion of which was $610,004 as of such date. The decrease in
long-term borrowings relates to payments of scheduled obligations.

Net cash used in operating activities was $304,691 and $43,042 for the
three (3) months ended March 31, 1998 and 1997, respectively, and $1,018,851,
$1,010,589 and $1,573,231 for the years ended December 31, 1997, 1996 and
1995, respectively. Net cash used by operations during the three (3) months
ended March 31, 1998 primarily consisted of net losses from operations and
decreases in net current liabilities, offset by depreciation and
amortization, payment of legal fees in Common Stock and decreases in net
current assets. Net cash used in operating activities during the three (3)
months ended March 31, 1997 primarily consisted of net losses, offset by
depreciation and amortization, payment of legal fees in Common Stock,
increases in current assets and decreases in current liabilities. Net cash
used in operating activities during the years ended December 31, 1997, 1996
and 1995 primarily consisted of net losses (after giving effect to the debt
forgiveness in connection with the Bankruptcy Reorganization), increases in
net current liabilities (1997 only) and decreases in net current assets (1997
and 1996 only), offset by depreciation and amortization, the payment of
compensation and fees for services in Common Stock, decreases in net current
liabilities (1996 and 1995 only) and increases in net current assets (1995
only).

Net cash provided (used) from investing activities was ($68,216) and
$43,042 for the three (3) months ended March 31, 1998 and 1997, respectively,
and ($4,068,293), ($308,924) and $116,868 for the years ended December 31,
1997, 1996 and 1995, respectively. In the three (3) months ended March 31,
1998, the Company utilized $68,216 to purchase equipment and for the
construction of a laser to be used as a demonstration model. In the three
(3) months ended March 31, 1997, the Company utilized $22,226 to purchase
certain equipment, which was offset by advances of $65,268 from Helionetics.
In the year ended December 31, 1997, the Company utilized $4,001,926 to make
payments to Baxter under the Baxter Agreement, $37,541 to purchase certain
equipment and $48,000 as an advance payment to Helionetics, which was offset
by the receipt

<PAGE>

of $19,174 from the sale of certain equipment. In the year ended December
31, 1996, the Company utilized $292,900 as an advance payment to Helionetics
and $16,024 to purchase certain equipment. In the year ended December 31,
1995, the Company utilized $21,988 to purchase certain equipment, and $11,845
in connection with the acquisition of certain patent rights, which was offset
by proceeds of $150,701 received from the sale of certain marketable
securities.

Net cash provided (used) by financing activities was ($38,378) and none
for the three (3) month periods ended March 31, 1998 and 1997, respectively
and $6,313,076, $1,258,427 and $1,468,112 during the years ended December 31,
1997, 1996 and 1995, respectively. In the three (3) months ended March 31,
1998, the Company utilized $74,129 to reduce certain debt obligations, which
was offset by the receipt of $35,751 of proceeds from the sale of Common
Stock. In the year ended December 31, 1997, the Company received $6,259,077
from the sale of Common Stock and Warrants, $71,094 of proceeds from certain
notes payable and $140,448 as capital contributions from Helionetics, which
was offset by the payment of $157,543 on certain notes payable. In the year
ended December 31, 1996, the Company received $92,952 of proceeds from
certain notes payable, $529,622 from Helionetics and $703,500 from the
exercise of stock options, which was offset by the payment of $67,647 on
certain notes payable. In the year ended December 31, 1995, the Company
received $1,000,000 from the sale of the Company's securities and $500,000 of
proceeds from certain notes payable, which was offset by the payment of
$31,888 on certain notes payable.

Management believes that, based on the Company's current business plan,
the Company has sufficient operating capital to finance current levels of
operations for a period of at least thirteen (13) months following the date
of this Prospectus. Management believes that the Company will require
working capital of approximately $1,500,000 to $2,500,000 over at least the
thirteen (13) months following the date of this Prospectus to continue to
finance costs of current levels of operations, including continued
development of its products and meeting the Company's obligations under the
Baxter Agreement. The Company has approximately $750,000 of cash as of April
8, 1998. Further, management believes that approximately $1,200,000 of
anticipated revenues will be generated from the sale of lasers to Baxter
under the Baxter Agreement. However, there can be no assurance to this
effect. Further, the sources and terms for the remainder of such capital, if
needed, are uncertain as of the date of this Prospectus.

The Company's ability to expand business operations is currently
dependent on financing from external sources. There can be no assurance that
changes in the Company's research and development plans or other changes
affecting the Company's operating expenses and business strategy will not
result in the expenditure of such resources before such time or that the
Company will be able to develop profitable operations prior to such date, or
at all, or that the Company will not require additional financing at or prior
to such time in order to continue operations and product development. There
can be no assurance that additional capital will be available on terms
favorable to the Company, if at all. To the extent that additional capital
is raised through the sale of additional equity or convertible debt
securities, the issuance of such securities could result in additional
dilution to the Company's stockholders. Moreover, the Company's cash
requirements may vary materially from those now planned because of results of
research and development, product testing, changes in the focus and direction
of the Company's research and development programs, competitive and
technological advances, the level of working capital required to sustain the
Company's planned growth, litigation, operating results, including the extent
and duration of operating losses, and other factors. In the event that the
Company experiences the need for additional capital, and is not able to
generate capital from financing sources or from future operations, management
may be required to modify, suspend or discontinue the business plan of the
Company. See "Risk Factors."

SEASONAL FACTORS

Seasonality is not a significant factor in medical laser sales.
Budgetary cycles and funding are spread out in various hospitals, chains and
organizations, so that funding is not as cyclical as in the scientific laser
market.

<PAGE>

The scientific laser market is affected mainly by the government budget
cycle. A majority of the Company's scientific laser sales are funded by
government agencies, such as the National Science Foundation, the National
Institutes of Health, Department of Energy and Department of Defense. The
second and third quarters are typically the heaviest for booking orders.
Approved funding is usually allocated late in the first quarter or early in
the second quarter each year. The Company typically sees an increase in
bookings at this time. The government fiscal year ends on September 30 of
each year. Bookings typically increase at this time as researchers scramble
to spend funding before it is cut off.

IMPACT OF INFLATION

The Company has not operated in a highly inflationary period and its
management does not believe that inflation has had a material effect on sales
or expenses.

YEAR 2000

The Company has developed plans to address issues related to the impact
on its computer systems of the year 2000. Financial and operational systems
have been assessed and plans have been developed to address systems
modification requirements. The financial impact of making the required
systems changes is not expected to be material to the Company's consolidated
financial position, liquidity or results of operations.

BUSINESS

BUSINESS OF THE COMPANY

The following should be read in conjunction with the Company's
Consolidated Financial Statements and the related Notes thereto, contained
elsewhere in this Prospectus. This Prospectus contains forward-looking
statements, which involve risks and uncertainties. The Company's actual
results may differ significantly from the results discussed in the
forward-looking statements. Unless the context otherwise requires, the term
"Company" refers to Laser Photonics, Inc., a Delaware corporation ("Laser
Photonics"), its wholly-owned subsidiary, Laser Analytics, Inc., a
Massachusetts corporation ("Laser Analytics"), and its 76%-owned subsidiary,
AccuLase, Inc., a California corporation ("AccuLase").

The Company's strategy has changed in 1997 to focus its efforts on the
Company's excimer laser technology and expertise in order to develop a broad
base of laser and laser delivery products for both medical and non-medical
applications.

<PAGE>

The Company's initial medical applications are intended to be used in
the treatment of cardiovascular disease and treatment of psoriasis. The
current cardiovascular and vascular applications are in an experimental
procedure known as Transmyocardial Revascularization ("TMR"), in which the
Company's laser system is currently in Phase I Human Clinical trials. A
proposed excimer laser system to treat psoriasis commenced in May, 1998 by
going through the first phase of Human Clinical trials to demonstrate the
laser's effectiveness as a replacement to current Ultraviolet Light
Phototherapy being used to control psoriasis.

ALLIANCE WITH BAXTER HEALTHCARE CORPORATION

On August 19, 1997, the Company executed a series of agreements with
Baxter Healthcare Corporation ("Baxter"). These agreements (collectively, the
"Baxter Agreement") provide, among other things, for the following:

1. The Company granted to Baxter an exclusive worldwide right and
license to manufacture and sell certain of the Company's laser technology
relating to the treatment of cardiovascular and vascular disease (the
"AccuLase Laser") and disposable products associated therewith.

<PAGE>

2. Baxter agreed to pay the Company a royalty equal to 10% of the "End
User Price" for each disposable product sold, or if the laser equipment is
sold on a "per treatment" basis, the "imputed" average sale price based on
average "non" per procedure sales.

3. Baxter agreed to purchase from the Company certain existing excimer
laser systems for cardiovascular and vascular disease.

4. Baxter agreed to fund the total cost of obtaining regulatory
approvals worldwide for the use of the AccuLase Laser and delivery system for
the treatment of cardiovascular and vascular disease.

5. Baxter agreed to fund all sales and marketing costs related to the
introduction and marketing of the AccuLase Laser and delivery system to treat
cardiovascular and vascular disease.

6. The Company agreed to manufacture the excimer laser system to
specifications for Baxter at certain agreed costs.

7. Baxter has paid the Company $1,550,000 in cash and the Company has
delivered the first of two new commercial excimer lasers to Baxter under the
Baxter Agreement.

8. The Company has granted Baxter a security interest in all of its
patents to secure performance under the Baxter Agreement. The Baxter
Agreement expires upon the expiration of the last to expire licensed patent.
However, Baxter may terminate the Baxter Agreement at any time.

In September, 1997 the Company, PMG and Baxter agreed to acquire a
license from Lasersight, Inc. for certain patents which relate to the use of
excimer lasers for the cardiovascular and vascular markets. Baxter advanced
$4,000,000 for this license, which amount the Company repaid to Baxter in
December, 1997.

MASSACHUSETTS GENERAL HOSPITAL AGREEMENT

On November 26, 1997, the Company entered into a license agreement (the
"Massachusetts General Hospital Agreement") with the General Hospital
Corporation, a not-for-profit corporation doing business as Massachusetts
General Hospital ("Massachusetts General Hospital") pursuant to which the
Company has obtained an exclusive, worldwide, royalty-bearing license from
Massachusetts General Hospital to commercially develop, manufacture, use and
sell products utilizing certain technology of Massachusetts General Hospital
related to the diagnosis and treatment of certain dermatological conditions
and diseases, including psoriasis. The licensed technology is the subject of
a currently pending provisional patent application filed in the United States
by Massachusetts General Hospital.

The Company has agreed to use its best efforts to develop and make
commercially available products with respect to the licensed technology
within certain time frames, or Massachusetts General Hospital may have the
right to cancel the exclusive license or convert any exclusive license to a
non-exclusive license.

On March 17, 1998 the Company entered into a clinical trial agreement
with the Massachusetts General Hospital to test the effect of the Company's
excimer laser and laser delivery system for treatment of psoriasis as
compared to the current Ultraviolet "B" ("UVB") treatment being used to treat
psoriasis.

There can be no assurances that the Company will be able to develop any
products utilizing the licensed technology within the contractual time frame
or at all.

<PAGE>

EXCIMER LASERS

ACCULASE TRANSMYOCARDIAL REVASCULARIZATION SYSTEM. The Company has under
development an excimer laser and fiberoptic system (the "AccuLase TMR
System") for the treatment of coronary heart disease in a procedure called
transmyocardial Revascularization ("TMR"), a procedure that creates new
channels for blood to flow to ischemic, or oxygen-starved, heart muscle.
Rather than opening narrowed coronary arteries, the AccuLase TMR System is
intended to treat ischemic myocardium (oxygen-starved heart tissue) directly.
This is accomplished by lasing small channels through ischemic areas of the
heart such that the channels connect directly with the left ventricle, which
is a reservoir of oxygen-rich blood. Management believes that these channels
provide new pathways for blood flow into the heart muscle. However, there can
be no assurances to this effect.

AccuLase's management met with representatives of the U.S. Food and Drug
Administration ("FDA") in January, 1995 to discuss preclinical data
submission requirements necessary to initiate human trials of the AccuLase
TMR System. Animal testing of the AccuLase TMR System was then performed in
collaboration with several heart research institutions in the United States,
culminating in a study at The New York Hospital Cornell Medical Center, which
serves as the pre-clinical basis for an Investigative Device Exemption
("IDE") that was granted by the FDA in August, 1996.

Under this IDE, Phase I human clinicals have begun at New York Hospital
Cornell Medical Center and at Good Samaritan Hospital in Los Angeles,
California.

The IDE submission provides for the AccuLase TMR System to be used in
open-heart procedures. The Phase I study only includes patients that are
suffering from ischemia and angina, and who are not candidates for coronary
bypass grafts ("CABG") or for balloon angioplasty.

There are an estimated 120,000 people worldwide per year who qualify for
TMR under the conditions set forth above. Depending upon the outcomes of the
Phase I study, Baxter may petition for the Phase II studies to be expanded to
a multi-site study (more than 10 institutions) and expand the procedure to
include patients who are candidates for incomplete CABG revascularization.

In the first quarter of 1998, the IDE was transferred to Baxter from the
Company by the FDA in connection with the Baxter Agreement.

LASER ANGIOPLASTY SYSTEM. The Company also has developed a laser
angioplasty system that is proposed to be used to treat atherosclerotic
blockages of the coronary arteries. The Company initially obtained clearance
to perform Phase 1 of a human clinical study for its intraoperative laser
angioplasty. However, the related IDE was terminated by the FDA and the
Company has terminated research on this system in order to focus its
resources on expanding research on its TMR laser.

EXCIMER LASER SYSTEM FOR THE TREATMENT OF PSORIASIS. AccuLase has
developed an excimer laser and laser delivery system for the treatment of
psoriasis. Psoriasis is a chronic inflammatory skin disease for which there
is no known cure today. However, there are several treatments that achieve
periods of clearance that restore function and maintain health.

According to the National Psoriasis Foundation ("NPF"), there are three
(3) approaches to treat psoriasis: topical therapy (creams and lotions),
phototherapy (ultraviolet light-UVA and UVB) and systemic medications. The
Company's excimer laser technology for the treatment of psoriasis, if
successful, is intended to replace and/or augment all the current treatment
modalities. The Company's excimer laser generates ultraviolet (UV) light
with a wavelength of 308nm. The UVB light currently being used in
phototherapy has a wavelength of 310nm and is the treatment modality that the
Company and its medical adviser believe that the Company's

<PAGE>

excimer laser system will be effective in replacing and should become the
preferred method to treat psoriasis. There can be no assurances that the
Company's excimer laser technology will be successful in treating psoriasis
or result in a commercially viable product.

ANTICIPATED MARKETS. Anticipated markets for the excimer laser and related
disposable products for the cardiovascular and vascular markets are hospitals
in the United States and around the world.

The markets for the excimer laser system for treatment of psoriasis are
hospitals and dermatology clinics in the United States. and around the world.

The NPF estimates that between 1% to 3% of the world's population is
affected by psoriasis. In the United States, the NPF estimates that this
condition affects more than six million Americans and that between 150,000
and 260,000 new cases occur each year. Both genders are affected by the
condition, being slightly more prevalent among women. About 10 to 15% of the
people who get psoriasis are under the age of 10. The NPF further estimates
that psoriasis patients make about 2.4 million visits to dermatologists each
year and that the overall current yearly cost to treat psoriasis may exceed
three billion dollars.

In addition to the above costs, the NPF estimates that 56 million hours of
work are lost each year by psoriasis sufferers.

The Company believes that its excimer laser system could replace and/or
augment the current phototherapy modalities. The Company will first test its
excimer laser system, as it compares to the UVB therapy currently being
extensively used to control psoriasis. In using UVB, the patient stands in a
light box lined with special UVB lamps and the whole body is radiated (other
than protected areas such as eyes and male genitals). The patient will
generally be treated three times per week over 10 to 12 weeks. The need for
long periods of treatment is due to the fact that the healthy skin as well as
the psoriasis affected skin is being treated in the current light boxes, so
that the dosage or radiation must be controlled or the patient will be
severely burned. The Company's excimer laser, however, can be used to treat
only the skin area that is affected by psoriasis, and since it is believed
that skin that is affected by psoriasis is not as susceptible to UVB
radiation, the Company and its medical adviser believe that a high dose of
UVB applied directly to the affected area could significantly reduce the
number of treatments and the time needed to control psoriasis. The Company
has entered into clinical trial agreement with Massachusetts General Hospital
to study the affect of different dosages on psoriasis. This study, which
commenced in May, 1998, should lead to the Company's submission of a Form
510K to the FDA, in the early part of 1999, requesting approval of the
Company's excimer laser system to be used to treat psoriasis.

The Company expects that the number of treatments that will be needed to
control psoriasis using the Company's excimer laser system should decrease
from over 30 to less than 10. The other benefits to the use of the Company's
excimer laser should be to reduce or eliminate the side effects of current
treatment modalities. It is known that UVB treatments have the same long
term effects as chronic sun exposure, which causes skin cancer and premature
skin aging. It is hoped that by treating only the psoriasis affected skin
with the Company's system that these side effects could be reduced.

Since the Company's laser system is still in the clinical trials stage with
its products, there is no assurance that the Company will be able to
successfully prove up their anticipated benefits, obtain required
governmental approvals for their use, and with its strategic association with
Baxter for the cardiovascular and vascular markets, reach anticipated markets
ahead of competing technologies and competitors.

<PAGE>

WORKING CAPITAL. Management believes that, based on the Company's current
business plan, the Company has sufficient operating capital to finance
current levels of operations for a period of at least thirteen (13) months
following the date of this Prospectus. Management believes that the Company
will require working capital over the thirteen (13) months following the date
of this Prospectus to continue development of its products and meet its
obligations under the Baxter Agreement, estimated in the range of $1,500,000
to $2,500,000. The Company has approximately $750,000 of cash as of April 8,
1998. Further, management believes that approximately $1,200,000 of
anticipated revenues will substantially be generated from the sale of lasers
to Baxter under the Baxter Agreement. However, there can be no assurances
to this effect. Further, the sources of and terms for the remainder of such
capital, if needed, are uncertain as of the date of this Prospectus. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources."

SOURCES AND AVAILABILITY OF RAW MATERIALS. The Company uses raw materials
that may be obtained from a number of different vendors. Therefore, the
Company believes that there are adequate sources and availability of all raw
materials required to commercialize its products.

