PREMIER LASER SYSTEMS INC, POS AM, 1998-03-16

PREMIER LASER SYSTEMS INC
POS AM, 1998-03-16
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS

Previous: GRAND CASINOS INC, SC 13D/A, 1998-03-16

Next: STANDARD PACIFIC CORP /DE/, S-4, 1998-03-16

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO. 333-04219
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

POST EFFECTIVE AMENDMENT NO. 4
TO REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933

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

PREMIER LASER SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

<TABLE>
<S> <C>
CALIFORNIA 33-0472684
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
</TABLE>

3 MORGAN, IRVINE, CALIFORNIA 92618
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

COLETTE COZEAN, PH.D.
PREMIER LASER SYSTEMS, INC.
3 MORGAN, IRVINE, CALIFORNIA 92618
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Approximate date of commencement of proposed sale to public: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

Pursuant to Rule 416, there are also being registered such additional
securities as may become issuable pursuant to the antidilution provisions of
the Class B Warrants, Class A Warrants, IPO Unit Purchase Options and
Secondary Unit Purchase Options, as defined herein.

Pursuant to Rule 429 under the Securities Act, this Registration Statement
also relates to and may be used in connection with the securities previously
registered under the Securities Act pursuant to Registration Statement No. 33-
83984.

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

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 ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one prospectus
(the "Public Warrant Prospectus") is to be used in connection with shares of
Class A Common Stock issuable upon exercise of certain outstanding publicly
traded warrants of Premier Laser Systems, Inc. (the "Company") and another
prospectus (the "UPO Prospectus") to be used in connection with the offering
of the Company's Class A Common Stock, Class A Warrants and Class B Warrants
issuable upon exercise of outstanding Unit Purchase Options granted by the
Company to the holders thereof (the "Selling Securityholders") in connection
with the Company's securities offerings in 1994 and 1996. Each Prospectus is
identical except for the front and back cover pages and the sections entitled
"Use of Proceeds," "Dilution" and "Concurrent Offering," and the addition of a
section entitled "Selling Securityholders and Plan of Distribution" in the UPO
Prospectus. The form of the Public Warrant Prospectus is included herein and
is followed by the alternate pages to be used in the UPO Prospectus. The
alternate pages for the UPO Prospectus included herein are labeled
"ALTERNATE." Final forms of each prospectus will be filed with the Securities
and Exchange Commission under Rule 424(b) of the Securities Act of 1933, as
amended.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION--DATED MARCH 16, 1998

PROSPECTUS

PREMIER LASER SYSTEMS, INC.

7,592,460 SHARES OF CLASS A COMMON STOCK UPON EXERCISE OF CLASS B WARRANTS

The securities offered hereby include shares of Class A Common Stock issuable
upon exercise of certain outstanding warrants of Premier Laser Systems, Inc.
(the "Company"), all of which warrants were issued in connection with the
Company's initial public offering in November 1994 (the "IPO") and its
secondary public offering in October 1996 (the "Secondary Offering"). Such
outstanding warrants include, as of March 10, 1998 7,592,460 Class B Warrants
(the "Class B Warrants" or "Warrants").

Each Class B Warrant entitles the registered holder thereof to purchase one
share of Class A Common Stock at $8.00 on or prior to November 30, 1999. The
exercise price of the Warrants is subject to adjustment. The Class B Warrants
are subject to redemption by the Company at $0.05 per warrant (the "Redemption
Price") on 30 days' written notice commencing November 30, 1997, provided that
the last sale price as reported on the Nasdaq National Market, Inc. ("Nasdaq")
of the Class A Common Stock exceeds $11.20 per share, for 30 consecutive
trading days ending within 15 days of the notice of redemption. The Company has
set , 199 , as the redemption date for the Class B Warrants (the
"Redemption Date"). All outstanding Class B Warrants that have not been
exercised prior to the Redemption Date will be redeemed by the Company at the
Redemption Price, and the rights of the holders thereof shall terminate. All of
such Class B Warrants that are redeemable by the Company shall be referred to
herein as the "Redeemable Warrants."

The Company has retained Bear, Stearns & Co. Inc. ("Bear, Stearns") as the
Company's financial advisor in connection with the redemption of the Redeemable
Warrants. In addition, the Company has granted Bear, Stearns an option,
exercisable in Bear, Stearns' sole discretion, to purchase from the Company all
of the shares of Class A Common Stock that otherwise would have been delivered
upon exercise of Redeemable Warrants that are either (i) duly surrendered for
redemption on or prior to the Redemption Date, or (ii) not duly surrendered for
exercise on or prior to the Exercise Expiration Date (defined below) or for
redemption on or prior to the Redemption Date. The right to exercise the
Redeemable Warrants expires at 5:00 p.m., Eastern Daylight Time, on the
business day immediately preceding the Redemption Date (the "Exercise
Expiration Date"). The option granted to Bear, Stearns is exercisable until
March 1, 1999 at an exercise price of $8.00 per share. The Company has agreed
to indemnify Bear, Stearns against, and to provide contribution with respect
to, certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Act"). See "Plan of Distribution" for information
concerning compensation to be paid to Bear, Stearns and indemnification
provisions.

The proceeds from the purchase of the shares of Class A Common Stock
underlying the Redeemable Warrants will be received by the Company.

The Company has agreed to pay to D.H. Blair Investment Banking Corp. ("D.H.
Blair"), which acted as the underwriter in the IPO and the Secondary Offering,
a solicitation fee (the "Solicitation Fee") equal to 5% of the exercise price
in connection with the exercise of Warrants under certain conditions that are
solicited by D.H. Blair and its agents and representatives. See "Plan of
Distribution." The exercise prices of the Warrants were determined by
negotiation between the Company and D.H. Blair, and are not necessarily related
to the Company's asset value, net worth or other criteria of value.

Upon exercise of the Warrants, the Company will receive the net proceeds
thereof, which will be $57,702,696 if all Warrants are exercised in full.

The Company's Common Stock and Class B Warrants are traded on the Nasdaq
National Market. On March 10, 1998, the closing sale price of the Common Stock,
as reported by Nasdaq was $11.3125 per share, and the closing sale price of the
Class B Warrants, as reported by Nasdaq was $3.5625.

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING
ON PAGE 5.

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

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

(2) Before deducting expenses of the offering payable by the Company, estimated
to be $80,000.

(3) Assumes the exercise of all outstanding Class B Warrants.

The date of this Prospectus is March , 1998
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement on Form
S-3 ("Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), relating to the shares of the Company's Class A Common
Stock and Warrants to be issued upon the exercise of certain warrants and
options. For further information pertaining to the Class A Common Stock and
the Warrants to which this Prospectus relates, reference is made to such
Registration Statement, including the exhibits filed as a part thereof. This
Prospectus constitutes the prospectus of the Company filed as a part of the
Registration Statement and it does not contain all of the information set
forth in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. In addition,
the Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission relating to its business, financial statements and other
matters. Reports and proxy and information statements filed pursuant to
Section 14(a) and 14(c) of the Exchange Act and other information filed with
the Commission as well as copies of the Registration Statement can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Midwest
Regional Office, 500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661;
and Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information that the Company files electronically with
the Commission. The Commission's Web site address is http://www.sec.gov. The
Company's Class A Common Stock and Class B Warrants are traded on the Nasdaq
National Market under the symbols "PLSIA" and "PLSIZ." Reports, proxy
statements, and other information concerning the Company also may be inspected
at the offices of Nasdaq, 1735 K Street, N.W., Washington, D.C.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission, are incorporated by this reference into this Prospectus:

1. The Company's Current Report on Form 8-K, as filed with the Commission
on March 9, 1998.

2. The Company's Current Report on Form 8-K, as filed with the Commission
on December 30, 1997.

3. The Company's Current Report on Form 8-K, as filed with the Commission
on December 8, 1997.

4. The Company's Current Report on Form 8-K, as filed with the Commission
on October 15, 1997, and amended by its Form 8-K/A filed with the
Commission on November 14, 1997.

5. The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997, filed with the Commission on May 28, 1997 pursuant to
Section 13(a) of the Exchange Act and amended by Form 10-K/A filed with the
Commission on June 18, 1997.

6. The Company's Quarterly Report on Form 10-Q for the period ended
December 31, 1997, filed with the Commission on February 17, 1998 pursuant
to Section 13 or 15(d) of the Exchange Act.