OTHER LASERS

The Company's other laser business applications and products are sold in
two markets, medical applications and scientific applications. The Company
has entered into a letter of intent to sell the Company's assets related to
these laser technologies.

MEDICAL LASER PRODUCTS. Although the Company has developed a
number of medical laser systems, such as Ruby Laser Systems, ND:
YAG Laser Systems and Alexandrite Laser Systems, only the Ruby
Laser System has generated any meaningful revenues since 1995.
Set forth below is a brief summary of the Company's current
medical laser systems:

RUBY LASER SYSTEM. The use of solid-state laser systems has expanded
into new application areas such as dermatology for the treatment of benign
pigmented lesions of the skin such as nevus of ota, moles, age spots and
tattoos. This new application represents an extension of the Company's
scientific ruby laser technology, a technology that was one of the earliest
laser systems developed for commercial use. Laser energy created by the ruby
laser is highly absorbed by pigmented lesions, but poorly absorbed by normal
skin. Using the laser system, therefore, allows the physician to treat
effectively the skin lesion without anesthesia and without causing normal
pigmented changes or scarring. The Company began manufacturing and shipping
these systems in August, 1991 on a private label basis. The
manufacturing/distribution agreement with the customer officially terminated
in 1993. In May, 1995, the Company resumed production of the ruby laser
using a distributor network for marketing the product. Research and
development programs have been geared toward modification to allow long pulse
width operation for other dermatological applications, including hair
removal. Ruby lasers have shown the ability to remove hair without damage to
the surrounding tissue while removing the hair for long periods of time.
Repeated application may lead to permanent hair removal. The Company is
awaiting FDA approval for the long pulse laser for dermatology.

Nd:YAG LASER SYSTEMS. During the 1980's, the CO2 gas laser began to be
replaced as the "workhorse" of the industry by the Nd:YAG Laser System. Major
complaints with the CO2 were the cumbersome delivery mechanism (an
articulating arm) and its inability to coagulate tissue or to deliver energy
through a fluid medium. The Nd:YAG energy could be delivered through a small
flexible optical fiber, could be effectively used in a fluid medium, and was
effective in cutting, coagulating and vaporizing tissue.

<PAGE>

In 1990, the Company received FDA clearances to market commercially 100,
60, and 45 watt Nd:YAG systems and accessories for use in general surgery.
These systems are used in traditional applications such as gynecology as well
as in endoscopic and laparoscopic procedures, such as laser laparoscopic
cholecystectomy (gallbladder removal). New endoscopic and laparoscopic
procedures have generated significant interest among general surgeons in the
use of lasers for surgery. Due to limited cash resources, the Company did not
actively market the Nd:YAG laser in 1997.

ALEXANDRITE LASER SYSTEM. Laser induced shockwave lithotripsy
("LISL"), or the use of laser energy to break up kidney and biliary stones,
also represents a new application of medical lasers. The Company believes
that LISL offers a reliable cost-effective adjunct or alternative to surgery
or extracorporeal shockwave lithotripsy ("ESWL") for the treatment of kidney
and biliary stones. However, there can be no assurances to this effect. ESWL
uses externally generated shock waves that noninvasively pass through the
skin and fragment the stone, allowing it to be passed by the patient. ESWL
equipment is expensive to purchase and install and may not be usable in
treating certain stones in the lower two-thirds of the ureter which are
shielded by the pelvic bone.

LISL requires a minimally invasive endoscopic procedure or percutaneous
puncture to allow access to the stone. A small optical fiber is passed
through the endoscope or percutaneous catheter until it reaches the stone.
Laser energy is transmitted through the optical fiber and causes the stone to
fragment into small particles, which can be expelled naturally. LISL can be
used to fragment stones in areas which are not easily treated by ESWL or
following ESWL treatment when fragments become lodged or are not small enough
to be expelled naturally.

In April, 1993, the Company received FDA clearance to market its
solid-state alexandrite lithotriptor for the treatment of kidney stones in
the renal and urinary tract. Clearance to market the lithotriptor was also
received in Japan in late 1995. Again, due to limited cash resources, the
Company did not actively promote the lithotriptor in 1997, choosing instead
to focus on the dermatology market.

SCIENTIFIC LASER SYSTEMS. The Company's scientific products are sold into
niche markets for use principally in applications such as spectroscopy,
calibration, alignment, and ultra-fast event measurement by universities,
government, and private industry research labs.

The Company manufactures and markets scientific products based on a wide
range of technologies which include: nitrogen laser systems, nitrogen pumped
dye laser systems, solid state mid infrared laser systems, as well as laser
diodes and laser diode spectrometers.

Set forth below is a brief summary of the Company's current scientific
laser systems:

DIODE LASER SYSTEMS. In February 1989, the Company acquired Laser
Analytics, Inc., a wholly owned subsidiary of Spectra Physics. Since the
acquisition, the Company has funded continued development efforts focused
primarily on improvements in the production of tunable infrared laser diodes.
In 1990, the Company signed a joint technology licensing agreement with the
General Motors Research Lab. This technology uses a spectrometer based on the
Company's tunable infrared laser diode to measure naturally occurring,
non-radioactive stable isotopes in exhaled breath. These measurements are
useful in diagnosing such medical problems as diabetes, lung and liver
dysfunction, digestive tract diseases, such as the detection of helicobactor
pylori which has been shown to be a precursor to liver and stomach cancer.
The Company is continuing research and development efforts on this product
but does not anticipate commercial sales from this product in the next twelve
months.

<PAGE>

The Company's tunable diode lasers are based on lead-salt semiconductor
technology for use in advanced research such as high resolution molecular
spectroscopy, combustion diagnostic studies and atmospheric chemistry. These
are "high end" instruments designed for research, which requires a high level
of sophistication and performance. These lasers are sold both as a
standardized unit, and as a customized unit. In addition, the Company has
designed a system using the tunable diode laser technology for pollution
monitoring applications.

In 1996, the Company received an order from its Japanese distributor for
complete systems for monitoring plasma reactions for advanced semiconductor
manufacturing. Five systems were initially installed in February, 1997. If
beta testing is successful, significant orders from this manufacturing
consortium could be realized in early 1998.

NITROGEN LASER AND NITROGEN PUMPED DYE LASER SYSTEMS. The Company's
nitrogen/dye laser uses an ultraviolet laser beam that when exposed to
certain dyes creates a visible wavelength that is tunable over a wide range
of frequencies. This feature makes them extremely useful to chemists who do
spectroscopic studies of materials that absorb or react to specific
wavelengths of light. The main features of this product line are tunability,
reliability, stability and ease of operation and low cost. The Company's
sealed nitrogen lasers are now being used in OEM commercial applications. In
1995, the Company received two significant quantity orders from a foreign
government for nitrogen lasers to be used in the currency printing process.
Machine vision systems and mass spectrometer manufacturers are also using
nitrogen lasers in quantity. The Company is working with an OEM customer to
develop a system for cervical cancer detection. Multiple quantity orders are
expected for this application in early 1998.

SOLID STATE MID INFRARED LASER SYSTEMS. The Company's solid-state
scientific product line consists of a broad range of laser system products
(Nd:YAG, Nd:GLASS, Ti:SAPPHIRE). Each product within this line has unique
wavelength and performance characteristics which are useful in laboratory
research in holography, plasma diagnostics, and bathimetry (ocean mapping).

PRINCIPAL MARKETS AND METHODS OF DISTRIBUTION. The Company's marketing
strategy is to define specific target markets and to modify existing products
or design new products to meet perceived market demand.

The Company markets its medical laser systems principally through
independent distributors and representatives to large hospitals, small
community hospitals, and freestanding outpatient surgery centers throughout
the world. The Company promotes its medical products through attendance at
trade shows and exhibits, advertising in medical journals and direct mail
programs to the medical community.

The Company markets its scientific products through a direct sales force in
the United States and through a network of distributors outside of the United
States, principally to universities, governmental research labs and large
companies. The Company promotes its scientific products through attendance at
trade shows, advertising in scientific journals and industry magazines, and
direct mail programs to the scientific research community.

SOURCES AND AVAILABILITY OF RAW MATERIALS. Management believes that the
Company currently has good relationships with vendors of materials for
medical and scientific lasers. As a result of the Bankruptcy Reorganization
and the Company's cash flow constraints, most vendors operate on a C.O.D.
basis. This has not significantly affected the willingness of vendors to work
with the Company on an ongoing basis. Most major components and raw
materials, including solid state laser rods, laser crystals, optics and
electro-optic devices are available from a variety of sources. The Company
does not rely on sole source vendors. Cash flow constraints are the main
limiting factors in parts availability.

<PAGE>

RELATIONSHIP WITH ACCULASE SUBSIDIARY

AccuLase is a 76% owned subsidiary of Laser Photonics, which was acquired
by Laser Photonics in May, 1995 in connection with the Bankruptcy
Reorganization. AccuLase owns certain technologies related to the Company's
excimer lasers and delivery systems. Due to AccuLase's inability to raise
financing to capitalize the development of its excimer lasers, Laser
Photonics engaged in significant financing activities in 1997 and provided
incentives and compensation to management of the Company and ongoing funding
to develop and commercialize the excimer laser technology. In addition,
Laser Photonics paid $4,000,000 to Baxter to acquire certain licenses
relating to the excimer lasers.

Laser Photonics believes that these financings and the providing of
management assistance and product development funding to AccuLase has
provided significant benefit to AccuLase and that AccuLase could not have
obtained any of these benefits without the assistance of Laser Photonics.
Laser Photonics and AccuLase are in the process of finalizing an agreement to
share revenues.

WORKING CAPITAL ITEMS

The Company is required by the FDA under Good Manufacturing Practices
("GMP") guidelines to carry certain inventories of its medical lasers for
emergency medical service. Typically, major service problems must be
responded to within 24 hours. The Company estimates that $250,000 of service
inventory is on hand at any given time for emergency response.

The Company is not required by any regulatory body to keep inventories on
hand to meet service or delivery issues. Certain raw materials have lead
times of greater than sixteen (16) weeks. The Company keeps a safety stock of
these items when appropriate. The Company estimates that less than $100,000
of current inventory is set aside for safety stock.

The Company does not provide the right to return units. In some cases,
demonstration equipment is sent to the customer prior to the sale to
determine suitability. In rare cases, the Company has allowed returns when
accompanied by a substantial restocking fee.

In April, 1996, the Company entered into a factoring relationship with
Commercial Factors of Atlanta. In June, 1997, the Company changed factors to
Altres Financial L.P. of Salt Lake City, Utah. The change was due primarily
to lower interest rates. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

All customers are on 30 day payment terms with approved credit. Some
distributors have been granted 60 day terms on a case by case basis.

DEPENDENCE ON NEW CUSTOMERS

The Company recognized revenue from Baxter equalling 22% for 1997. No
single customer other than Baxter accounted for sales in excess of 10% in
1997.

PRODUCT WARRANTIES

The Company's standard warranty period on most products, except
consumables, which have a ninety (90) day warranty period, is one year for
parts and labor. Selected medical products have a 12 month parts only
warranty. During the warranty period, the Company pays shipping charges one
way. The Company has established a reserve for warranty costs based upon the
estimated costs to be incurred over the warranty period of the Company's
products.

<PAGE>

PRODUCT LIABILITY INSURANCE

The Company maintains liability insurance with coverage limits of
$1,000,000 per occurrence and $2,000,000 in the annual aggregate amount.
Although the Company has never been subject to a product liability claim,
there can be no assurance that the coverage limits of the Company's insurance
policies will be adequate or that one or more successful claims brought
against the Company would not have a material adverse effect upon the
Company's business, financial condition and results of operations.

RESEARCH AND DEVELOPMENT

The Company's research and development emphasis has shifted from pure
research to product modification and development to meet new market demands.
The Company's strategy is to utilize and modify its existing laser and
component base to develop new products and applications in targeted medical
and scientific markets. In addition to internal development, the Company may
take advantage of opportunities, if they arise, in the current laser market
environment of consolidation and market specialization by continuing to seek
out and acquire both products and technology at a cost the Company believes
to be lower than internal development. The Company does not have any present
acquisition plans. Because the Company products are focused in specific niche
scientific and medical markets, the Company does not believe the decline in
research and development expenditures will impact the Company's abilities to
be competitive in its markets.

During 1997, the Company concentrated on development of its excimer
lasers and upgrading and modifying its ruby laser for dermatology. The
Company has been working with an OEM customer to develop its scientific
nitrogen laser technology for cancer detection. The Company's scientific
research and development focused on development of the diode laser systems
for the semiconductor manufacturing application and on development of OEM
nitrogen lasers for cancer detection and industrial applications.

ENVIRONMENTAL CONCERNS

The Company's medical lasers are not believed to cause any environmental
concerns. All medical lasers are solid-state construction so no hazardous
gases or liquid dyes are used in their operation or manufacture. In winter
months, medical laser cooling systems are filled with an ethylene glycol and
water mixture to prevent freezing during shipment. This mixture must be
removed and discarded upon installation.

The Company's excimer lasers utilize Xenon-Chloride gas as a lasing
medium. The chlorine component of this gas is extremely corrosive and must be
handled with care. Although only a small quantity of gas is present in each
laser, proper handling is essential for safe operation. Depleted gas is
reacted prior to disposal. Excimer lasers are common in hospitals and
laboratories and the disposal and handling of these gases is well known. The
use of these gases is not expected to impact the desirability of these
lasers. Excimer lasers used in PRK (photorefractive radial keratectomy) use
similar gases. These lasers are also in widespread use.

The Company does not knowingly use any products known to harm the
environment. All solvents and cleaners are biodegradable. Cooling systems,
where applicable, use CFC free refrigerant.

The Company's Analytics Division produces lead-salt diodes. The
manufacturing process used to produce the state-of-the-art lasers is a
complex process in which many different types of materials are used to
produce sophisticated lasers. Many of these materials must be processed in a
laboratory environment. The quantity of materials is small (the Analytics
Division is classified as a Very Small Quantity Generator). This division has
chemical management programs which are designed to provide a safe work
environment for all employees and to ensure compliance with all federal,
state and local regulations related to the use and disposal of chemicals in
the work environment.

39
<PAGE>

GOVERNMENT REGULATION

The Company is subject to the Radiation Control for Health and Safety
Act with laser radiation safety regulations administered by the Center for
Devices and Radiological Health ("CDRH") of the FDA. These regulations
require laser manufacturers to file new product and annual reports, to
maintain quality control, product testing and sales records, to incorporate
certain design and operating features in lasers sold to end users and to
certify and label each laser sold, except those sold to original equipment
manufacturer ("OEM") customers, as belonging to one of four classes, based on
the level of radiation from the laser that is accessible to users. Various
warning labels must be affixed and certain protective devices installed,
depending on the class of the product. CDRH is empowered to seek fines and
other remedies for violations of the regulatory requirements. As of the date
of this Prospectus, the Company has filed the documentation with CDRH for its
laser products requiring such filing, and has not experienced any
difficulties or incurred significant costs in complying with such regulations.

Medical devices incorporating lasers are subject to extensive FDA
regulations governing the use and marketing of such devices. FDA conducts
on-site inspections to insure compliance with good manufacturing practice.
The FDA conducted a no-notice compliance inspection in September, 1991, and
the Company received no written deficiencies in its Quality Assurance program.

COMPETITION

The laser industry is very complex and fragmented because of the
specialized nature of laser products and the differing applications required
by purchasers of lasers and laser systems. To the extent the Company's
products are incorporated into systems for medical and scientific
applications, the Company indirectly competes with hundreds of suppliers of
devices employing other technologies and also those which employ lasers as a
principal component.

The Company believes the primary competitive factors within the surgical
laser market are the level of customer support, training, price, product
reliability, and breadth of product line. The Company believes that it offers
a broad product line, flexible OEM capabilities, and provides through its
distributors and in-house capabilities a high level of customer service and
training. The Company believes that its medical products are competitively
priced compared to competing laser products and that its products based on
solid-state technology are very reliable. Although the Company has
manufactured surgical YAG laser systems and components on a private label
basis for a number of years, as an entrant into this market under the "Laser
Photonics" label, the Company must establish its reputation as a direct
provider of products to the medical community.

The market for the Company's proposed products is extremely competitive.
The Company directly and indirectly competes with other businesses,
including businesses in the laser industry. In many cases, these competitors
are substantially larger and more firmly established than the Company. In
addition, many of such competitors have greater marketing and development
budgets and substantially greater capital resources than the Company.
Accordingly, there can be no assurance that the Company will be able to
achieve and maintain a competitive position in the Company's industry.
Further, in order to compete effectively in the market for laser technology,
the Company must develop and introduce on a timely basis competitive products
that embody new technology, meet evolving industry standards, and achieve
competitive levels of performance at prices acceptable to the market.

The Company's competitors include companies with substantially greater
resources in technology, finance, manufacturing, sales, marketing,
distribution, customer service and support, as well as greater experience and
name recognition, than the Company. The Company expects substantial direct
competition, both from existing competitors and from new market entrants.

40
<PAGE>

Further, larger and more established competitors may seek to impede the
Company's ability to establish a market share for any products which may be
developed by the Company through competitive pricing activities. Also,
prospective customers for the Company's products may be reluctant to disrupt
relationships with well-established distributors of products which may be
comparable in quality or pricing to any of the Company's products.

Further, the Company's competitors spend substantial sums on research
and development and manufacturing facilities in order to maintain their
respective market positions. The Company does not have comparable resources
with which to invest in research and development and advertising and is at a
competitive disadvantage with respect to its ability to develop products.
The Company may also encounter difficulties in customer acceptance because it
is likely to be perceived as a new processor supplier whose identity is not
yet well known and whose reputation and commercial longevity are not yet
established. Substantial marketing and promotional costs, possibly in excess
of what the Company can afford, may be required to overcome barriers to
customer acceptance. There can be no assurance that the Company will be able
to overcome such barriers. The failure to gain customer acceptance of the
Company's laser technology would have a material adverse effect on the
Company.