7. The Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997, filed with the Commission on November 14, 1997 pursuant
to Section 13 or 15(d) of the Exchange Act, and amended by Form 10-Q/A
filed with the Commission on November 26, 1997.

8. The Company's Quarterly Report on Form 10-Q for the period ended June
30, 1997 filed with the Commission on August 14, 1997 pursuant to Section
13 or 15(d) of the Exchange Act.

9. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
December 7, 1994, as amended by Form 8-A/A filed with the Commission on
January 31, 1995.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering which is the subject
of this Prospectus shall be deemed to be incorporated herein by this reference
and to be made a part hereof from the date of filing of such documents.

2
<PAGE>

Upon the written or oral request of any person to whom this Prospectus is
delivered, the Company will provide, without charge, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits
to such documents). Requests for such informational documents should be
directed to Premier Laser Systems, Inc., 3 Morgan, Irvine, California 92618,
telephone number (714) 859-0656, Attention: Corporate Secretary.

Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Act"), this Prospectus also relates to and may be used in connection with the
securities previously registered under said Act pursuant to Registration
Statement No. 33-83984 and consisting of (i) shares of Class A Common Stock
issuable upon exercise of Class B Warrants that are presently outstanding ;
and (ii) 3,400 Class A Warrants, 6,800 Class B Warrants and 13,600 shares of
Class A Common Stock (including 10,200 shares underlying the Warrants)
issuable upon exercise of unit purchase options (the "IPO Unit Purchase
Options") received by D.H. Blair, its designees and three finders (the
"Selling Securityholders") in connection with the Company's IPO.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements incorporated by reference from documents filed with the
Commission by the Company and Ophthalmic Imaging Systems, a California
corporation ("OISI") in which the Company recently acquired approximately 51%
of the outstanding shares of common stock, are or may constitute forward-
looking statements. Such statements include those contained herein or therein
regarding the development or possible assumed future results of operations of
the Company's and OISI's businesses, the markets for the Company and OISI's
services and products, anticipated capital expenditures, regulatory
developments, any statements preceded by, followed by or that include the
words "believes," "expects," "anticipates," or similar expression, and other
statements contained or incorporated by reference herein regarding matters
that are not historical facts. Because such statements are subject to risks
and uncertainties, actual results may differ materially from those expressed
or implied by such forward-looking statements. The risks and uncertainties
that may cause actual results to differ include, among others, general
economic conditions, risks associated with acquisitions, dependence on
suppliers, fluctuations in operating results because of acquisitions, stock
prices, changes in applicable federal, state and local laws and regulations,
alternate and emerging technologies, competition and pricing pressures,
overcapacity in the industry, seasonal fluctuations, uncertainties of
litigations, and risks associated with the operation, growth and integration
of newly acquired businesses. As a result of these factors, the Company's
revenue and income could vary significantly from quarter to quarter, and past
financial performance should not be considered a reliable indicator of future
performance. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the cautionary statements set forth or referred
to above in this paragraph. Investors are cautioned not to place undue
reliance on such statements, which speak only as of the date hereof. The
Company undertakes no obligation to release publicly any revision to these
forward-looking statements to reflect events of or circumstances after the
date hereof or to reflect the occurrence of unanticipated events, except as
may be required by the federal securities laws.

3
<PAGE>

THE COMPANY

GENERAL

The Company develops, manufactures and markets several lines of surgical
lasers, laser waveguides and laser fiber optic devices, disposables and
associated accessory products for the medical market. The Company commenced
operations in August 1991 after acquiring substantially all of the assets of
Pfizer Laser Systems ("Pfizer Laser"), a division of Pfizer Hospital Products
Group, Inc. ("Pfizer HPG") which had entered the laser business in December
1984. The assets acquired from Pfizer Laser by the Company included
proprietary rights to a broad base of laser and fiber optic technologies.

The Company's recently acquired subsidiary EyeSys Technologies, Inc. is
engaged in the business of designing, developing and marketing noninvasive
corneal topography systems for use by ophthalmologists and optometrists in
surgical planning and evaluation, diagnosis of corneal pathologists and
contact lens fitting.

In addition, OISI, a corporation in which the Company has approximately a
51% ownership interest, is engaged in the business of designing, developing,
manufacturing and marketing digital imaging systems and image enhancement and
analysis software for use by practitioners in the ocular health field.

The Company's product line of patented proprietary lasers includes CO/2/,
diode, argon, neodymium: yttrium aluminum garnet ("Nd:YAG"), erbium:yttrium
aluminum garnet ("Er:YAG") and holmium:yttrium aluminum garnet ("Ho:YAG")
lasers, which the Company believes are capable of a wide range of procedures
in multiple medical and surgical specialties ranging from cutting bone and
teeth to removing precise layers of cellular tissue in the eye. Representative
procedures for which the Company has market clearance from the United States
Food and Drug Administration ("FDA") include treatment of gum disease,
laparoscopic procedures, hard tissue and cavity preparation procedures,
treatment of endometriosis, dermatological treatment of port wine stains and
discectomy. The Company is currently conducting various clinical trials
relating to additional applications for its laser products. The primary focus
of the Company's research, marketing and sales efforts is in specific niche
medical specialties, such as dentistry and ophthalmology, where the Company
believes opportunities exist for clinical advances and market growth.

The principal offices of the Company are located at 3 Morgan, Irvine,
California 92618, and its telephone number is (714) 859-0656.

A description of the Company's business is set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1997, as amended (the
"Annual Report"), which description is incorporated herein by this reference.

4
<PAGE>

RISK FACTORS

The securities offered hereby are highly speculative in nature and involve a
high degree of risk. Prospective investors should carefully consider, along
with the other information contained in this Prospectus, the following
considerations and risks in evaluating an investment in the Company.

LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES

The Company was formed in July 1991 and has not generated significant
revenues to date. As of December 31, 1997, the Company had an accumulated
deficit of approximately $36.4 million and tangible net worth of approximately
$32 million. For the fiscal years ended March 31, 1995, 1996 and 1997, the
Company had operating losses of approximately $3.8 million, $5.8 million and
$5.6 million, respectively, resulting principally from costs incurred in
research and development and other costs of operations. For the fiscal quarter
ended December 31, 1997, the Company had operating profits of approximately
$227,441. There can be no assurance, however, that operating profits will
continue. The Company may incur losses for the foreseeable future due to the
significant costs associated with manufacturing, marketing and distributing
its laser products and due to continual research and development activities
which will be necessary to develop additional applications for the Company's
laser technology.

OISI has experienced operating losses for each fiscal year since its initial
public offering in 1992 and has derived substantially all of its revenues from
the sale of OISI digital imaging systems. While the management of OISI
believes that the overall angiography market has modest growth potential,
sustained growth in the angiography equipment business may become increasingly
difficult due to increased competition. OISI's results of operations have
historically fluctuated from quarter to quarter and management anticipates
that such fluctuations will continue in the future. There can be no assurance
that revenue growth or profitablity can be achieved or sustained in the
future.

UNCERTAINTIES CONCERNING FUTURE PROFITABILITY

The Company had operating profits for the first time in the fiscal quarter
ended December 31, 1997. The Company's ability to maintain profitability will
depend, in part, on its ability to continue to successfully develop clinical
applications, obtain regulatory approvals for its products and develop the
capacity to manufacture and market such products on a wide scale. There is no
assurance that the Company will be able to successfully make

the transition from research and development to manufacturing and selling
commercial medical laser products on a broad basis. While attempting to make
this transition, the Company will be subject to all risks inherent in a
growing venture, including the need to produce reliable products, develop
marketing expertise and enlarge its sales force.

UNCERTAIN MARKET ACCEPTANCE

The Company's future sales are dependent, in part, on the Company's ability
to demonstrate to dentists, ophthalmologists and other physicians the
potential cost and performance advantages of its laser systems over
traditional methods of treatment and, to a lesser extent, over competitive
laser systems. To date, commercial sales of the Company's lasers have been
limited, and no assurance can be given that these laser products can be
successfully commercialized on a broad basis. Lasers have not been widely used
in dentistry and their use requires training and expertise. The acceptance of
dental lasers may be adversely affected by their high cost, concerns by
patients and dentists relating to their safety and efficacy, and the
substantial market acceptance and penetration of alternative dental tools such
as the dental drill. Current economic pressure may make doctors and dentists
reluctant to purchase substantial capital equipment or invest in new
technology. The failure of medical lasers to achieve broad market acceptance
would have a material adverse effect on the Company's business, financial
condition and results of operations. No assurance can be given that any of the
Company's products will be accepted by the medical or dental community or by
patients, or that a significant market for the Company's laser systems will be
developed and sustained. The Company currently has a limited sales force and
will need to hire additional sales and marketing personnel to increase the
general acceptance of its products.