PATENTS AND TRADEMARKS

The Company holds several United States patents on various items of
laser equipment and components. The Company does not, however, consider the
ownership of patents essential to its operations. The first patent, which
was issued in January, 1990, provides patent protection until 2007 and covers
the Company's base excimer laser design. The second patent, which was issued
in May, 1990, provides patent protection until 2007 and covers a liquid
filled flexible laser light guide. The third patent, which was issued in May,
1991, provides patent protection until 2007, and covers a means of measuring
optical fiber power output. The fourth patent, which was issued in September,
1991, provides patent protection until 2008 and relates to the laser optical
fiber coupling apparatus used in the Company's excimer lasers. The Company
also has one U.S. patent application pending relating to a proprietary laser
catheter design, which application was initially denied and now is on appeal.

The Company also received patents for its base excimer laser design in
Australia in November, 1991, Canada in December, 1992, and Israel in
February, 1993. The Australian, Canadian, and Israeli patents provide
protection until August, 2004, December, 2009, and August, 2008,
respectively. Patent applications are pending in these countries and in Japan
for a fiber optic laser catheter design.

The Company regards its technological processes and product designs as
proprietary and seeks to protect its rights in them through a combination of
patents, internal procedures and non-disclosure agreements. The Company also
utilizes licenses from third parties for processes and designs used by the
Company which are proprietary to other parties. The Company believes that
its success will depend in part on the protection of its proprietary
information and patents, and the licenses of technologies from third parties.

There can be no assurances as to the range or degree of protection any
patent or registration which may be owned or licensed by the Company will
afford, that such patents or registrations will provide any competitive
advantages for the Company, or that others will not obtain patents or
registrations similar to any patents or registrations owned or licensed by
the Company. There can be no assurances that any patents or registrations
owned or licensed by the Company will not be challenged by third parties,
invalidated, rendered unenforceable or designed around, or that the Company's
competitors will not independently develop technologies which are
substantially equivalent or superior to the technologies owned or licensed by
the Company and which do not infringe patents or proprietary rights of the
Company. Further, there can be no assurances that any pending patent or
registration applications or future applications will result in the issuance
of a patent or registration. There can be no assurances that the Company or
any licensor to the Company will be successful in protecting its proprietary
rights. No assurances can be given that the technology owned or

41
<PAGE>

licensed by the Company will not infringe on patents or proprietary rights of
others, or that the Company can obtain or renew licenses to use such
proprietary rights, if necessary.

To the extent that the Company relies upon trade secrets and unpatented
know-how, and the development of new products and improvements of existing
products in establishing and maintaining a competitive advantage in the
market for the Company's products and services, there can be no assurances
that such proprietary technology will remain a trade secret or be available
to the Company, or that others will not develop substantially equivalent or
superior technologies to compete with the Company's products and services.

Any asserted claims or litigation to determine the validity of any third
party infringement claims could result in significant expense to the Company
or any licensor of such technology and divert the efforts of the Company's
technical and management personnel, whether or not such litigation is
resolved in favor of the Company or any such licensor. In the event of an
adverse result in any such litigation, the Company or any such licensor could
be required to expend significant time and resources to develop
non-infringing technology or to obtain licenses to the disputed technology
from third parties. There can be no assurances that the Company or any such
licensor would be successful in such development or that any such licenses
would be available to the Company on commercially reasonably terms, if at all.

EMPLOYEES

As of March 31, 1998, the Company had approximately 35 full-time
employees, including 16 employees in the Company's Florida offices, 7 in the
Company's Massachusetts offices and 12 in the Company's California corporate
offices. These employees include technical, administrative and clerical
personnel. The Company intends to hire additional personnel as the
development of the Company's business makes such action appropriate. The
loss of the services of such key employees as Chaim Markheim and Raymond A.
Hartman could have a material adverse effect on the Company's business.
Since there is intense competition for qualified personnel knowledgeable of
the Company's industry, no assurances can be given that the Company will be
successful in retaining and recruiting needed personnel. See "Management."

The Company's employees are not represented by a labor union or covered
by a collective bargaining agreement, and the Company believes it has good
relations with its employees. The Company provides its employees with
certain benefits, including health insurance.

PROPERTIES

AccuLase presently leases approximately 5,400 square feet of office and
laboratory space in San Diego, California on a month to month basis, at a
monthly rental of $4,719.

The Company currently occupies approximately 12,000 square feet of
office and light manufacturing space in Orlando, Florida, at a monthly rent
of $11,000 per month, on a month to month basis. At December 31, 1997, the
Company was delinquent in payment of approximately $469,000 of rental
obligations on such lease.

The Company's Laser Analytics subsidiary occupies a 13,000 square foot
office and light manufacturing facility in Wilmington, Massachusetts, which
commenced in December, 1996, for a five-year period at $5,600 per month.

LEGAL PROCEEDINGS

BANKRUPTCY REORGANIZATION. The Company filed a Petition for
Reorganization (the "Bankruptcy Proceeding") under Chapter 11 of the Federal
Bankruptcy Act on May 13, 1994 (Case No. 94-02608-611 - Federal Bankruptcy
Court - Middle District, Florida). An order was issued on May 22, 1995
confirming the Company's Third Amended Plan of Reorganization (the
"Bankruptcy Reorganization").

42
<PAGE>

During the pendency of the Bankruptcy Proceeding, Helionetics
contributed $1,000,000 in cash to the Company, which funds were utilized for
cash payments under the Bankruptcy Reorganization. Helionetics further loaned
to the Company $300,000 to fund the cost of research and development of the
Company's excimer lasers. In connection with the Bankruptcy Reorganization:
(i) Helionetics received 3,750,000 shares of Common Stock of the Company,
which represented 75% of the then total issued and outstanding shares of
Common Stock, (ii) certain of the Company's unsecured creditors received
1,000,000 shares of Common Stock, which represented 20% of the then total
issued and outstanding shares of Common Stock, and (iii) the shares of Common
Stock of the Company's prior existing stockholders were cancelled and
reissued into 250,000 shares of Common Stock, which represented 5% of the
then total issued and outstanding shares of Common Stock. As of the date of
this Prospectus, Helionetics does not own any shares of the Company's Common
Stock.

CONSENT DECREE. In 1996, the Company entered into a Consent Decree with
the Commission where it neither admitted nor denied alleged securities law
violations in 1992 and early 1993 under prior management, but consented to
the issuance of an injunction against any future violation. The alleged
events occurred prior to the Bankruptcy Reorganization and involve events,
which occurred prior to the change in the Company's management and directors.
The current management and directors have no connection with this proceeding.
No monetary damages were sought.

LEASE DISPUTE. In June, 1997, the Company was served with a complaint
as defendant by Riverboat Landing, Inc., plaintiff, in the County Court of
the Eighteenth Judicial Circuit, Seminole County, Florida regarding failed
lease negotiations for a facility in Sanford, Florida. The Company has filed
a response and is anticipating settlement out of court. The Company had
placed a $10,000 deposit on this facility which has been written off in 1996.

Except as set forth above, the Company knows of no material legal
actions, pending or threatened, or judgment entered against the Company or
any executive officer or director of the Company in his capacity as such.

<PAGE>

MANAGEMENT

The directors of the Company currently have terms which will end at the
next annual meeting of the stockholders of the Company or until their
successors are elected and qualify, subject to their prior death, resignation
or removal. Officers serve at the discretion of the Board of Directors.
There are no family relationships among any of the Company's directors and
executive officers.

The following sets forth certain biographical information concerning the
current members of the Board of Directors and executive officers of the
Company:

<TABLE>
<CAPTION>
Name Position Age
- ---- -------- ---
<S> <C> <C>
Raymond A. Hartman Director, President and Chief 51
Executive Officer

Chaim Markheim Director, Chief Operating Officer 53
and Chief Financial Officer

John J. McAtee, Jr. Chairman of the Board of Directors 61

Alan R. Novak Director 63

Steven A. Qualls Director and Executive Vice-President- 41
East Coast Operations
</TABLE>

RAYMOND A. HARTMAN was appointed to the Board of Directors in October,
1997, and also serves as the President and Chief Executive Officer of Laser
Photonics, Inc. and AccuLase, Inc. Mr. Hartman is responsible for the
engineering and development of the excimer laser, handpieces and fiberoptics
for TMR. He also developed and obtained FDE for TMR as a sole therapy option
for CAO patients. Prior employment includes: Founder and President of
Electrode Technology, Inc., Union City, California; Vice President of
Manufacturing and Research and Development, Applied Medical Technology, Palo
Alto, California. Mr. Hartman was an Assistant Professor at The Ohio State
University in Columbus Ohio, Business Law and Marketing (Graduate School of
Business); Business Policy (Graduate School of Business) and Seapower and
Maritime Affairs (ROTC). Mr. Hartman was a Lieutenant in the United States
Navy. He received his MBA from The Ohio State University, and a BS with
Honors in Chemistry at Montana State University.

CHAIM MARKHEIM was appointed to the Board of Directors of the Company in
May, 1995. He also serves as the Company's Chief Operating Officer and Chief
Financial Officer. Mr. Markheim was a director and the Chief Operating
Officer of Helionetics, Inc. from May, 1992 until January, 1998. Helionetics,
Inc. filed a petition for bankruptcy reorganization under Chapter 11 of the
Federal Bankruptcy Act in 1997. Mr. Markheim acted as business consultant to
a diverse group of companies, including Helionetics, Inc., from 1985 to 1992.
From 1980 to 1985, Mr. Markheim served in various financial positions with
Campbell Soup Company. His last position was Controller of the Beverage
Division (V8). From 1976 to 1980, Mr. Markheim served in a number of
financial positions with Atlantic Richfield Company (ARCO). Prior to 1976, he
was employed as an auditor with Coopers and Lybrand and Seidman & Seidman.
Mr. Markheim was a licensed Certified Public Accountant in the State of
California. Mr. Markheim holds a Bachelor of Science Degree in Accounting
from California State University, at Northridge.

44
<PAGE>

JOHN J. McATEE, JR. has been Chairman of the Board of Directors of the
Company since March 4, 1998. From 1990 to 1996, Mr. McAtee was Vice Chairman
of Smith Barney, Inc. (now Salomon Smith Barney), one of the world's largest
banking and brokerage firms. Before that, he was a partner in the New York
law firm of Davis Polk & Wardwell for more than twenty years. Mr. McAtee is
a graduate of Princeton University and Yale Law School. Mr. McAtee is also a
director of U.S. Industries, Inc., a diversified industrial management
corporation, and Whitehall Corporation, which provides products and services
to the commercial and military markets.

ALAN R. NOVAK was appointed to the Board of Directors of the Company in
October, 1997. Mr Novak is Chairman of Infra Group, L.L.C., an international
project finance and development company. He is also Chairman of Lano
International, Inc., a real estate development company, and Chairman of
American Partners Asset Management ("Holdings") Limited, a money management
company, and a director of Strategic Partners (Holdings) Limited, an
international airport and seaport development company. Mr. Novak is a
graduate of Yale University, Yale Law School, and Oxford University as a
Marshall scholar. Mr. Novak practiced law at Cravath, Swaine & Moore and
Swidler & Berlin, Chartered. His public service includes a U.S. Supreme
court clerkship with Justice Potter Stewart, Senior Counsel, Senator E. M.
Kennedy, Senior Executive Assistant to Undersecretary of State, Eugene
Rostow, and Executive Director, President Johnson's Telecommunications Task
Force. Mr. Novak was appointed by President Carter and served for five years
as Federal Fine Arts Commissioner.

STEVEN A. QUALLS was appointed to the Board of Directors of the Company
in May, 1995. Mr. Qualls has been an employee of the Company since 1987 and
currently serves as the Company's Executive Vice President. He previously
served as the Company's General Manager, Chief Operating Officer, President
and Chief Executive Officer. Mr. Qualls holds an MBA from the Crummer
Graduate School of Business at Rollins College in Winter Park, Florida, and
received a BS in Physics from the University of Central Florida.

45
<PAGE>

COMPENSATION OF
EXECUTIVE OFFICERS AND DIRECTORS

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning
compensation of certain of the Company's executive officers, including the
Company's Chief Executive Officer and all executive officers (the "Named
Executives") whose total annual salary and bonus exceeded $100,000, for the
years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
------------------------------- -------------------------------------------
Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Restricted Securities
principal Other annual stock underlying LTIP All other
position Year Salary Bonus compensation award(s) Options/SARs payouts compensation
($) ($) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steven A. Qualls (CEO)(1) 1997 $75,000 0 0 0 0 0 0
Raymond A. Hartman (CEO)(2) 1997 $125,000(3) 0 0 0 270,250 0 0
Raymond A. Hartman 1996 $125,000(3) 0 0 0 60,000 0 0
Steven A. Qualls (CEO) 1996 $75,000 0 0 $15,000 60,000 0 0
Paul Cattermole (CEO) 1995 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Mr. Qualls served as the Company's Chief Executive Officer until
October, 1997.

(2) Mr. Hartman became the Company's Chief Executive Officer in October, 1997.

(3) Includes paid and accrued salary for each such fiscal year.

46
<PAGE>

OPTION/SAR GRANTS TABLE

The following table sets forth certain information concerning grants of
stock options to certain of the Company's executive officers, including the
Named Executives for the year ended December 31, 1997:

<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants For Option Term(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Number of % of
Securities Total
Underlying Options/
Options/ SARs Exercise
SARs Granted to or Base
Granted Employees Price Expiration
Name (#) in Fiscal Year ($/Share) Date 5% ($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond A. Hartman(2) 250,000 75.6% $0.50 10/1/02 $842,500 $1,025,000
Raymond A. Hartman 20,250 6.1% $1.25 8/14/02 46,980 61,763
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
1. This chart assumes a market price of $2.94 for the Common Stock,
the average of the bid and asked prices for the Company's Common Stock in the
over-the-counter market as of April 13, 1998, as the assumed market price for
the Common Stock with respect to determining the "potential realizable value"
of the shares of Common Stock underlying the options described in the chart,
as reduced by any lesser exercise price for such options. Further, the chart
assumes the annual compounding of such assumed market price over the relevant
periods, without giving effect to commissions or other costs or expenses
relating to potential sales of such securities. The Company's Common Stock
has a very limited trading history. These values are not intended to forecast
the possible future appreciation, if any, price or value of the Common Stock.

2. These options will vest in the event that certain performance levels
are reached with respect to the development of the Company's lasers.

OPTION EXERCISES IN 1997

No Named Executive exercised any stock option in 1997.

1995 NON-QUALIFIED OPTION PLAN

On January 2, 1996, the Company adopted the Company's 1995 Non-Qualified
Option Plan for key employees, officers, directors and consultants, and
reserved up to 500,000 options to be granted thereunder. The option exercise
price is not less than 100% of market value on the date granted, 40% of
granted options vest immediately, and may be exercised immediately; 30% vest
and may be exercised beginning one year after grant; and the remaining 30%
vest and may be exercised beginning two (2) years from grant.

<PAGE>

No options may be exercised more than ten (10) years after grant, options
are not transferable (other than at death), and in the event of complete
termination "for cause" (other than death or disability) or "voluntary"
termination, all "unvested" options automatically terminate.

On January 2, 1996, the Company granted a total of 335,000 options at an
exercise price of $1.50 per share to certain directors, employees and
consultants.

LIMITATION ON DIRECTORS' LIABILITIES; INDEMNIFICATION OF OFFICERS AND
DIRECTORS

The Company's Certificate of Incorporation and Bylaws designate the
relative duties and responsibilities of the Company's officers, establish
procedures for actions by directors and stockholders and other items. The
Company's Certificate of Incorporation and Bylaws also contain extensive
indemnification provisions which will permit the Company to indemnify its
officers and directors to the maximum extent provided by Delaware law.
Pursuant to the Company's Certificate of Incorporation and under Delaware
law, directors of the Company are not liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty, except for
liability in connection with a breach of duty of loyalty, for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for dividend payments or stock repurchases illegal
under Delaware law or any transaction in which a director has derived an
improper personal benefit.

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

The Company has no compensatory plans or arrangements which relate to the
resignation, retirement or any other termination of an executive officer or
key employee with the Company or a change in control of the Company or a
change in such executive officer's or key employee's responsibilities
following a change in control.

COMPENSATION AND AUDIT COMMITTEES; COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

The Board has a Compensation Committee comprised of the following members
of the Board of Directors: John J. McAtee, Jr. and Alan R. Novak, and an
Audit Committee comprised of the following members of the Board of Directors:
Chaim Markheim, John J. McAtee, Jr. and Alan R. Novak. Messrs. McAtee and
Novak may be deemed to be outside/non-employee directors. The Board has no
standing committee on nominations or any other committees performing
equivalent functions.

The Compensation Committee reviews and approves the annual salary and
bonus for each executive officer (consistent with the terms of any applicable
employment agreement), reviews, approves and recommends terms and conditions
for all employee benefit plans (and changes thereto) and administers the
Company's stock option plans and such other employee benefit plans as may be
adopted by the Company from time to time.

The Audit Committee reports to the Board regarding the appointment of the
independent public accountants of the Company, the scope and fees of the
prospective annual audit and the results thereof, compliance with the
Company's accounting and financial policies and management's procedures and
policies relative to the adequacy of the Company's system of internal
accounting controls.

COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and beneficial holders of more than 10% of the Company's
Common Stock to file with the Commission initial reports of ownership and
reports of changes in ownership and reports of changes in ownership of such
equity securities of the Company. Based solely upon a review of such forms,
or on written representations from

<PAGE>

certain reporting persons that no other reports were required for such
persons, except for those reports discussed in the next paragraph, the
Company believes that all reports required pursuant to Section 16(a) with
respect to its executive officers, directors and 10% beneficial stockholders
for the ended December 31, 1997 were timely filed.

To the Company's knowledge, during the year ended December 31, 1997, the
following persons failed to file the reports set forth below in a timely
manner due to administrative error: (i) Raymond A. Hartman, Chief Executive
Officer and a director, failed to file a Form 3 for the month of October,
1997; (ii) Chaim Markheim, Chief Financial Officer and Chief Operating
Officer, failed to file a Form 4 for the months of August and November, 1997;
and (iii) Alan R. Novak, a director, failed to file a Form 3 for the month of
October, 1997. These reports subsequently were filed with the Commission by
Messrs. Hartman and Markheim in April, 1998, and by Mr. Novak in March, 1998.