5
<PAGE>

COSTS ASSOCIATED WITH INTEGRATION OF ACQUIRED BUSINESSES

On September 30, 1997, the Company acquired EyeSys Technologies, Inc.
("EyeSys") through the merger of a newly formed subsidiary of the Company with
and into EyeSys (the "Merger"). Upon the effectiveness of the Merger, EysSys
became a wholly-owned subsidiary of the Company. As a result of the Merger,
the Company must integrate and coordinate the business formerly operated by
EyeSys with the Company's other businesses. Although the Company believes that
there are certain synergies in the two lines of business, it may incur
expenses in connection with its efforts to integrate the two businesses. For
example, although certain of the existing EyeSys management personnel have
been retained by EyeSys following the Merger, members of the Company's
management must also expend time and effort on new activities relating to the
EyeSys operations, which will detract from their time available to attend to
the Company's pre-Merger activities. No assurance can be given that the
Company will receive the advantages from the Merger, or that the expenses or
dislocations it may suffer or incur as a result of the post-Merger
coordination of these businesses will not be material.

EyeSys currently markets two primary products (a portable and a stationary
corneal topography measuring system) in a highly competitive market.
Historically, EyeSys has incurred substantial losses. The ability of EyeSys to
achieve a break-even level of operating performance is dependent on the demand
for its products as well as maintaining sufficient research, development and
sales and marketing expenditures to meet the requirements of the market. There
can be no assurance that the revenues from the EyeSys product line will be
sufficient to cover all of the expenses related to such operations.

In the event that the Company's Offer (defined below) to acquire additional
outstanding shares of OISI is accepted, the Company will encounter issues
similar to the above regarding the integration of the two businesses. As a
result, certain expenses may be incurred in efforts to address such issues.

ABILITY TO EXERT SIGNIFICANT INFLUENCE

The Company recently made an offer (the "Offer") to acquire the remaining
outstanding shares of common stock of OISI from its shareholders. As of the
date of the Offer, the Company owned beneficially approximately 51% of the
outstanding common stock of OISI. If the Offer is successful, the Company will
beneficially own an increased percentage of OISI's outstanding common stock.
As a result, even if the Offer is unsuccessful, the Company will control all
outcomes submitted to a vote of OISI's shareholders, including the election of
directors and significant corporate transactions.

PURCHASE METHOD OF ACCOUNTING MAY IMPACT OPERATING RESULTS

Under the purchase method of accounting, the estimated fair value of the
OISI common stock purchased under the Offer would be recorded as the cost of
acquiring OISI's business. This cost would be allocated to the individual
assets acquired and liabilities assumed according to their respective fair
value with the excess of the estimated fair value of OISI common stock over
the fair value of net assets acquired recorded as goodwill, to be amortized
over a period up to 40 years. The estimated fair value of the OISI common
stock to be purchased under the Offer is substantially in excess of the amount
which the net assets are carried in OISI's accounts. Therefore, purchase
method accounting treatment may have a material adverse impact on the reported
operating results of the combined companies.

REALIZATION OF EXPECTED OPERATING SYNERGIES MAY NOT MATERIALIZE

The consummation of the Offer will involve the combination of two companies
that have previously operated independently. Although the Company expects to
achieve savings in operating costs, delays or unexpected expenses related to
operating the companies under common ownership could result in a reduction of
net income.

GOING CONCERN REPORT WITH RESPECT TO EYESYS

EyeSys' independent auditors have included an explanatory paragraph in their
report covering EyeSys' financial statements for the years ended December 31,
1994, 1995 and 1996, which paragraph emphasizes substantial doubt as to
EyeSys' ability to continue as a going concern. EyeSys' independent auditors
cited the following reasons for such explanatory paragraph: (i) EyeSys has
reported net losses of $4,164,998, $3,424,996

6
<PAGE>

and $3,708,657 for the years ended December 31, 1996, 1995 and 1994,
respectively, (ii) EyeSys was in default of several loan covenants relating to
its revolving lines of credit, and (iii) EyeSys had not repaid such loan
obligations within their respective terms.