Further, to the Company's knowledge, the following persons filed the
reports set forth below in April, 1998, which were previously delinquent due
to administrative error: (i) Chaim Markheim - Form 3 (May, 1995) and Form 4
(February, 1996 and October, 1996), and (ii) Steven A. Qualls - Form 3 (May,
1995) and Form 4 (February, 1996 and October, 1996).

To the Company's knowledge, all other filing requirements of executive
officers and directors were timely complied with during the year ended
December 31, 1997.

COMPENSATION OF DIRECTORS

Outside/non-employee members of the Board of Directors will receive
options to purchase up to 20,000 shares of Common Stock as compensation, on
an annual basis, at an exercise price equal to the market price of the Common
Stock on the last trading day of the preceding year. The options will vest
at the rate of 5,000 options per quarter during each quarter in which such
person served as a member of the Board of Directors. The Company granted, to
each of John J. McAtee, Jr. and Alan R. Novak, options to purchase up to
20,000 shares of Common Stock at an exercise price of $2.875 per share for
services to be rendered during the year ending December 31, 1998.

The Company has obtained directors' and officers' liability insurance with
a $2,500,000 limit of liability and a $2,500,000 excess coverage. The policy
period expires on February 24, 1999. The Company intends to renew such policy
or obtain comparable coverage after the expiration of such policy. However,
there can be no assurances to this effect.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONVERSION OF CONVERTIBLE DEBT

In 1995, the Company sold an aggregate of $600,000 in six month
convertible, secured notes in a private transactions pursuant to exemption
from registration under Regulation S promulgated under the Securities Act of
1933, as amended (the "Securities Act"). The Company also issued to such
persons warrants to purchase up to 500,000 shares of Common Stock which
expired in 1995 due to the Company's meeting of certain filing requirements.
The noteholders were also granted a transferable one year option to purchase
134,000 additional shares at $2.25 per share, and 134,000 shares at $3.00 per
share, which were exercised in 1996, and 137,000 shares at $3.75 per share,
which expired without exercise. In February and April, 1996, the notes were
converted into an aggregate of 538,583 shares of Common Stock at a conversion
price of $0.96 per share. In April, 1996, an additional 30,000 shares were
issued pursuant to Regulation S as payment of past due rent valued at $60,000.

<PAGE>

CERTAIN ISSUANCES TO FORMER AFFILIATES

In February, 1996, the Company issued 25,000 shares of Common Stock to
Susan E. Barnes, the wife of Bernard B. Katz, a former director and Chairman
of the Board of the Company, in consideration for her personal guaranty of
$81,000 in lease obligations associated with the Company's Andover facility
lease. In February, 1996, the Company agreed to issue to Ms. Barnes 50,000
shares of Common Stock for services she arranged to provide in connection
with raising $1.5 million to finance the Company's emergence from the
Bankruptcy Proceeding, at a value of $1.00 per share. In October, 1996, the
Company issued an additional 100,000 shares of Common Stock to Ms. Barnes in
connection with her further personal guaranty of the Andover lease and lease
extension, after the lease went into default and the landlord was threatening
immediate eviction. This second personal guaranty was secured by a pledge of
391,360 shares of her personally owned Helionetics, Inc. common stock.

ISSUANCE OF SHARES AND OPTIONS TO KEY EMPLOYEES AND CONSULTANTS

On January 2, 1996, the Company adopted the Company's 1995 Non-Qualified
Option Plan for key employees, officers, directors and consultants, and
reserved up to 500,000 options to be granted thereunder. On January 2, 1996,
the Company granted a total of 335,000 options at an exercise price of $1.50
per share to certain directors, employees and consultants.

During 1996, the Company issued 151,000 shares of Common Stock and options
to purchase up to 62,500 shares of Common Stock in exempt transactions to key
employees and consultants for services rendered and as compensation.
Included were issuances to certain current and former officers and directors
for services rendered, as follows: (i) Steven A. Qualls (10,000 shares),
(ii) Chaim Markheim (5,000 shares), and (iii) Maxwell Malone (5,000 shares).

During 1997, the Company issued a total of 105,000 shares of Common Stock
to an outside consultant to the Company for legal services rendered. In
addition, the Company issued options to acquire 250,000 shares of Common
Stock at an exercise price of $0.50 per share and having a five year term,
contingent upon certain performance contingencies in the future, to Raymond
A. Hartman.

On July 1, 1997, the Company granted a total of 108,500 options at an
exercise price of $1.00 per share to certain employees and consultants. On
October 31, 1997, the Company issued options to purchase up to 20,000 shares
of Common Stock at an exercise price of $1.00 per share to a former director
of the Company. In October, 1997, in satisfaction of all compensation owed
by the Company to K.B. Equities, Inc. ("KB Entities"), an affiliate of Mr.
Katz and Ms. Barnes, for consulting services rendered to the Company in 1997,
the Board of Directors granted options to acquire 100,000 shares of Common
Stock to K.B. Equities at an exercise price of $0.75 per share, and with a
term of seven years. Mr. Katz resigned from the Board of Directors of the
Company on October 9, 1997.

In August, 1997, the Company issued options to purchase up to 211,899
shares of Common Stock to the following persons, who are currently officers
and directors of the Company, at an exercise price of $1.25 per share with a
term of five (5) years: (i) Chaim Markheim (20,250 options), (ii) Raymond A.
Hartman (20,250 options), (iii) Alan R. Novak (71,399 options), and (iv) John
J. McAtee, Jr. (100,000 options).

In April, 1998, the Company issued options to Chaim Markheim to purchase
up to 250,000 shares of Common Stock at an exercise price of $2.875 per share
with a five (5) year term.

In April, 1998, the Company issued options to purchase up to 100,000
shares of Common Stock, at the exercise price of $2.875 per share, with a
five-year term, and 20,000 shares of Common Stock, to certain consultants for
services rendered. The 20,000 shares were issued for services rendered at a
$1.00 per share.

<PAGE>

In April, 1998, the Company established a compensation plan for the
outside/non-employee members of the Board of Directors. Such directors will
receive options to purchase up to 20,000 shares of Common Stock as
compensation, on an annual basis, at an exercise price equal to the market
price of the Common Stock on the last day of the preceding year. The options
will vest at the rate of 5,000 options per quarter during each quarter in
which such person served as a member of the Board of Directors. The Company
granted, to each of John J. McAtee, Jr. and Alan R. Novak, options to
purchase up to 20,000 shares of Common Stock at an exercise price of $2.875
per share for services to be rendered during the year ending December 31,
1998.

CERTAIN ISSUANCES OF SECURITIES

In September and October, 1997, the Company privately sold a total of
679,500 restricted shares of Common Stock in a private placement to certain
accredited investors at a price of $1.25 per share. The Company sold an
additional 28,601 shares at a price of $1.25 per share in the first quarter
of 1998. These funds were used in part to pay outstanding accounts payable
and to make a partial payment on delinquent Federal and State taxes
outstanding.

In September, 1997, PMG purchased from Helionetics, with approval of the
Federal Bankruptcy Court in the pending Helionetics Chapter 11 Bankruptcy
proceeding, all debt owed by AccuLase to Helionetics. In October, 1997, the
Company purchased the debt owing by AccuLase, in the amount of $2,159,708
from PMG in consideration of 800,000 shares of Common Stock.

In November, 1997, the Company issued 1,500,000 shares of Common Stock and
750,000 warrants (the "Warrants"), with an exercise price of $4.00 per share
and a term of five (5) years, in a private placement to certain accredited
investors resulting in gross proceeds of $6,000,000 to the Company. The
Company also issued 150,000 Warrants and paid a commission of $480,000 to PMG
as a placement agent fee.

The Company has agreed to issue to PMG an additional 75,000 warrants (the
"Contingent Warrants") at a purchase price of $0.001 per share at such time
as any of the other 900,000 Warrants have been exercised. The Contingent
Warrants will be exercisable for a period of five years following the date of
issue at an exercise price equal to the average closing bid price for the
Common Stock for the ten trading days preceding the date of issue.

If at any time during the five year period following the closing date of
the PMG offering the Company issues additional shares (the "Additional
Shares") of Common Stock, other than to employees of the Company pursuant to
the exercise of stock options, the Company has agreed to offer to the
purchasers of the PMG offering a number of shares of Common Stock at the
offering price of such Additional Shares equal to the number of Additional
Shares multiplied by the purchasers' ownership percentage prior to the
commencement of sale of such Additional Shares.

The Warrants may be redeemed by the Company, upon 30 days' notice, at a
redemption price of $0.10 per share if the closing bid price of the Common
Stock exceeds $8.00 per share for a period of thirty consecutive trading days.

The 2,979,500 shares and the 900,000 Warrants issued from September
through November, 1997, and the 28,601 shares issued in 1998 are being
registered in connection with this Prospectus. See "Selling Stockholders and
Plan of Distribution."

Except as otherwise provided above, the Company believes each of the
foregoing issuances of securities was made to accredited investors in
transactions exempt from registration under Section 4(2) of the Securities
Act.

The Company believes that all such transactions with affiliates of the
Company have been entered into on terms no less favorable to the Company than
could have been obtained from independent third parties. The Company intends
that any transactions and loans with officers, directors and five percent
(5%) or greater stockholders, following the date of this Prospectus, will be
on terms no less favorable to the Company than could be obtained from
independent third parties and will be approved by a majority of the
independent, disinterested directors of the Company.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table reflects, as of May 26, 1998, the beneficial Common
Stock ownership of: (a) each director of the Company, (b) each Named
Executive (See "Compensation of Executive Officer and Directors"), (c) each
person known by the Company to be a beneficial holder of five percent (5%) or
more of its Common Stock, and (d) all executive officers and directors of the
Company as a group:

<TABLE>
<CAPTION>
PERCENT#
NAME AND ADDRESS NO. OF ----------------------------------
OF BENEFICIAL OWNER SHARES BEFORE OFFERING* AFTER OFFERING*
- --------------------------- ------- ---------------- ---------------
<S> <C> <C> <C>
Chaim Markheim(1) 320,250 3.33 3.04

Raymond A. Hartman(2) 340,250 3.53 3.23

Steven A. Qualls(3) 70,666 ** **

Alan R. Novak(4) 110,000 1.17 1.07

John J. McAtee, Jr.(5) 209,000 2.22 2.03

Calvin Hori and Hori
Capital Management, Inc.(6) 933,100 10.04 9.15

Platinum Partners, L.P.(6) 759,000 8.17 7.44

All directors and officers
as a group (5 persons)(7) 1,050,166 10.30 10.40
</TABLE>

- --------------------------------
(FOOTNOTES ON THE FOLLOWING PAGE)

# Pursuant to the rules of the Commission, shares of Common Stock which
an individual or group has a right to acquire within 60 days pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose
of computing the percentage ownership of such individual or group, but are
not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table.

* Assumes that the 900,000 shares of Common Stock underlying the
Warrants, which are being registered in connection with this Prospectus, are
exercised in full.

** Less than 1%.

<PAGE>

(FOOTNOTES FROM PREVIOUS PAGE)

1. Includes options to purchase up to 320,250 shares of Common Stock.
Mr. Markheim's address is 6865 Flanders Drive, Suite G, San Diego, California
92121.

2. Includes options to purchase up to 80,250 shares of Common Stock
registered in his name and options to purchase up to 10,000 shares of Common
Stock registered in the name of his wife, Sandra Hartman. Also includes
options to purchase up to 250,000 shares of Common Stock which are vested
subject to certain events. Mr. Hartman's address is 6865 Flanders Drive,
Suite G, San Diego, California 92121.

3. Includes 10,666 shares of Common Stock and options to purchase up to
60,000 shares of Common Stock. Mr. Qualls' address is 12351 Research
Parkway, Orlando, Florida 32826.

4. Includes 28,601 shares of Common Stock, which are being registered in
connection with this Prospectus, and options to purchase up to 81,399 shares
of Common Stock. Does not include options to purchase up to 10,000 shares of
Common Stock which may vest periodically during the course of the year. Mr.
Novak's address is 3050 K Street, NW, Suite 105, Washington, D.C. 20007. See
"Selling Stockholders and Plan of Distribution."

5. Includes 99,000 shares of Common Stock, including 84,000 of which are
being registered in connection with this Prospectus, and options to purchase
up to 110,000 shares of Common Stock. Does not include options to purchase
up to 10,000 shares of Common Stock which may vest subject to certain
schedules. Mr. McAtee's address is Two Greenwich Plaza, Greenwich,
Connecticut 06830. See "Selling Stockholders and Plan of Distribution."

6. The listed persons, Calvin Hori ("Hori"), Hori Capital Management,
Inc. ("Hori Capital") and Platinum Partners, L.P. ("Platinum") have jointly
filed an Amendment No. 1 to Schedule 13D (the "Schedule 13D"), dated December
1, 1997, with respect to 933,100 shares of Common Stock. The Schedule 13D
provides, in pertinent part, that: (a) Hori, Hori Capital and Platinum may be
deemed to be the beneficial owners of 759,000 of these shares, and (b) Hori
and Hori Capital may be deemed to be the beneficial owners of an additional
174,100 of these shares. The address for each of the listed persons is One
Washington Mall, Boston, Massachusetts 02108.

7. Includes 148,267 shares of Common Stock and options to purchase up to
651,899 shares of Common Stock. Also includes options to purchase up to
250,000 shares of Common Stock which may vest subject to certain events.
Does not include options to purchase up to 20,000 shares of Common Stock
which may vest subject to certain schedules. See "Certain Relationships and
Related Transactions."

<PAGE>

DESCRIPTION OF SECURITIES

GENERAL

The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, par value $0.01 per share. As of the date of this Prospectus,
there were issued and outstanding 9,295,694 shares of Common Stock. There
were also issued and outstanding Warrants to purchase up to 900,000 shares of
Common Stock and options to purchase up to 1,477,899 shares of Common Stock.

As of February 4, 1998, the Company's stockholders adopted an amendment
to the Company's Certificate of Incorporation to increase the authorized
number of shares of Common Stock to 15,000,000 shares, and which is
anticipated to be filed with the State of Delaware in the near future.

COMMON STOCK

Holders of the Common Stock are entitled to cast one vote for each share
held of record, to receive such dividends as may be declared by the Board of
Directors out of legally available funds and to share ratably in any
distribution of the Company's assets after payment of all debts and other
liabilities, upon liquidation, dissolution or winding up. Holders of the
Common Stock do not have preemptive rights or other rights to subscribe for
additional shares, and the Common Stock is not subject to redemption. The
outstanding shares of Common Stock are validly issued, fully paid and
nonassessable.

Under Delaware law, each holder of a share of Common Stock is entitled to
one vote per share for each matter submitted to the vote of the stockholders,
and cumulative voting is allowed for the election of directors, if provided
for in the Certificate of Incorporation. The Company's Certificate of
Incorporation does not provide for cumulative voting.

The exercise price of the Warrants may be adjusted in the event that the
Company issues shares of Common Stock for consideration of $4.00. In such
event, the per share exercise price will be adjusted to the issue price of
such additionally issued shares of Common Stock. This price adjustment does
not apply to transactions related to Common Stock issued to employees or
consultants of the Company which are approved by the Company's Board of
Directors and which have an exercise price not less than 50% of the current
market price of the Company's Common Stock at the time of issuance. See
"Description of Securities - Warrants."

WARRANTS

The Company has issued and outstanding Warrants to purchase up to 900,000
shares of Common Stock at an exercise price of $4.00 per share, which expire
on November 26, 2002. The 900,000 shares underlying the Warrants are being
registered in connection with this Prospectus.

OPTIONS

The Company has issued and outstanding options to purchase 1,477,899
shares of Common Stock to various employees, officers, directors and
consultants of the Company at exercise prices ranging from $0.50 to $2.875
per share, 1,107,899 of which are currently exercisable. See "Compensation
of Executive Officers and Directors - 1995 Non-Qualified Stock Option Plan;
- -Compensation of Directors."

TRANSFER AGENT

The transfer agent for the Common Stock is American Stock Transfer &
Trust Co., New York, New York.

CERTAIN BUSINESS COMBINATIONS

Delaware law contains a statutory provision which is intended to curb
abusive takeovers of Delaware corporations. The effect of such
"anti-takeover" provisions may delay, deter or prevent a takeover of the
Company which the stockholders may consider to be in their best interests,
thereby possibly depriving holders of the Company's securities of certain
opportunities to sell or otherwise dispose of their securities at
above-

<PAGE>

market prices, or limit the ability of stockholders to remove incumbent
directors as readily as the stockholders may consider to be in their best
interests.

Section 203 of the Delaware General Corporation Law addresses the problem
by preventing certain business combinations of the corporation with
interested stockholders within three years after such stockholders become
interested. Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations
with a person or an affiliate, or associate of such person, who is an
"interested stockholder" for a period of three (3) years from the date that
such person became an interested stockholder unless: (i) the transaction
resulting in a person becoming an interested stockholder, or the business
combination, is approved by the Board of Directors of the corporation before
the person becomes an interested stockholder; (ii) the interested stockholder
acquired 85% or more of the outstanding voting stock of the corporation in
the same transaction that makes such person an interested stockholder
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by certain employee stock ownership plans); or
(iii) on or after the date the person becomes an interested stockholder, the
business combination is approved by the corporation's board of directors and
by the holders of at least 66-2/3% of the corporation's outstanding voting
stock at an annual or special meeting, excluding shares owned by the
interested stockholder. Under Section 203, an "interested stockholder" is
defined as any person who is: (i) the owner of fifteen percent (15%) or more
of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of fifteen percent (15%)
or more of the outstanding voting stock of the corporation at any time within
the three (3) year period immediately prior to the date on which it is sought
to be determined whether such person is an interested stockholder.

SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

The 3,028,001 shares of the Company's Common Stock and the 900,000 shares
of Common Stock underlying the Warrants offered hereby by the Selling
Stockholders may be sold from time to time to purchasers directly by the
Selling Stockholders. Alternatively, the Selling Stockholders may from time
to time offer the shares of Common Stock through underwriters, dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders and/or the
purchasers of the shares for whom they may act as agent. The Selling
Stockholders and any underwriters, dealers or agents that participate in the
distribution of the shares of Common Stock may be deemed to be underwriters
and any profit on the sale of shares by them and any discounts, commissions
or concessions received by any such underwriters, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
At the time a particular offer of shares is made, to the extent required, a
Prospectus Supplement will be distributed which will set forth the specific
shares to be sold and the terms of the offering, including the name or names
of any underwriters, dealer-agents, any discounts, commissions or concessions
allowed or reallowed or paid to dealers.

The shares of Common Stock may be sold from time to time in one or more
transactions at a fixed offering price which may be changed or at varying
prices determined at the time of sale or negotiated prices.

The Company has paid all of the expenses incident to the offering of the
shares of the Common Stock offered by the Selling Stockholders, other than
commissions and discounts of underwriters, dealers or agents and the fees and
expenses of counsel to the Selling Stockholders.

As of the date of this Prospectus, except for John J. McAtee, Jr. and
Alan R. Novak, who are directors of the Company, none of the Selling
Stockholders or their affiliates is a director, executive officer or 5% or
greater beneficial stockholder of the Company.

The following table sets forth certain information related to the number
of shares of Common Stock and shares underlying the Warrants which may be
offered by the Selling Stockholders pursuant to this Prospectus:

<PAGE>

<TABLE>
<CAPTION>
NUMBER OF SHARES
SELLING STOCKHOLDERS NUMBER OF SHARES UNDERLYING WARRANTS
- -------------------- ---------------- -------------------
<S> <C> <C> <C>
1. Frank A. Abruzzese 5,000
2. Accrued Investments, Inc. 15,000 7,500
3. David S. Allsopp 57,900
4. Fran M. Auch 16,500
5. Kenneth J. Beahan 10,000
6. Mary E. Bowler 7,000
7. William P. Brown 10,000
8. Frank J. Campbell III 100,000
9. Steven G. and Riki Charles 2,000
10. Coutts (Jersey) Limited 240,000 20,000
11. Amir L. Ecker(1) 160,000 37,500
12. EDJ Limited 20,000 10,000
13. Joseph M. and Linda Evancich 10,000
14. Peter J. Faillace, Jr.(2) 10,000
15. Richard S. Frary 15,000 7,500
16. Jay M. and Sandee Fuller 25,000 12,500
17. Kathleen M. Furgiuele 1,000
18. Joseph E. Gallo, Trustee, FBO
Children's Family Trust, dated
August 17, 1990 125,000 62,500
19. Richard Gibbs 26,875 8,438
20. Richard C. Goodwin 25,000 12,500
21. Jon D. and Linda W. Gruber(3) 87,500 43,750
22. Penelope S. and Richard A. Hansen(4) 105,000
23. Holmes Partners, L.P. 12,500 6,250
24. Jubilee Partners Family Limited
Partnership 10,000
25. Clifford Kalista(5) 50,000
26. James Kilkowski 20,000
27. Lagunitas Partners, L.P. 162,500 81,250
28. Lancaster Investment Partners, L.P. 200,000 50,000
29. Legion Fund, Ltd. 25,000 12,500
30. James J. and Carolyn Lennon 10,000
31. Mary M. Losty 25,000 12,500
32. Larry Martin 200,000 100,000
33. Michael A. Martorelli 10,000
34. Irving L. Mazer 5,625 2,812
35. John J. McAtee, Jr.(6) 100,000
36. Scott McQueen 10,000 5,000
37. Salomon E. and Flor Melgen 50,000 25,000
38. Millridge Corporation 100,000
39. Harry Mittelman(7) 86,100 33,000
40. Alan R. Novak(8) 28,601
41. J. Gregory O'Meara 10,000
42. Vincent Papa 10,000
43. David Parke 5,000
44. George Parlby 48,000 24,000
45. Eric and Ellen Peterson 22,500 6,250
46. Arnold A. Phipps, III 20,000
</TABLE>

56
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF SHARES
SELLING STOCKHOLDERS NUMBER OF SHARES UNDERLYING WARRANTS
- -------------------- ---------------- -------------------
<S> <C> <C> <C>
47. Porter Partners, L.P. 110,000 30,000
48. ProFutures Special
49. Equities Fund, L.P. 125,000 62,500
50. Peter S. Rawlings(9) 200,000
51. Charles Robins 25,000
52. Leonid Roytman 10,000 5,000
53. James M. Sheridan 5,000
54. Linda D. and Joseph T. Simon 5,000
55. Robert M. Smith 10,000
56. Perry D. Snavely, Jr.(10) 52,500
57. Sonz Partners, L.P. 50,000 25,000
58. Elliot Stein, Jr. 12,500 6,250
59. Teal Fund, L.P. 62,500 31,250
60. R. Scott Williams 20,000
61. Carolyn Wittenbraker 6,000 3,000
62. Pennsylvania Merchant Group 150,000

------------- -----------
TOTAL 3,028,101 900,000
</TABLE>

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

1. Includes the number of Shares and Warrants registered in the names
of the persons set forth hereinafter, as follows: (a) Amir L. Ecker (95,000
Shares and 12,500 Warrants), (b) Amir L. and Maria T. Ecker (7,500 Shares and
3,750 Warrants), (c) Amir L. Ecker IRA (30,000 Shares and 15,000 Warrants),
and (d) The Ecker Family Partnership (27,500 Shares and 6,250 Shares).

2. Includes the number of Shares and Warrants registered in the names
of the persons set forth hereinafter, as follows: (a) Peter J. Faillace, Jr.
(3,000 Shares), (b) Peter J. Faillace, Jr., C/F Matthew Faillace (3,500
Shares), and (c) Peter J. Faillace, Jr., C/F Adam Faillace (3,500 Shares).

3. Includes the number of Shares and Warrants registered in the names
of the persons set forth hereinafter, as follows: (a) Jon D. and Linda W.
Gruber (35,700 Shares and 18,750 Warrants), and (b) Gruber & McBaine
International (50,000 Shares and 25,000 Warrants).

4. Includes the number of Shares registered in the names of the
persons set forth hereinafter, as follows: (a) Penelope S. Hansen (35,000
Shares) and (b) Richard A. Hansen (70,000 Shares).

5. Includes the number of Shares registered in the names of the
persons set forth hereinafter, as follows: (a) Clifford Kalista (47,000
Shares), and (b) Phyllis Kalista (3,000 Shares).

6. Includes the number of Shares registered in the names of the
persons set forth hereinafter, as follows:(a) John J. McAtee, Jr. (84,000
Shares), (b) Elizabeth P. McAtee (8,000 Shares), and (c) John C.C. McAtee
(8,000 Shares). John J. McAtee, Jr. is a member of the Board of Directors of
the Company. Mr. McAtee disclaims beneficial ownership of the 16,000 shares
registered in the names of Elizabeth P. McAtee and John C.C. McAtee, who are
his adult children.

57
<PAGE>

7. Includes the number of Shares and Warrants registered in the names
of the persons set forth hereinafter, as follows: (a) Harry Mittelman (20,100
Shares), (b) Brenda Mittelman (6,000 Shares and 3,000 Warrants), (c) Harry
Mittelman, MD, Trustee, Harry Mittelman, MD, APC Pension Profit Sharing Plan
FBO Harry Mittelman (15,000 Shares and 7,500 Warrants), and (d) Harry
Mittelman, Trustee, The Harry Mittelman Revocable Trust, dated October 22,
1996 (45,000 Shares and 22,500 Warrants.)

8. Mr. Novak is a member of the Board of Directors of the Company.

9. Includes the number of Shares registered in the names of the
persons set forth hereinafter, as follows: (a) Peter S. Rawlings (160,000
Shares), and (b) Sarah P. Rawlings (40,000 Shares).

10. Includes the number of Shares and Warrants registered in the names
of the persons set forth hereinafter, as follows: (a) Perry D. Snavely, Jr.
(40,000 Shares), and (b) Perry D. Snavely IRA (12,500 Shares and 6,250
Warrants.)

58
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

As of the date of this Prospectus, the Company had issued and
outstanding 9,295,694 shares of Common Stock. There are currently 105,000
shares of Common Stock which are restricted shares and 9,190,694 shares which
are freely tradeable or eligible to have the restrictive legend removed
pursuant to Rule 144(k) promulgated under the Securities Act. Further, the
Company has issued and outstanding options to purchase up to 1,715,399 shares
of Common Stock, 1,583,899 of which are currently exercisable, and Warrants
to purchase up to 900,000 shares of Common Stock.

Holders of restricted securities must comply with the requirements of
Rule 144 in order to sell their shares in the open market. In general, under
Rule 144 as currently in effect, any affiliate of the Company and any person
(or persons whose sales are aggregated) who has beneficially owned his or her
restricted shares for at least one year, may be entitled to sell in the open
market within any three-month period in brokerage transactions or to
marketmakers a number of shares that does not exceed the greater of: (i) 1%
of the then outstanding shares of the Company's Common Stock (approximately
92,957 shares immediately after this Offering), or (ii) the average weekly
trading volume reported in the principal market for the Company's Common
Stock during the four calendar weeks preceding such sale. Sales under Rule
144 are also subject to certain limitations on manner of sale, notice
requirement and availability of current public information about the Company.
Nonaffiliates who have held their restricted shares for two years are
entitled to sell their shares under Rule 144 without regard to any of the
above limitations, provided they have not been affiliates of the Company for
the three months preceding such sale.

The Company can make no prediction as to the effect, if any, that sales
of shares of Common Stock or the availability of shares for sale will have on
the market price of Common Stock. Nevertheless, sales of significant amounts
of Common Stock could adversely affect the prevailing market price of the
Common Stock, as well as impair the ability of the Company to raise capital
through the issuance of additional equity securities.

LEGAL MATTERS

Certain matters with respect to the validity of the Shares offered by
the Selling Stockholders will be passed upon for the Company by Matthias &
Berg LLP, Los Angeles, California.

EXPERTS

The audited Consolidated Financial Statements and related Notes and
Schedules of Laser Photonics, Inc. and subsidiaries including the
consolidated balance sheets at December 31, 1996 and 1997, and the related
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for the periods from January 1, 1995 through May 22, 1995, May 23,
1995 through December 31, 1995, and the years ended December 31, 1996 and
1997, included elsewhere in this Prospectus, have been so included in
reliance on the report of Hein + Associates LLP, independent certified public
accountants, given on the authority of such firm as experts in auditing and
accounting.

59
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Commission, a registration statement on
Form S-1 (the "Registration Statement") under the Securities Act with
respect to the Securities offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company
and the Securities, reference is made to the Registration Statement and the
exhibits and schedules filed as a part thereof. Statements made in this
Prospectus as to the contents of any contract or any other document referred
to are not necessarily complete, and, in each instance, reference is made to
the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference to such exhibits. The Registration Statement, including exhibits
and schedules thereto, may be inspected without charge at the Public
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission at 7
World Trade Center, Suite 1300, New York, New York 10048; and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the
Registration Statement and the exhibits and schedules thereto may be obtained
from the Public Reference Room of the Commission at its principal office in
Washington, D.C. at prescribed rates. In addition, such materials may be
accessed electronically at the Commission's site on the World Wide Web,
located at http://www.sec.gov.

The Company is currently subject to the reporting requirements of the
Exchange Act and in accordance therewith files reports, proxy and information
statements and other information with the Commission. Such reports, proxy
and information statements and other information may be inspected and copied
at the Public Reference Room of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington D.C. 20549; and at the regional offices of the
Commission at 7 World Trade Center, Suite 1300, New York, New York 10048; and
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of such materials can be obtained from the Public Reference Section of the
Commission at its principal office in Washington, D.C. at prescribed rates.
In addition, such materials may be accessed electronically at the
Commission's site on the World Wide Web, located at http://www.sec.gov. The
Company intends to furnish its stockholders with annual reports containing
audited financial statements and such other periodic reports as the Company
may determine to be appropriate or as may be required by law.

60
<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1995, 1996 AND 1997
AND FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1998

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE

INDEPENDENT AUDITOR'S REPORT- HEIN + ASSOCIATES LLP . . . . . . . . . . . . F-2

CONSOLIDATED BALANCE SHEETS - December 31, 1996 and 1997, and
March 31, 1998 (unaudited) . . . . . . . . . . . . . . . . . . . . . . F-3

CONSOLIDATED STATEMENTS OF OPERATIONS - For the period from
January 1, 1995 through May 22, 1995, the period from
May 23, 1995 through December 31, 1995, the years ended
December 31, 1996 and 1997, and for the three months ended
March 31, 1997 and 1998 (unaudited). . . . . . . . . . . . . . . . . . F-4

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - For the
period from January 1, 1995 through May 22, 1995, the period from
May 23, 1995 through December 31, 1995, for the years ended
December 31, 1996 and 1997, and for the three months ended
March 31, 1998 (unaudited) . . . . . . . . . . . . . . . . . . . . . . F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS - For the period from
January 1, 1995 through May 22, 1995, the period from
May 23, 1995 through December 31, 1995, for the years ended
December 31, 1996 and 1997, and for the three months ended
March 31, 1997 and 1998 (unaudited). . . . . . . . . . . . . . . . . . F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . F-11

F-1

<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Laser Photonics, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Laser
Photonics, Inc. and subsidiaries (the "Company") as of December 31, 1996 and
1997, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the periods from January 1, 1995 through
May 22, 1995 and May 23, 1995 through December 31, 1995 and the years ended
December 31, 1996 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Laser Photonics, Inc. and
subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for the periods from January 1, 1995 through
May 22, 1995 and May 23, 1995 through December 31, 1995 and the years ended
December 31, 1996 and 1997, in conformity with generally accepted accounting
principles.

As discussed in Note 1, on May 22, 1995, the U.S. Bankruptcy Court entered an
order confirming the Company's Plan of Reorganization. Accordingly, the
accompanying consolidated financial statements have been prepared in
conformity with AICPA Statement of Position 90-7, "Financial Reporting for
Entities in Reorganization under the Bankruptcy Code," for the Successor
Company as a new entity with assets, liabilities, and a capital structure
having carrying values not comparable with prior periods.

/s/ HEIN + ASSOCIATES LLP
- -----------------------------
HEIN + ASSOCIATES LLP
Certified Public Accountants

Orange, California
February 18, 1998, except as to Note 13 which is as of April 10, 1998.

F-2

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998
----------- ------------ -----------
(unaudited)
ASSETS
------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ - $ 1,225,932 $ 814,647
Accounts receivable, net of allowance for doubtful
accounts of $100,000 at December 31, 1996,
and $75,000 at December 31, 1997 and
March 31, 1998 (unaudited) 383,435 343,465 253,830
Inventories 891,011 951,209 889,422
Prepaid expenses and other assets 7,722 91,463 132,264
---------- ---------- ----------
Total current assets 1,282,168 2,612,069 2,090,163
PROPERTY AND EQUIPMENT, net 294,842 141,432 199,195

PATENT COSTS, net of accumulated amortization of
$15,612, $23,965 and $26,053 at December 31, 1996 and
1997, and March 31, 1998 (unaudited), respectively 67,260 60,833 58,745

PREPAID LICENSE FEE, net of accumulated
amortization of $0, $41,667, and $166,667 at December 31,
1996 and 1997 and March 31, 1998 (unaudited), respectively - 3,958,333 3,833,333

EXCESS OF COST OVER NET ASSETS OF ACQUIRED
COMPANIES, net of accumulated amortization of $822,830,
$1,342,614 and $1,472,535 at December 31, 1996 and 1997,
and March 31, 1998 (unaudited), respectively 1,515,739 995,955 866,034

OTHER ASSETS 35,073 39,682 64,821
---------- ---------- ----------

TOTAL ASSETS $3,195,082 $7,808,304 $7,112,291
---------- ---------- ----------
---------- ---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
Notes payable - current portion $696,453 $610,004 $535,875
Accounts payable 698,286 859,559 891,559
Accrued payroll and related expenses 670,481 400,222 368,600
Other accrued liabilities 945,791 631,808 618,592
Deferred revenue - 95,000 -
---------- ---------- ----------
Total current liabilities 3,011,011 2,596,593 2,414,626
NOTES PAYABLE, less current portion 282,559 282,559 282,559
DUE TO RELATED PARTY 1,991,440 - -
---------- ---------- ----------
Total liabilities 5,285,010 2,879,152 2,697,185
---------- ---------- ----------

COMMITMENTS AND CONTINGENCIES (Notes 3, 8, 12
and 13)

STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.01 par value; 15,000,000
shares authorized, 6,162,583, 9,247,083 and
9,295,694 shares outstanding at December 31,
1996 and 1997, and March 31, 1998 (unaudited),
respectively 61,626 92,471 92,957
Additional paid-in capital 5,330,228 14,625,564 14,680,829
Accumulated deficit (7,481,782) (9,788,883) (10,358,680)
---------- ---------- ----------
Total stockholders' equity (deficit) (2,089,928) 4,929,152 4,415,106
---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $3,195,082 $7,808,304 $7,112,291
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.