DEPENDENCE ON SUPPLIERS

The Company purchases certain raw materials, components and subassemblies
included in the Company's products from a limited group of qualified suppliers
and does not maintain long-term supply contracts with any of its key
suppliers. The disruption or termination of these sources could have a
material adverse effect on the Company's business and results of operations.
For example, during fiscal 1994, the Company's sole supplier of the
specialized optic fiber required for use in the Company's Er:YAG lasers ceased
to provide this fiber to the Company. While the Company has since qualified
the new suppliers of this fiber, the Company's inability to obtain sufficient
quantities of this specialized optical fiber had a material adverse effect on
the volume of Er:YAG lasers the Company was able to sell during fiscal 1994
and 1995. While the Company believes that alternative suppliers could be
found, there can be no assurance that any supplier could be replaced in a
timely manner. Any interruption in the supply of other key components could
have a material adverse effect on the Company's ability to manufacture its
products and on its business, financial condition and results of operations.

Certain computer memory chips used by EyeSys in its proprietary hardware are
manufactured by a single company. These computer memory chips are subject to
rapid innovation and obsolescence. The discontinuance of the manufacturing of
this chip may require EyeSys to redesign certain hardware and software to
accommodate a replacement chip. While in the past EyeSys has been successful
in these redesign efforts, there can be no assurance that such an event would
not prove costly or cause a disruption in sales of corneal topography systems.

RISKS APPLICABLE TO FOREIGN SALES

Sales of the Company's products to foreign markets account for a substantial
portion of the Company's sales. Foreign sales expose the Company to certain
risks, including the difficulty and expense of maintaining foreign sales
distribution channels, barriers to trade, potential fluctuations in foreign
currency exchange rates, political and economic instability, availability of
suitable export financing, accounts receivable collections, tariff
regulations, quotas, shipping delays, foreign taxes, export licensing
requirements and other United States and foreign regulations that may apply to
the export of medical lasers. The regulation of medical devices worldwide also
continues to develop, and there can be no assurance that new laws or
regulations will not have an adverse effect on the Company. In addition, the
Company may experience additional difficulties in providing prompt and cost
effective service of its medical lasers in foreign countries. The Company does
not carry insurance against such risks. The occurrence of any one or more of
these events may individually or in the aggregate have a material adverse
effect upon the Company's business, financial condition and results of
operations.

RISK OF TECHNOLOGICAL OBSOLESCENCE

The markets in which the Company's laser products compete are subject to
rapid technological change as well as the potential development of alternative
surgical techniques or new pharmaceutical products. Such changes could render
the Company's products uncompetitive or obsolete. The Company will be required
to invest in research and development to attempt to maintain and enhance its
existing products and develop new products. No assurances can be given that
such research and development efforts will result in the introduction of new
products or product improvements.

DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY

The Company's success will depend in part on its ability to obtain patent
protection for products and processes, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties. While the
Company holds 23 U.S. patents and 16 foreign patents (including 2 utility
model patents) and has