F-3
<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIOD FROM PERIOD FROM
JANUARY 1, MAY 23, 1995 THREE MONTHS THREE MONTHS
1995 TO TO YEAR ENDED YEAR ENDED ENDED ENDED
MAY 22, DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1995 1995 1996 1997 1997 1998
----------- ------------ ------------ ------------ ------------ ------------
REVENUES (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>

Sales $1,241,814 $1,408,459 $2,901,454 $2,960,330 $937,368 $1,004,500
Other - - - 855,000 - 95,000
---------- ---------- ---------- ---------- -------- ----------
1,241,814 1,408,459 2,901,454 3,815,330 937,368 1,099,500
---------- ---------- ---------- ---------- -------- ----------
COSTS AND EXPENSES:
Cost of sales 1,206,559 1,282,155 2,329,299 2,090,276 649,313 466,832
Selling, general and administrative 696,065 566,805 1,158,841 2,181,304 226,445 603,618
Research and development 136,211 806,021 850,993 685,109 132,541 296,713
Bad debt expense related to
Related Party receivable - - 662,775 48,000 - -
Write off of reorganization
goodwill - - 1,486,823 - - -
Depreciation and amortization 43,010 695,900 1,214,876 741,481 173,854 267,462
---------- ---------- ---------- ---------- -------- ----------
2,081,845 3,350,881 7,703,607 5,746,170 1,182,153 1,634,625
---------- ---------- ---------- ---------- -------- ----------
LOSS FROM OPERATIONS (840,031) (1,942,422) (4,802,153) (1,930,840) (244,785) (535,125)
---------- ---------- ---------- ---------- -------- ----------
OTHER INCOME (EXPENSE):
Interest expense (175,677) (150,109) (392,000) (386,069) (93,294) (42,991)
Interest income - - - 52,280 - 9,519
Other, net 86,759 (31,283) (163,815) (38,572) (37,360) -
---------- ---------- ---------- ---------- -------- ----------
LOSS BEFORE INCOME TAX AND
EXTRAORDINARY ITEM (928,949) (2,123,814) (5,357,968) (2,303,201) (375,439) (568,597)
Income tax expense - - - (3,900) - (1,200)
---------- ---------- ---------- ---------- -------- ----------
LOSS BEFORE EXTRAORDINARY ITEM (928,949) (2,123,814) (5,357,968) (2,307,101) (375,439) (569,797)
Extraordinary item - gain from
reorganization 5,768,405 - - - - -
---------- ---------- ---------- ---------- -------- ----------
NET INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS) $4,839,456 $(2,123,814) $(5,357,968) $(2,307,101) $(375,439) $(569,797)
---------- ---------- ---------- ---------- -------- ----------
---------- ---------- ---------- ---------- -------- ----------

BASIC AND DILUTED LOSS PER SHARE $(0.42) $(0.95) $(0.35) $(0.06) $(0.06)
---------- ---------- ---------- -------- ----------
---------- ---------- ---------- -------- ----------
WEIGHTED AVERAGE SHARES 5,000,000 5,619,668 6,531,190 6,172,591 9,267,083
---------- ---------- ---------- -------- ----------
---------- ---------- ---------- -------- ----------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-4

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 1995 THROUGH DECEMBER 31, 1997
AND THE THREE MONTHS ENDING MARCH 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCES, January 1, 1995 6,312,112 $63,121 $11,318,259 $(18,024,443) $(6,643,063)
Net income - - - 4,839,456 4,839,456
Elimination of old stockholders' interest,
and accumulated deficit (6,312,112) (63,121) (11,318,259) 13,184,987 1,803,607
Issuance of new shares 5,000,000 50,000 2,760,028 - 2,810,028
---------- ------- ---------- ------------ -----------

BALANCES, May 22, 1995 5,000,000 50,000 2,760,028 - 2,810,028
Net loss - - - (2,123,814) (2,123,814)
---------- ------- ---------- ------------ -----------

BALANCES, December 31, 1995 5,000,000 50,000 2,760,028 (2,123,814) 686,214
Conversion of convertible debentures and
related accrued interest 538,583 5,386 519,896 - 525,282
Exercise of stock options 268,000 2,680 700,820 - 703,500
Stock issued for prior year services 148,500 1,485 171,640 - 173,125
Stock issued for rent 30,000 300 59,700 - 60,000
Stock issued as compensation 177,500 1,775 264,475 - 266,250
Capital contribution from Helionetics - - 853,669 - 853,669
Net loss - - - (5,357,968) (5,357,968)
---------- ------- ---------- ------------ -----------

BALANCES, December 31, 1996 6,162,583 61,626 5,330,228 (7,481,782) (2,089,928)
Sale of stock and warrants, net of expenses 2,179,500 21,795 6,237,282 - 6,259,077
Stock issued for services 105,000 1,050 94,575 - 95,625
Stock issued to purchase debt and accrued
interest 800,000 8,000 2,151,708 - 2,159,708
</TABLE>

(continued)

F-5

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 1, 1995 THROUGH DECEMBER 31, 1997
AND THE THREE MONTHS ENDING MARCH 31, 1998 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Capital contributions from Helionetics - - 140,448 - 140,448
Compensation recognized upon issuance of
stock options - - 671,323 - 671,323
Net loss - - - (2,307,101) (2,307,101)
---------- ------- ---------- ------------ -----------

BALANCES, December 31, 1997 9,247,083 92,471 14,625,564 (9,788,883) 4,929,152
Stock issued for services (unaudited) 20,000 200 19,800 - 20,000
Sale of stock, net of expenses (unaudited) 28,611 286 35,465 - 35,751
Net loss (unaudited) - - - (569,797) (569,797)
---------- ------- ---------- ------------ -----------

BALANCES, March 31, 1998 (unaudited) 9,295,694 $92,957 $14,680,829 $(10,358,680) $4,415,106
---------- ------- ---------- ------------ -----------
---------- ------- ---------- ------------ -----------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-6

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM PERIOD FROM
JANUARY 1, 1995 MAY 23, 1995 FOR THE THREE FOR THE THREE
THROUGH THROUGH YEAR ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED
MAY 22, DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1995 1995 1996 1997 1997 1998
--------------- ------------- ------------ ------------ ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $4,839,456 $(2,123,814) $(5,357,968) $(2,307,101) $(375,439) $(569,797)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization 43,010 695,900 1,214,876 741,581 173,854 267,462
Write off of reorganization
goodwill - - 1,486,823 - - -
Bad debt expense related to
Related Party receivable - - 662,775 48,000 - -
Allowance for doubtful accounts 23,604 (141,200) - (25,000) - -
Stock issued to pay legal fees - - - - 39,375 20,000
Stock issued to pay interest - - 25,282 168,268 - -
Stock issued for services - - - 95,625 - -
Stock issued to pay rent - - 60,000 - - -
Stock issued as compensation - - 266,250 - - -
Compensation recognized upon
issuance of stock options - - - 671,323 - -
Gain on sale of marketable
securities - (86,759) - - - -
Gain on reorganization (5,768,405) - - - - -
Changes in operating assets and
liabilities:
Accounts receivable 70,808 296,348 (127,066) 64,970 1,884 115,764
Inventories (31,422) 312,874 (35,147) (60,198) 9,362 61,787
Prepaid expenses and other
assets (10,552) 37,838 16,838 (88,350) 7,722 (92,069)
Accounts payable 89,779 382,733 17,830 161,273 190,847 32,000

(continued)

F-7
</TABLE>

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

PERIOD FROM PERIOD FROM
JANUARY 1, 1995 MAY 23, 1995 FOR THE THREE FOR THE THREE
THROUGH THROUGH YEAR ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED
MAY 22, DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1995 1995 1996 1997 1997 1998
--------------- ------------- ------------ ------------ ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Accrued payroll and related
expenses 33,928 167,940 317,923 (270,259) 148,394 (31,622)
Other accrued liabilities 693,704 (899,812) 440,995 (313,983) (239,041) (13,216)
Deferred revenue - - - 95,000 - (95,000)
Due to parent company - (199,189) - - - -
--------------- ------------- ------------ ------------ ------------- -------------
Net cash used in operating activities (16,090) (1,557,141) (1,010,589) (1,018,851) (43,042) (304,691)
--------------- ------------- ------------ ------------ ------------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisitions of property and
equipment (17,286) (4,702) (16,024) (37,541) (22,226) (68,216)
Proceeds from disposal of property
and equipment - - - 19,174 - -
Acquisition of patents and licenses - (11,845) - (4,001,926) - -
(Advances to) payments from related
parties - - (292,900) (48,000) 65,268 -
Proceeds from sale of marketable
securities - 150,701 - - - -
--------------- ------------- ------------ ------------ ------------- -------------
Net cash provided by (used in)
investing activities (17,286) 134,154 (308,924) (4,068,293) 43,042 (68,216)
--------------- ------------- ------------ ------------ ------------- -------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable - 500,000 92,952 71,094 - -
Payments on notes payable - (31,888) (67,647) (157,543) - (74,129)
Capital contributions from Parent
Company - - 529,622 140,448 - -

(continued)

F-8
</TABLE>

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

CASH AND CASH EQUIVALENTS,
beginning of period 49,337 1,015,961 61,086 - - 1,225,932
------------ ---------- ---------- ----------- ---------- ----------

CASH AND CASH EQUIVALENTS,
end of period $1,015,961 $61,086 $- $1,225,932 $- $814,647
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------

SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $169,125 $204,260 $189,021 $158,939 $27,498 $29,833
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
Income taxes $ - $ - $ - $ - $ - $ -
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
Reorganization items:
Elimination of old equity $8,500,961 $ - $ - $ - $ - $ -
Record fixed assets at fair value (425,834) - - - - -
Contribution of AccuLase assets
and liabilities 892,882 - - - - -
Reorganization goodwill 2,136,829 - - - - -
Elimination of debt 6,343,613 - - - - -
Other 487,567 - - - - -

(continued)

</TABLE>

F-9

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>

Non-cash financing transactions:
Conversion of convertible
debentures to common stock $ - $ - $500,000 $ - $ - $ -
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
Stock issued for accrued prior year
services $ - $ - $173,125 $ - $ - $ -
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
Reclassification of Helionetics
advances to Additional Paid-in Capital $ - $ - $324,047 $ - $ - $ -
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
Stock issued to purchase debt and
accrued interest $ - $ - $ - $2,159,708 $ - $ -
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-10

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

1. ORGANIZATION AND NATURE OF OPERATIONS:

NATURE OF OPERATIONS - Laser Photonics, Inc. and subsidiaries (the Company)
is principally engaged in the development, manufacture and marketing of
laser systems and accessories for medical and scientific applications and,
through its approximately 76% owned subsidiary, AccuLase, Inc., is
developing excimer laser and fiber optic equipment and techniques directed
toward the treatment of coronary heart disease.

As of December 31, 1995 and 1996, the Company was an approximately 75% and
61% owned subsidiary of Helionetics, Inc. (Helionetics), respectively.
During 1997, Helionetics sold 2,000,000 shares of the Company's common
stock and the Company issued 3,084,500 new shares of common stock, thereby
reducing Helionetics ownership to approximately 19% as of December 31,
1997.

BANKRUPTCY FILING AND PLAN OF REORGANIZATION - On May 13, 1994, the Company
filed a voluntary petition of reorganization with the U.S. Bankruptcy Court
in the Middle District of Florida for protection under Chapter 11 of
Title 11 of the U.S. Bankruptcy Code. The Company was subsequently
authorized to conduct its business operations as a debtor-in-possession
subject to the jurisdiction of the Bankruptcy Court.

On May 22, 1995, the Company's Plan of Reorganization (the Plan) was
confirmed by the Bankruptcy Court. The implementation of the terms of the
Plan resulted in the Company's adoption of "fresh start" accounting as
described in Statement of Position 90-7, "FINANCIAL REPORTING BY ENTITIES
IN REORGANIZATION UNDER THE BANKRUPTCY CODE." The Plan included, among
other things, the following provision:

(a) Helionetics paid the Company $1,000,000 in cash, $215,000 in
expenses, and transferred to the Company all of Helionetics'
rights and interest in and to 76.1% of the common stock of
AccuLase, Inc. In addition, Helionetics committed to fund the
cost of research and development of AccuLase's excimer laser
technology for a minimum of two years from the effective date. In
exchange for the foregoing consideration, the Company issued to
Helionetics shares of the Company's new common stock such that,
following the issuance of all stock to be issued under the Plan,
Helionetics owned 75% of new common stock of the Company.

(b) In exchange for the forgiveness of certain unsecured debt, the
Company issued to unsecured creditors shares of the Company's new
stock such that, following the issuance of all new stock to be
issued under the Plan, the unsecured creditors owned 20% of new
common stock of the Company.

(c) The existing shareholders of the Company had their shares
canceled in exchange for the issuance of shares of the Company's
new common stock equal to 5% of the new common stock of the
Company.

F-11

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

The acquisition of AccuLase has been accounted for as a purchase and the
results of operations of AccuLase have been included in these consolidated
financial statements since May 23, 1995.

FRESH START REPORTING - Under the provisions of SOP 90-7, the Company is
required to adopt fresh start reporting as of May 22, 1995 since the
reorganization value (approximate fair value at the date of reorganization)
was less than the total of all postpetition liabilities and allowed
prepetition claims, and holders of existing voting shares before the
effective date received less than 50% of the voting shares of the emerging
entity. Accordingly, the statement of operations for the period ended May
22, 1995 reflects the effects of the forgiveness of debt resulting from
confirmation of the plan of reorganization and the effects of the
confirmation of the Plan and the effects of the adjustments to restate
assets and liabilities to reflect the reorganization value of reorganized
Laser Photonics, Inc.

In adopting fresh start reporting, the Company was required to determine
its reorganization value, which represented the fair value of the entity
before considering liabilities and approximated the amount a willing buyer
would pay for the assets of the Company immediately after its emergence
from Chapter 11 status. The reorganization value was based upon the
consideration given by Helionetics to acquire a 75% interest in the
Company. The purchase price of $1,894,122 was determined based upon cash
paid and the carrying value of the 76.1% interest in AccuLase owned by
Helionetics.

All assets and liabilities were restated to reflect their reorganization
value in accordance with procedures specified in Accounting Principles
Board Opinion 16 "Business Combinations" (APB 16) as required by SOP 90-7.
The portion of the reorganization value that could not be attributed to
specific tangible or identified intangible assets was classified as
reorganization value in excess of amounts allocable to identifiable assets
("Reorganization Goodwill") and was being amortized over five years.
Because of the magnitude of the Company's losses since emerging from
bankruptcy the balance was written off as of December 31, 1996.

In addition, the accumulated deficit of the Company was eliminated and its
capital structure was recast in conformity with the approved plan. As such,
the consolidated financial statements of the Company as of December 31,
1995 and for the seven and one half months then ended represent that of the
Successor Company which, in effect, is a new entity with assets,
liabilities and a capital structure having carrying values not comparable
with prior periods. The accompanying consolidated financial statements for
the five and one half months ended May 22, 1995 represent that of the
Predecessor Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries, Laser
Analytics, Inc., and AccuLase, Inc. All significant intercompany balances
and transactions have been eliminated in consolidation.

F-12

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

STATEMENT OF CASH FLOWS - For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and circumstances
indicate that the cost of long-lived assets may be impaired, an evaluation
of recoverability would be performed. If an evaluation is required, the
estimated future undiscounted cash flows associated with the asset would be
compared to the asset's carrying amount to determine if a write-down to
market value or discounted cash flow value is required.

STOCK BASED COMPENSATION - The Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB25) and related interpretations in accounting for its employee stock
options. In accordance with FASB Statement No. 123 "Accounting for
Stock-Based Compensation" (FASB123), the Company will disclose the impact
of adopting the fair value accounting of employee stock options.
Transactions in equity instruments with non-employees for goods or services
have been accounted for using the fair value method as prescribed by
FASB123.

REVENUE RECOGNITION - Revenues are recognized upon shipment of products to
customers. Deferred revenue relates to payments received under the Baxter
Agreement (See Note 12) and is being recognized as research and development
costs are incurred.

INVENTORIES - Inventories are stated at the lower of cost or market,
determined by the first-in, first-out method.

PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation of property and equipment is calculated using the
straight-line method over the estimated useful lives (ranging from 3 to 7
years) of the respective assets. The cost of normal maintenance and repairs
is charged to operating expenses as incurred. Material expenditures which
increase the life of an asset are capitalized and depreciated over the
estimated remaining useful life of the asset. The cost of properties sold,
or otherwise disposed of, and the related accumulated depreciation or
amortization are removed from the accounts, and any gains or losses are
reflected in current operations.

INTANGIBLE ASSETS - Patents and license fees are carried at cost less
accumulated amortization which is calculated on a straight-line basis over
the estimated useful lives of the assets, which range from eight to twelve
years. Reorganization goodwill represents the portion of the reorganization
value that could not be attributed to specific tangible or identified
intangible assets. The balance was being amortized over 5 years. Because of
the magnitude of the Company's losses since emerging from bankruptcy, the
balance of $1,486,823 was written off as of December 31, 1996.

Excess of cost over net assets of acquired company represents the goodwill
recorded by Helionetics for the purchase of AccuLase that has been "pushed
down" to the Company. The balance is being amortized using a straight-line
basis over 5 years.

F-13

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

ACCRUED WARRANTY COSTS - Estimated warranty costs are provided for at the
time of sale of the warranted product. The Company extends warranty
coverage for one year from the time of sale.

USE OF ESTIMATES - The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions that
affect the amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.

The Company's financial statements are based upon a number of significant
estimates, including the allowance for doubtful accounts, obsolescence of
inventories, the estimated useful lives selected for property and equipment
and intangible assets, realizability of deferred tax assets, estimated
future warranty costs, penalties and interest for delinquent payroll taxes
and penalties for ERISA violations. Due to the uncertainties inherent in
the estimation process, it is at least reasonably possible that these
estimates will be further revised in the near term and such revisions could
be material.

RESEARCH AND DEVELOPMENT - Research and development costs are charged to
operations in the period incurred.

CONCENTRATIONS OF CREDIT RISK - Credit risk represents the accounting loss
that would be recognized at the reporting date if counterparties failed
completely to perform as contracted. Concentrations of credit risk (whether
on or off balance sheet) that arise from financial instruments exist for
groups of customers or counterparties when they have similar economic
characteristics that would cause their ability to meet contractual
obligations to be similarly effected by changes in economic or other
conditions described below. In accordance with FASB Statement No. 105,
DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE-
SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK,
the credit risk amounts shown do not take into account the value of any
collateral or security.

The Company operates primarily in one industry segment and a geographic
concentration exists because the Company's customers are generally located
in the United States. Financial instruments that subject the Company to
credit risk consist principally of accounts receivable.

As of December 31, 1997, the Company maintained cash in banks that was
approximately $1,046,000 in excess of the federally insured limit.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair values for
financial instruments under FAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS, are determined at discrete points in time based on
relevant market information. These estimates involve uncertainties and
cannot be determined with precision. The estimated fair values of the
Company's financial instruments, which includes all cash, accounts
receivables, accounts payable, long-term debt, and other debt, approximates
the carrying value in the financial statements at December 31, 1997.

INCOME TAXES - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax consequences

F-14

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109,
the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

LOSS PER COMMON AND COMMON EQUIVALENT SHARES - In February 1997, the
Financial Accounting Standards Board issued a new statement titled
"Earnings per Share" ("FASB128"). The new statement is effective for both
interim and annual periods ending after December 15, 1997. FASB128 replaces
the presentation of primary and fully diluted earnings per share with the
presentation of basic and diluted earnings per share. Basic earnings per
share excludes dilution and is calculated by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings
of the entity. Common stock equivalents for all periods presented were
anti-dilutive and excluded in the earnings per share computation. The
earnings (loss) per share prior to reorganization is not presented as the
results are not meaningful due to debt discharge, the issuance of new
common stock and fresh start reporting.

IMPACT OF RECENTLY ISSUED STANDARDS - The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standards 130,
"Reporting Comprehensive Income" and Statement of Financial Accounting
Standards 131 "Disclosures About Segments of an Enterprise and Related
Information." Statement 130 establishes standards for reporting and display
of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except
those resulting from investments by owners and distributions to owners.
Among other disclosures, Statement 130 requires that all components of
comprehensive income shall be classified based on their nature and shall be
reported in the financial statements in the period in which they are
recognized. A total amount for comprehensive income shall be displayed in
the financial statements where the components of other comprehensive income
are reported. Statement 131 supersedes Statement of Financial Accounting
Standards 14 "Financial Reporting for Segments of a Business Enterprise."
Statement 131 establishes standards on the way that public companies report
financial information about operating segments in annual financial
statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. Statement 131 defines operating segments as components of a
company about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance.

Statements 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Results of operations and financial position
will be unaffected by implementation of these standards.

F-15

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

INTERIM FINANCIAL INFORMATION - The March 31, 1997 and 1998 financial
statements have been prepared by the Company without audit. In the opinion
of management, the accompanying unaudited financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary for a
fair presentation of the Company's financial position as of March 31, 1998,
and the results of their operations and cash flows for the three month
periods ended March 31, 1997 and 1998. The results of operations for the
three month periods ended March 31, 1997 and 1998 are not necessarily
indicative of those that will be obtained for the entire fiscal year.

3. BASIS OF PRESENTATION:

As shown in the accompanying financial statements, the Company has reported
significant net losses for the periods ended December 31, 1997, 1996 and
1995 resulting in an accumulated deficit of $9,788,883 as of December 31,
1997.

During 1997, the Company took steps to mitigate the losses and enhance its
future viability, as follows: AccuLase entered into a Master Technology
Agreement with Baxter Healthcare Corporation (see Note 12) under which
AccuLase has received $950,000 and will receive an additional $600,000 plus
purchase commitments and future royalty payments. Also during 1997, the
Company sold 2,179,500 shares of common stock for net proceeds of
$6,259,077 and issued 800,000 shares of common stock to purchase debt of a
subsidiary in the amount of $2,159,708. Finally, the Company's Board of
Directors authorized management to pursue the sale of the assets of Laser
Photonics, Inc. and Laser Analytics, Inc. or consider the closure of their
operations. Management believes that these actions will allow the Company
to continue as a going concern.

4. INVENTORIES:

Inventories are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- ----------
1996 1997 1998
---------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
Raw materials $1,306,420 $1,255,107 $1,247,257
Work-in-process 456,330 435,854 426,573
Finished goods 124,560 79,772 68,116
---------- ---------- ----------
1,887,310 1,770,733 1,741,946
Allowance for obsolescence (996,299) (819,524) (852,524)
---------- ---------- ----------
$891,011 $951,209 $889,422
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

F-16
<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

5. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------- -----------
1996 1997 1998
-------- -------- -----------
(unaudited)
<S> <C> <C> <C>
Machinery and equipment $651,471 $248,439 $294,438
Furniture and fixtures 32,753 53,708 77,831
-------- -------- --------
684,224 302,147 372,269
Less accumulated
depreciation (389,382) (160,715) (173,074)
-------- -------- --------
$294,842 $141,432 $199,195
-------- -------- --------
-------- -------- --------
</TABLE>

6. OTHER ACCRUED LIABILITIES:

Other accrued liabilities consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------- ------------
1996 1997 1998
-------- ------- -----------
(unaudited)
<S> <C> <C> <C>
Customer deposits $308,408 $76,588 $ -
Accrued professional fees 127,842 - -
Accrued property taxes 113,721 111,962 111,962
Other accrued liabilities 395,820 443,258 506,630
-------- -------- --------
$945,791 $631,808 $618,592
-------- -------- --------
-------- -------- --------
</TABLE>

7. NOTES PAYABLE, LONG-TERM DEBT, AND CONVERTIBLE DEBENTURES:

Notes payable and long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- ----------
1996 1997 1998
--------- --------- ----------
(unaudited)
<S> <C> <C> <C>
Notes payable - unsecured creditors, interest at
prime rate, quarterly interest only payments
beginning October 1, 1995, principal due
October 1, 1999, unsecured. $282,559 $282,559 $282,559
</TABLE>

F-17

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------- ----------
1996 1997 1998
--------- --------- ----------
(unaudited)
<S> <C> <C> <C>

Notes payable - unsecured creditors, interest
at prime rate, quarterly interest only
payments beginning October 1, 1995, principal
due October 1, 1999, unsecured. Payments
past due. 165,298 165,298 165,298

Note payable - creditor, interest at 10%,
monthly interest only payments through May 5,
1997, thereafter monthly interest and principal
payments of $6,384 through May 1999, unsecured.
Payments past due. 138,368 127,860 116,632

Note payable - U.S. Treasury, interest at 9%,
payable in monthly principal and interest
installments of $5,000 through December 1999,
unsecured. Payments past due. 158,387 131,094 121,613

Notes payable - various creditors, interest at
9%, payable in various monthly principal and
interest installments through July 2000,
unsecured. Payments past due. 69,234 100,726 49,252

Note payable - creditor, interest at 9%,
payable in monthly principal and interest
installments of $1,258 through January 2001,
collateralized by personal property of the
Company. Payments past due. 50,583 48,804 46,858

Note payable - bank, interest at 9.75%,
payable in monthly principal and interest
installments of $636 through February 1999,
unsecured. Payments past due. 21,641 - -

Note payable - factor, interest at 36.5%,
due on demand, secured by all assets of
the Company (Note 12). 76,150 - -

Note payable - other, no interest, due on
demand, unsecured. 16,792 36,222 36,222
-------- -------- --------
979,012 892,563 818,434
Less current maturities (696,453) (610,004) (535,875)
-------- -------- --------
$282,559 $282,559 $282,559
-------- -------- --------
-------- -------- --------
</TABLE>

F-18

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

As a result of the past due payments on some of the notes listed above, the
notes are callable at the option of the holder. Therefore, these notes have
been classified as current. Aggregate maturities required on long-term debt
at December 31, 1997 are due in future years as follows:

In July and November 1995, the Company sold an aggregate of $500,000 in six
month convertible, secured notes in a private transaction to four offshore
corporations. Of the resulting proceeds, $300,000 was retained by the
Company, $100,000 was paid to Helionetics in compensation for its corporate
guarantee and pledge of collateral, and $100,000 was paid to Helionetics
toward the accruing Helionetics debt owed by the Company to Helionetics.
The notes bear interest at 12% per annum, with principal and interest all
due and payable on maturity. The notes were collateralized by the corporate
guarantee of Helionetics, the Company's parent, coupled with a pledge of
300,000 shares of Tri-lite, Inc. (a subsidiary of Helionetics) stock and
500,000 shares of the Company's common stock held by Helionetics. The
notes provide that the holders may convert into an aggregate of 512,500
shares of the common stock of the Company, at a conversion price of $0.96
per share. In January and April 1996, the notes were converted to shares of
common stock of the Company.

8. DUE TO/FROM PARENT COMPANY:

The amounts financed by Helionetics are due on demand with interest at the
prime rate plus 2%. Helionetics is a defendant in class action litigation
seeking substantial damages allegedly resulting from the purported
violation of Federal securities laws. In the opinion of management of
Helionetics, the ultimate outcome of these actions will not have a material
impact on the Company's financial statements.

During April 1997, Helionetics filed a voluntary petition of reorganization
with the U.S. Bankruptcy Court in the Central District of California for
protection under Chapter 11 of Title 11 of the U.S. Bankruptcy Code. As a
result, the Company wrote off its $662,775 receivable from Helionetics as
of December 31, 1996.

On September 30, 1997, an investment banker purchased from the Helionetics
bankruptcy estate the note payable from AccuLase to Helionetics in the
amount of $2,159,708 including accrued interest. During October 1997, the
investment banker sold such note to the Company for 800,000 shares of the
Company's common stock.

F-19

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

9. STOCKHOLDERS' EQUITY:

In conjunction with the issuance of convertible notes payable in 1995, the
Company granted to the note holders a transferable one year option to
purchase 375,000 additional shares of the Company's common stock,
exercisable 134,000 shares at $2.25 per share, 134,000 shares at $3.00 per
share, and 107,000 shares at $3.75 per share. Shares deliverable upon
option exercise are to be provided either by the Company as new issuance
shares, or by Helionetics out of the block of shares it holds for
investment, at the sole option of Helionetics. During July and August of
1996, 268,000 of these options were exercised. New shares were issued for
proceeds of $703,500. The remaining 107,000 options expired during 1996.

On January 2, 1996, the Company adopted the 1995 Non-Qualified Option Plan
for key employees, officers, directors, and consultants, and provided for
up to 500,000 options to be issued thereunder. The option exercise price
shall not be less than 100% of market value on the date granted, 40% of
granted options vest immediately and may be exercised immediately; 30% vest
and may be exercised beginning 12 months after grant; and the remaining 30%
vest and may be exercised beginning 24 months from grant.

No options may be exercised more than 10 years after grant, options are not
transferable (other than at death), and in the event of complete
termination "for cause" (other than death or disability) or "voluntary"
termination, all "unvested" options automatically terminate.

In January 1996, the Board approved the grant of options to certain key
employees and consultants, to purchase 335,000 shares of common stock under
the 1995 Non-Qualified Option Plan. On the date of grant, 110,000 options
were vested and the balance will vest over two years. The options were
granted with an exercise price of $1.50 per share and are exercisable
through January 2006.

In February 1996, the Board approved the issuance of 50,000 shares of
common stock to the Company's chairman for consulting services rendered,
and 98,500 shares of common stock and options to purchase 62,500 shares of
common stock to consultants for services rendered. The options were granted
with an exercise price of $2.50 per share, are fully vested and are
exercisable through February 2001. The accompanying financial statements
include expense of $173,125 as of December 31, 1995, representing the
agreed-upon value of the services rendered.

In October 1996, the Board approved the issuance of 125,000 shares of
common stock to the Company's chairman for consulting services rendered and
52,500 shares of common stock to employees and consultants for services
rendered. The Company has recognized $266,250 in compensation expense
related to these services for the year ended December 31, 1996.

During May 1997, the Board granted options to purchase 250,000 shares of
common stock at $0.50 per share to the Company's president. The options
vest immediately and expire in May 2002. The Company has recognized $62,500
in compensation expense related to these options for the year ended
December 31, 1997.

F-20

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

On July 1, 1997, the Board approved the grant of options to certain
employees and consultants to purchase 108,500 shares of common stock at an
exercise price of $1.00 per share. The options vest immediately and expire
in July 2007. The Company has recognized $56,030 in compensation expense
related to these options for the year ended December 31, 1997.

During August 1997, the Board granted options to purchase 211,899 shares of
common stock at $1.25 per share to certain officers and directors of the
Company. The options vest immediately and expire in August 2002. The
Company has recognized $172,168 in compensation expense related to these
options for the year ended December 31, 1997.

In August 1997, the Company's board of directors authorized the sale of
750,000 shares of common stock at $1.25 per share through an investment
banker ("the investment banker") pursuant to Regulation D under the
Securities Act of 1933. As of December 31, 1997, the Company has sold
679,500 shares of common stock for $849,375.

In October 1997, the Company's board of directors authorized the sale of
1,500,000 shares of common stock at $4.00 per share through an investment
banker ("the investment banker") pursuant to Regulation D under the
Securities Act of 1933. Each share issued had attached a share purchase
warrant to purchase a share of common stock for each two shares purchased
in the offering for a period of five years at $4.00 per share. As of
December 31, 1997, the Company has sold 1,500,000 shares of common stock
for $6,000,000. In connection with this sale, the Company granted the
investment banker warrants to purchase 150,000 and up to an additional
75,000 shares of common stock at $4.00 per share for a period of five
years.

On October 10, 1997, the Board granted options to a former director to
purchase 100,000 shares of common stock at an exercise price of $0.75. On
October 31, 1997, the Board granted options to a former director to
purchase 20,000 shares of common stock at an exercise price of $1.00. These
options vest immediately and expire in October 2004. The Company has
recognized $380,625 as compensation expense related to these options for
the year ended December 31, 1997.

F-21

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

A summary of option transactions during 1995, 1996 and 1997 follows:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE EXERCISE
SHARES PRICE
----------- -----------------
<S> <C> <C>
Outstanding at January 1, 1995 - $ -
Granted 375,000 3.00
Expired/canceled - -
---------- -----------------

Outstanding at December 31, 1995 375,000 3.00
Granted 397,500 1.66
Exercised (268,000) 2.63
Expired/canceled (107,000) 3.75
---------- ------------------

Outstanding at December 31, 1996 397,500 1.66
Granted 690,399 0.86
Expired/canceled - -
---------- ------------------

Outstanding at December 31, 1997 1,087,899 1.00
Granted (unaudited) - -
Expired (unaudited) - -
---------- ------------------

Outstanding at March 31, 1998 1,087,899 $ 1.00
---------- ------------------
---------- ------------------
</TABLE>

At December 31, 1997, options to purchase 975,399 shares were exercisable
at prices ranging from $0.50 to $2.50 per share. The remaining 112,500
options outstanding become exercisable in 1998 at $1.50 per share.

As stated in Note 2, the Company has not adopted the fair value accounting
prescribed by FASB123 for employees. Had compensation cost for stock
options issued to employees been determined based on the fair value at
grant date for awards in 1997 and 1996 consistent with the provisions of
FASB123, the Company's net loss and net loss per share would have increased
to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1997
----------- ------------
<S> <C> <C>
Net loss $(5,502,273) $(2,965,259)
----------- ------------
----------- ------------
Net loss per share $ (0.98) $ (0.45)
----------- ------------
----------- ------------
</TABLE>

F-22

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

Pro forma information for the quarter ended March 31, 1998 is the same as
the Company's reported net loss and net loss per share.

The fair value of each option is estimated on the date of grant using the
present value of the exercise price and is pro-rated based on the percent
of time from the grant date to the end of the vesting period. The weighted
average fair value of the options granted during 1997 and 1996 was $1.75
and $1.08, respectively. The following assumptions were used for grants in
1997: risk-free interest rate equal to the yield on government bonds and
notes with a maturity equal to the expected life for the month the options
were granted; expected lives of two years; dividend yield of 0%; and
expected volatility of 134%. The following assumptions were used for grants
in 1996: risk-free interest rate of 4.9%; expected lives of two years;
dividend yield of 0%; and expected volatility of 148%.

AccuLase has reserved 800,000 shares of its common stock for issuance under
a noncompensatory employee stock option plan. Options are exercisable over
a period of up to ten years from the date of grant. During 1993 and 1992,
5,000 and 28,500 options were granted at an exercise price of $.10 and
$2.80 per share, respectively. At December 31, 1997, all outstanding
options are exercisable.

On February 4, 1998, the majority of the stockholders of the Company voted
to increase the authorized number of common shares to 15,000,000.

10. INCOME TAXES:

Income tax expense (benefit) is comprised of the following:

<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MAY 23, 1995 JANUARY 1,
TO 1995 TO YEAR ENDED YEAR ENDED
DECEMBER 31, MAY 22, DECEMBER 31, DECEMBER 31,
1995 1995 1996 1997
------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Current
Federal $ - $ - $ - $ -
State - - - 3,900
------------- ----------- ------------ ------------
- - - 3,900
------------- ----------- ------------ ------------

Deferred
Federal - - - -
State - - - -
------------- ----------- ------------ ------------
- - - -
------------- ----------- ------------ ------------
Income tax expense $ - $ - $ - $3,900
------------- ----------- ------------ ------------
------------- ----------- ------------ ------------
</TABLE>

F-23

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets (liabilities):
Accounts receivable, principally due to
allowances for doubtful accounts $37,000 $29,000
Tax credit carryforwards 283,000 329,000
Compensated absences, principally due to
accrual for financial reporting purposes 2,000 8,000
Warranty reserve, principally due to
accrual for financial reporting purposes 34,000 39,000
Net operating loss carryforwards 4,848,000 5,301,000
Inventory obsolescence reserve 372,000 316,000
Depreciation and amortization 29,000 21,000
Capitalized research and development costs 309,000 323,000
Stock option compensation - 260,000
Accrued expenses - 35,000
Deferred revenue - 39,000
----------- -----------
Total gross deferred tax assets 5,914,000 6,700,000
Less valuation allowance (5,914,000) (6,700,000)
----------- -----------
Net deferred tax assets $ - $ -
----------- -----------
----------- -----------
</TABLE>

At December 31, 1997, Laser Photonics and AccuLase had net operating loss
carryforwards of approximately $5,608,000 and $11,817,000, which expire in
various years through 2012. These net operating losses are subject to
annual limitations imposed by the Internal Revenue Code due to change in
control of the Companies.

F-24

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

Total income tax expense differed from the amounts computed by applying the
U.S. federal statutory tax rates to pre-tax income as follows:

<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JANUARY 1, MAY 23,1995
1995 TO TO YEAR ENDED YEAR ENDED
MAY 22, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995 1996 1997
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total expense (benefit)
computed by applying the
U.S. statutory rate (34.0%) (34.0%) (34.0%) (34.0%)
Permanent differences - 10.8 47.8 25.7
State income taxes - - - .2
Effect of valuation allowance 34.0 23.2 (13.8) 8.3
---------- ----------- ----------- -----------
- % - % - % 0.2%
---------- ----------- ----------- -----------
</TABLE>

11. RELATED PARTY TRANSACTIONS:

The Company advanced $48,000 to an affiliated company which was
subsequently written off during 1997.

12. COMMITMENTS AND CONTINGENCIES:

LEASES - The Company leases its main facility under a month-to-month
operating lease which requires monthly payments of $11,000. AccuLase leases
its facility under a month-to-month operating lease which requires minimum
monthly payments of $4,900. The Company's other subsidiary leases its
facility under a non-cancelable operating lease which expires during fiscal
2001. Rental expense for these leases amounted to $346,260, $376,147 and
$302,800 for the years ended December 31, 1997, 1996 and 1995,
respectively. The future annual minimum payments under the non-cancelable
lease are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1998 67,000
1999 67,000
2000 73,000
2001 73,000
2002 -
--------
Minimum lease payments $280,000
--------
--------
</TABLE>

FACTOR AGREEMENT - In June 1997, the Company entered into an agreement to
factor up to $600,000 in accounts receivable, $150,000 minimum per month.
The Company is entitled to a rebate on the discount less base commission
and total daily funds charge. The base commission is 1.5% plus 1.375% for
each

F-25

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

30 day period or part thereof the account is outstanding. The daily funds
rate is prime plus 3% divided by 360. The factor may withhold reserve
against the face value of accounts outstanding at its discretion.