7
<PAGE>

other patent applications pending in the United States and foreign countries,
no assurance can be given that any additional patents will be issued, that the
scope of any patent protection will exclude competitors or that any of the
Company's patents will be held valid if subsequently challenged. Further,
there can be no assurance that others will not independently develop similar
products, duplicate the Company's products or design products that circumvent
any patents used by the Company. The Company is aware of certain patents
which, along with other patents that may exist or be granted in the future,
could restrict the Company's right to market certain of its technologies
without a license, including, without limitation, patents relating to the
Company's lens emulsification product and ophthalmic probes for the Er:YAG
laser. In the past, the Company has received allegations that certain of the
Company's laser products infringe other patents. Britesmile, Inc., a wholly-
owned subsidiary of Ion Laser Technology, Inc. has alleged that the use of one
of the Company's products in connection with a laser bleaching procedure
infringes a patent which they hold. There has been significant patent
litigation in the medical industry in general, and in the medical laser
industry in particular. Adverse determinations in litigation or other patent
proceedings to which the Company may become a party could subject the Company
to significant legal judgments or other liabilities to third parties and could
require the Company to seek licenses from third parties that may or may not be
economically viable. Patent and other intellectual property rights disputes
often are settled through licensing arrangements. No assurance can be given
that any licenses required under these or any other patents or proprietary
rights would be available on terms acceptable to the Company, if at all. If
the Company does not obtain such licenses, it could encounter delays in
product introductions while it attempts to design around such patents, or it
could find that the development, manufacture or sale of products requiring
such licenses could be enjoined. If the Company is found, in a legal
proceeding, to have infringed the patents or other proprietary rights of
others, it could be liable for significant damages. The Company also relies
upon unpatented trade secrets, and no assurance can be given that others will
not independently develop or otherwise acquire substantially equivalent trade
secrets. In addition, at each balance sheet date, the Company is required to
review the value of its intangible assets based on various factors, such as
changes in technology. Any adjustment downward in such value may result in a
write-off of the intangible asset and a substantial charge to earnings,
thereby adversely affecting the operating results of the Company in the
future.

NEED FOR FDA AND FOREIGN GOVERNMENTAL APPROVALS; GOVERNMENT REGULATION

The Company's products are regulated as medical devices by the FDA under the
Federal Food, Drug and Cosmetic Act (the "FDC Act"). As such, these devices
require either Section 510(k) premarket clearance ("510(k)") or approval of a
premarket approval application ("PMA") by the FDA prior to commercialization.
Satisfaction of applicable regulatory requirements may take several years and
varies substantially based upon the type, complexity and novelty of such
devices, as well as the clinical procedure. Filings and governmental approvals
may be required in foreign countries before the devices can be marketed in
these countries. There is no assurance that further clinical trials of the
Company's medical lasers or of any future products will be successfully
completed or, if they are completed, that any requisite FDA or foreign
governmental approvals will be obtained. FDA or other governmental approvals
of products developed by the Company in the future may require substantial
filing fees which could limit the number of applications sought by the Company
and may entail limitations on the indicated uses for which such products may
be marketed. In addition, approved or cleared products may be subject to
additional testing and surveillance programs required by the FDA and other
regulatory agencies, and product approvals and clearances could be withdrawn
for failure to comply with regulatory standards or by the occurrence of
unforeseen problems following initial marketing. Also, the Company has made
modifications to certain of its existing products which it does not believe
require the submission of a new 510(k) notification to the FDA. However, there
can be no assurance that the FDA would agree with the Company's determination
and not require the Company to discontinue marketing one or more of the
modified devices until they have been cleared by the FDA. The Company is also
required to adhere to applicable requirements for current Good Manufacturing
Practices ("CGMP") and radiological health requirements, to engage in
extensive record keeping and reporting and to comply with the FDA's product
labeling, promotional and advertising requirements. Noncompliance with state,
local, federal or foreign requirements can result in fines, injunctions, civil
penalties, recall or seizure of products, total or partial suspension of
production, delay, denial or withdrawal of premarket clearance or approval of
devices, recommendations by the FDA that the Company

8
<PAGE>

not be allowed to enter into government contracts, and criminal prosecution,
all of which would have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's manufacturing
facilities are subject to periodic inspections by state and federal agencies,
including the FDA, the California Department of Health Services, and
comparable agencies in other countries.

DEPENDENCE ON KEY PERSONNEL

The Company depends to a considerable degree on a limited number of key
personnel, including Colette Cozean, Ph.D., its Chairman of the Board,
President, Chief Executive Officer and Director of Research. Dr. Cozean is
also an inventor of a number of the Company's patented technologies. During
the Company's limited operating history, many key responsibilities within the
Company have been assigned to a relatively small number of individuals. The
loss of Dr. Cozean's services or those of certain other members of management
could adversely affect the Company. The Company carries key person life
insurance in excess of $3 million on Dr. Cozean. The Company has no employment
agreements with its key personnel. The success of the Company will also
depend, among other factors, on the successful recruitment and retention of
qualified technical and other personnel.