As of December 31, 1997, the face amount of receivables sold was $160,235.

ERISA VIOLATIONS - The Company is in violation of several provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) primarily because
employee contributions to the Company's 401(k) plan have not been remitted
to the plan's trust. As of December 31, 1997, the Company has accrued
approximately $90,000 for employee contributions, lost plan investment
earnings and penalties which may be assessed by the U.S. Department of
Labor. Subsequent to year end, the Company paid $91,385 to the plan for
employee contributions and lost plan investment earnings.

DELINQUENT FEDERAL AND STATE PAYROLL TAXES - The Company is delinquent in
remitting Federal and state payroll taxes. As of December 31, 1997, the
Company has accrued approximately $60,000 for payroll taxes which includes
interest and penalties related to the delinquent payments. Subsequent to
year end the Company has paid $48,069 in principal and interest related to
delinquent payroll taxes.

BAXTER AGREEMENT - On August 19, 1997, AccuLase executed a series of
Agreements with Baxter Healthcare Corporation ("Baxter"). These Agreements
provided among other things for the following:

1. AccuLase granted to Baxter an exclusive world-wide right and license
to manufacture and sell the AccuLase Laser and disposable products
associated therewith, for the purposes of treatment of cardiovascular
and vascular diseases.

2. In exchange Baxter agreed to:

a. Pay AccuLase $700,000 in cash at closing, agreed to pay AccuLase
an additional $250,000 in cash three months after closing, and
agreed to pay an additional $600,000 upon delivery of the first
two commercial excimer lasers.

b. To pay AccuLase a royalty equal to 10% of the "End User Price"
for each disposable product sold, or if the laser equipment is
sold on a per treatment basis, the "imputed" average sale price
based on "non" per procedure sales.

c. To purchase from AccuLase excimer laser systems for
cardiovascular and vascular disease.

d. To fund the total cost of obtaining regulatory approvals
world-wide for the use of the AccuLase laser and delivery
systems for the treatment of cardiovascular and vascular disease.

e. To fund all sales and marketing costs related to the
cardiovascular and vascular business.

3. AccuLase agreed to manufacture the excimer laser system to
specifications for Baxter. Baxter agreed to pay a fixed price per
laser for the first 8 lasers to be manufactured by AccuLase, and
thereafter

F-26

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO DECEMBER 31, 1997 IS UNAUDITED)

to pay unit prices on a reducing scale of from $75,000 to $45,000 per
laser, based upon the annual number of lasers sold to Baxter.

4. AccuLase agreed for a period of five years not to engage in any
business competitive with the laser products for cardiovascular and
vascular applications licensed to Baxter.

5. AccuLase has granted Baxter a security interest in all of its patents
to secure performance under the Baxter Agreement. The agreement
expires upon the expiration of the last to expire license patent,
however, Baxter may terminate the agreement at any time.

LICENSE AGREEMENT WITH BAXTER AND LASER SIGHT - On September 23, 1997,
Baxter purchased certain patent rights to related patents from a third
party for $4,000,000. In December 1997, the Company acquired a license to
the acquired patent rights from Baxter. An agreement between the Company
and AccuLase to determine how costs will be allocated has not yet been
entered into.

LICENSE AGREEMENT WITH GENERAL HOSPITAL - On November 26, 1997, the Company
entered into a license agreement with The General Hospital Corporation
("General") whereby General grants the Company an exclusive, worldwide,
royalty-bearing license. In consideration for the use of the license, the
Company has agreed to pay General $12,500 for costs incurred prior to the
effective date of the agreement, $25,000 upon execution of the agreement,
$50,000 upon issuance by the US Patent and Trademark Office of any Patent
right, and $50,000 upon approval by the U.S. Food and Drug Administration
of the First NDA, 510(k), PMA or PMA Supplement. The Company has agreed to
pay royalties of 4% of the net sales price on products that are covered by
a valid claim of any patent right licensed exclusively to the Company, 2%
of net sales price on products covered by a valid claim of any patent right
licensed non-exclusively to the Company, 1% of net sales of products on
which no royalty is payable for the next ten years following the first
commercial sale and 25% of all non-royalty income.

SIGNIFICANT CUSTOMERS - One customer accounted for 22% of total revenue for
1997. No individual customer accounted for more than 10% of total revenues
during 1995 or 1996.

13. SUBSEQUENT EVENTS:

On April 8, 1998, the Company entered into a letter of intent to sell
certain assets, subject to the assumption of certain liabilities, to a
third party. The completion of the transaction is subject to numerous
items, including but not limited to, the final identification of specific
assets and liabilities to be transferred and the execution of a final
written agreement. The proposed sales price is $1,300,000 which would
result in an approximate gain of $300,000 to the Company.

On April 10, 1998, the Company issued options to an officer to purchase
250,000 shares of common stock at an exercise price of $2.875 per share
with a five year term.

On April 10, 1998, the Company issued options to purchase 100,000 shares of
common stock at an exercise price of $2.875 per share with a five year term
to an employee.

F-27

<PAGE>

LASER PHOTONICS, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
CLASSIFICATION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- -------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
For the year ended
December 31, 1997:

Accumulated
amortization -Patent costs $ 15,612 $ 8,353 $ - $ 23,965
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Accumulated
amortization -Excess of cost
over net assets of acquired companies $ 822,830 $ 519,784 $ - $ 1,342,614
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
doubtful accounts $ 100,000 $ - $ 25,000 $ 75,000
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
obsolescence $ 996,299 $ - $ 176,775 $ 819,524
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------

For the year ended
December 31, 1996:

Accumulated
amortization -Patent costs $ 7,259 $ 8,353 $ - $ 15,612
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Accumulated
amortization -Excess of cost over net
assets of acquired companies $ 303,148 $ 519,682 $ - $ 822,830
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Accumulated
amortization -
Reorganization goodwill $ 222,600 $1,914,425 $ - $ 2,137,025
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
doubtful accounts $ 100,000 $ - $ - $ 100,000
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
obsolescence $1,477,000 $ - $ 480,701 $ 996,299
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------

For the year ended
December 31, 1995:

Accumulated
amortization -Patent costs $ - $ 7,259 $ - $ 7,259
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Accumulated
amortization -Excess of cost over net
assets of acquired companies $ - $ 303,148 $ - $ 303,148
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Accumulated
amortization -
Reorganization goodwill $ - $ 222,600 $ - $ 222,600
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
doubtful accounts $ 217,591 $ 23,609 $ 141,200 $ 100,000
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Allowance for
obsolescence $ - $1,477,000 $ - $ 1,477,000
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>

S-1
<PAGE>

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

NO DEALER, SALES REPRESENTATIVES, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 2
Summary Consolidated Financial Information................................ 5
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 15
Dividend Policy........................................................... 15
Price Range of Common Stock............................................... 15
Capitalization............................................................ 17
Selected Consolidated Financial Data...................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 20
Business.................................................................. 30
Management................................................................ 44
Compensation of Executive Officers and Directors.......................... 46
Certain Relationships and Related Transactions............................ 49
Principal Stockholders.................................................... 52
Description of Securities................................................. 54
Selling Stockholders and Plan of Distribution............................. 55
Shares Eligible for Future Sale........................................... 59
Legal Matters............................................................. 59
Experts................................................................... 59
Additional Information.................................................... 60
Financial Statements...................................................... F-1
</TABLE>

LASER PHOTONICS, INC.

3,928,101 SHARES

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

PROSPECTUS

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

, 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Registrant estimates that expenses in connection with the Offering
described in this Registration Statement, other than the underwriting
discount, will be as follows:

<S> <C>
Securities and Exchange Commission Registration Fee....................$3,736.13
Legal, Accounting Fees and Expenses....................................40,000.00
Printing Expenses......................................................
Miscellaneous..........................................................

Total..................................................................

</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

The Company's Certificate of Incorporation generally provides for the
maximum indemnification of a corporation's officers and directors as
permitted by law in the State of Delaware. Delaware law empowers a
corporation to indemnify any person who was or is a party or who is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except in the case of an action by or in the right of the
corporation, by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise. Depending on the character of the
proceeding, a corporation may indemnify against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with such action, suit or proceeding if
the person indemnified acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceedings, had no
reasonable cause to believe his or her conduct was unlawful.

A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses, including amounts paid in
settlement and attorney's fees actually and reasonably incurred by him or her
in connection with the defense or settlement of the action or suit if he or
she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.

To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim,
issue or matter therein, he or she must be indemnified by the corporation
against expenses, including attorney's fees, actually and reasonably incurred
by him in connection with the defense. Any indemnification under this
section, unless ordered by a court or advanced pursuant to this section, must
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee

II-1

<PAGE>

or agent is proper in the circumstances. The determination must be made:
(a) by the stockholders; (b) by the board of directors by majority vote of a
quorum consisting of directors who were not parties to the action, suit or
proceeding; (c) if a majority vote of a quorum consisting of directors who
were not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or (d) if a quorum consisting of
directors who were not parties to the action, suit or proceeding cannot be
obtained, by independent legal counsel in a written opinion.

The certificate of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the final disposition
of the action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is not
entitled to be indemnified by the corporation. The provisions of this section
do not affect any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled under any contract
or otherwise by law.

The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section: (a) does not exclude any other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his or her official capacity or an action in another capacity while holding
his or her office, except that indemnification, unless ordered by a court
pursuant to this section or for the advancement of any director or officer if
a final adjudication establishes that his or her acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action; and (b) continues for a person who has
ceased to be a director, officer, employee or agent and inures to the benefit
of the heirs, executors and administrators of such a person.

Further, the Company may enter into agreements of indemnification with
its directors to provide for indemnification to the fullest extent permitted
under Delaware law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

CONVERSION OF CONVERTIBLE DEBT

CERTAIN ISSUANCES TO FORMER AFFILIATES

II-2

<PAGE>

immediate eviction. This second personal guaranty was secured by a pledge of
391,360 shares of her personally owned Helionetics, Inc. common stock.

ISSUANCE OF SHARES AND OPTIONS TO KEY EMPLOYEES AND CONSULTANTS

On January 2, 1996, the Company adopted the Company's 1995 Non-Qualified
Option Plan for key employees, officers, directors and consultants, and
reserved up to 500,000 options to be granted thereunder. On January 2, 1996,
the Company granted a total of 335,000 options at an exercise price of $1.50
per share to certain directors, employees and consultants.

During 1996, the Company issued 151,000 shares of Common Stock and
options to purchase up to 62,500 shares of Common Stock in exempt
transactions to key employees and consultants for services rendered and as
compensation. Included were issuances to certain current and former officers
and directors for services rendered, as follows: (i) Steven A. Qualls
(10,000 shares), (ii) Chaim Markheim (5,000 shares), and (iii) Maxwell Malone
(5,000 shares).

During 1997, the Company issued a total of 105,000 shares of Common
Stock to an outside consultant to the Company for legal services rendered. In
addition, the Company issued options to acquire 250,000 shares of Common
Stock at an exercise price of $0.50 per share and having a five year term,
contingent upon certain performance contingencies in the future, to Raymond A.
Hartman.

On July 1, 1997, the Company granted a total of 108,500 options at an
exercise price of $1.00 per share to certain employees and consultants. On
October 21, 1997,the Company issued options to purchase up to 20,000 shares
of Common Stock at an exercise price of $1.00 per share to a former director
of the Company. In October, 1997, in satisfaction of all compensation owed
by the Company to K.B. Equities, Inc. ("KB Entities"), an affiliate of Mr. Katz
and Ms. Barnes, for consulting services rendered to the Company in 1997, the
Board of Directors granted options to acquire 100,000 shares of Common Stock
to K.B. Equities at an exercise price of $0.75 per share, and with a term of
seven years. Mr. Katz resigned from the Board of Directors of the Company on
October 9, 1997.

In April, 1998, the Company issued options to Chaim Markheim to purchase
up to 250,000 shares of Common Stock at an exercise price of $2.875 per share
with a five (5) year term.

II-3

<PAGE>

CERTAIN ISSUANCES OF SECURITIES

In September, 1997, Pennsylvania Merchant Group, Ltd. ("PMG"), purchased
from Helionetics, with approval of the Federal Bankruptcy Court in the
pending Helionetics Chapter 11 Bankruptcy proceeding, all debt owed by
AccuLase to Helionetics. In October, 1997, the Company purchased the debt
owing by AccuLase, in the amount of $2,159,708 from PMG in consideration of
800,000 shares of Common Stock.

In November, 1997, the Company issued 1,500,000 shares of Common Stock
and 750,000 warrants (the "Warrants"), with an exercise price of $4.00 per
share and a term of five (5) years, in a private placement to certain
accredited investors resulting in gross proceeds of $6,000,000 to the
Company. The Company also issued 150,000 Warrants and paid a commission of
$480,000 to PMG as a placement agent fee.

The Company has agreed to issue to PMG an additional 75,000 warrants
(the "Contingent Warrants") at a purchase price of $0.001 per share at such
time as any of the other 900,000 Warrants have been exercised. The
Contingent Warrants will be exercisable for a period of five years following
the date of issue at an exercise price equal to the average closing bid price
for the Common Stock for the ten trading days preceding the date of issue.

The 3,008,101 shares and the 900,000 Warrants issued from September
through November, 1997, and the 28,601 shares issued in 1998 are being
registered in connection with this Registration Statement.

II-4

<PAGE>

ITEM 16

EXHIBITS.

<S> <C>
3.1 Certificate of Incorporation(1)
3.2 Bylaws(1)
4.1 Specimen Common Stock Certificate*
5.1 Opinion of Matthias & Berg LLP(1)
10.1 Lease Agreement (Andover, Massachusetts)(1)
10.2 Lease Agreement (Orlando, Florida)(1)
10.3 Lease Agreement (San Diego, California)(2)
10.4 Patent License Agreement between the Company and Patlex Corporation(3)
10.5 Master Technology Agreement between the Company and Baxter
Healthcare Corporation, dated July 28, 1997(4)
10.6 License Agreement between the Company and Baxter Healthcare
Corporation, dated August 19, 1997(4)
10.7 Manufacturing Agreement between the Company and Baxter Healthcare
Corporation, dated August 19, 1997(4)
22.1 List of subsidiaries of the Company*
24.1 Consent of Hein + Associates LLP
24.2 Consent of Matthias & Berg LLP (included in Exhibit 5.1)*
25.1 Power of Attorney (included on signature page)
27 Financial Data Schedules
99.1 Registrant's Third Amended Plan of Reorganization(1)
99.2 Order Confirming Registrant's Third Amended Plan of Reorganization, as
modified(1)
99.3 Letter of March 22, 1995 from Coopers & Lybrand, directed to Laser
Photonics, Inc.(1)

</TABLE>

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

* To be filed by amendment.

1. Filed as part of the Company's Annual Report on Form 10-K for the year
ended December 31, 1994.

2. Filed as part of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.

3. Filed as part of the Company's Annual Report on Form 10-K for the year
ended December 31, 1987.

4. Incorporated by reference as part of the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, and subject to a
currently pending request for Confidential Treatment with the
Commission.

II-5

<PAGE>

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:

(i) Include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.

(2) For the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) File a post-effective amendment to remove from registration any of
the securities being registered that remain unsold at the end of the Offering.

In addition, the undersigned Registrant hereby undertakes:

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.

For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

II-6

<PAGE>

SIGNATURES AND POWERS OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego, California
on May 28, 1998.

LASER PHOTONICS, INC.

By: /s/ Raymond A. Hartman
-----------------------------------------------
Raymond A. Hartman
President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Chaim Markheim and Raymond A. Hartman,
or either of them, as his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) and supplements to this Registration
Statement, and to file the same with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Signature Capacity in Which Signed Date
--------- ------------------------ ----

<S> <C> <C>
/s/ Raymond A. Hartman
- ----------------------- President, Chief Executive Officer May 28, 1998
Raymond A. Hartman and Director

/s/ Chaim Markheim Director, Chief Operating Officer May 28, 1998
- ----------------------- and Chief Financial Officer
Chaim Markheim (Principal Financial Officer
and Principal Accounting
Officer)

/s/ Steven A. Qualls Director and Executive Vice President May 28, 1998
- -----------------------
Steven A. Qualls

/s/ Alan R. Novak Director May 28, 1998
- -----------------------
Alan R. Novak

/s/ John J. McAtee, Jr. Chairman of the Board of Directors May 28, 1998
- -----------------------
John J. McAtee, Jr.

</TABLE>

II-7

<PAGE>

ACCOUNTANT'S CONSENT

The Board of Directors
Laser Photonics, Inc.

The audits referred to in our report dated February 18, 1998, except as to Note
13 which is as of April 10, 1998 included the related financial statement
schedule for each of the years in the three-year period ended December 31, 1997
included in the Registration Statement. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our audits. In
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the Prospectus.

/s/ HEIN + ASSOCIATES LLP
- -------------------------------
HEIN + ASSOCIATES LLP
Certified Public Accountants

Orange, California
May 29, 1998

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 814,647
<SECURITIES> 0
<RECEIVABLES> 328,830
<ALLOWANCES> 75,000
<INVENTORY> 889,422
<CURRENT-ASSETS> 2,090,163
<PP&E> 372,269
<DEPRECIATION> 173,074
<TOTAL-ASSETS> 7,112,291
<CURRENT-LIABILITIES> 2,414,626
<BONDS> 0
0
0
<COMMON> 92,957
<OTHER-SE> 4,322,149
<TOTAL-LIABILITY-AND-EQUITY> 7,112,291
<SALES> 1,099,500
<TOTAL-REVENUES> 1,099,500
<CGS> 466,832
<TOTAL-COSTS> 466,832
<OTHER-EXPENSES> 1,167,793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,991
<INCOME-PRETAX> (569,797)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (569,797)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)

</TABLE>