HIGHLY COMPETITIVE INDUSTRY

The medical laser industry is subject to intense competition and is
characterized by rapid technological change. The Company is and will continue
to be subject to competition in its targeted markets, principally from
businesses providing other traditional surgical and nonsurgical treatments,
including existing and developing technologies, and to a lesser extent
competitors' CO/2/, Argon, Er:YAG and Nd:YAG lasers. Many of the Company's
competitors have substantially greater financial, marketing and manufacturing
resources and experience than the Company. Furthermore, the Company expects
other companies will enter the market, particularly as medical lasers gain
increasing market acceptance. Significant competitive factors which will
affect future sales in the marketplace include regulatory approvals,
performance, pricing and general market acceptance.

The corneal topography market is highly competitive. There are many
companies, both public and private, some with significantly greater resources
than EyeSys engaged in the corneal topography market. These companies include
Alcon Laboratories (a subsidiary of Nestle), Humphrey Instruments (a
subsidiary of Carl Zeiss), and Tomey Technology. These companies, together
with EyeSys and others, market corneal topography instruments which utilize a
technology for measuring corneal curvature based on reflected images. Other
companies, including PAR Technology and Orbtek, utilize other technologies to
measure the corneal surface. There can be no assurances that EyeSys'
competitors will not succeed in developing technologies, procedures or
products that are more effective or economical than those marketed or being
developed by EyeSys or that would render EyeSys' products obsolete or
noncompetitive.

To continue to remain competitive, EyeSys must develop new software and
hardware meeting the needs of ophthalmologists and optometrists. EyeSys'
future revenues will depend, in part, on its ability to develop and
commercialize these new products as well as on the success of development and
commercialization efforts of its competitors.

The industry in which OISI competes, development and sale of ocular imaging
systems, is also highly competitive. OISI's two major competitors are Topcon
and Tomey, as well as a variety of smaller companies in international markets.
Many of these competitors have greater financial, marketing and manufacturing
resources and experience than OISI. There can be no assurance that OISI's
competitors will not succeed in developing technologies, procedures or
products that are more effective or economical than those marketed or being
developed by OISI or that would render OISI's products obsolete or
noncompetitive.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

Due to the relatively high sales price of the Company's laser systems and
the low sales unit volume, minor timing differences in receipt of customer
orders have produced and could continue to produce significant fluctuations in
quarterly results. In addition, if anticipated sales and shipments in any
quarter do not occur when

9
<PAGE>

expected, expenditures and inventory levels could be disproportionately high,
and the Company's operating results for that quarter, and potentially for
future quarters, would be adversely affected. Quarterly results may also
fluctuate based on a variety of other factors, such as seasonality, production
delays, product mix, cancellation or rescheduling of orders, new product
announcements by competitors, receipt of FDA clearances or approvals by the
Company or its competitors, notices of product suspension or recall, the
Company's ability to manage product transitions, sales prices and market
conditions. In addition, if the Company expands or augments its manufacturing
capabilities in connection with the introduction of new products, quarterly
revenues and operating results are expected to fluctuate to an even greater
degree.

UNCERTAIN ABILITY TO MEET CAPITAL NEEDS

The Company will require substantial additional funds for its research and
development programs, preclinical and clinical testing, development of its
sales and distribution force, operating expenses, regulatory processes and
manufacturing and marketing programs. The Company's capital requirements will
depend on numerous factors, including the progress of its research and
development programs, results of preclinical and clinical testing, the time
and cost involved in obtaining regulatory approvals, the cost of filing,
prosecuting, defending and enforcing any patent claims and other intellectual
property rights, competing technological and market developments, developments
and changes in the Company's existing research, licensing and other
relationships and the terms of any new collaborative, licensing and other
arrangements that the Company may establish. The Company believes its
available short-term assets and investment income will be sufficient to meet
its operating expenses and capital expenditures through the next 12 months.
However, the Company's cash requirements may vary materially from those now
planned due to potential future acquisitions, the progress of research and
development programs, results of clinical testing, relationships with
strategic partners, if any, competitive and technological advances, the FDA
and foreign regulatory processes and other factors. There can be no assurance,
however, that additional financing will be available when needed, or if
available, will be available on acceptable terms. Insufficient funds may
prevent the Company from implementing its business strategy or may require the
Company to delay, scale back or eliminate certain of its research and product
development programs or to license to third parties rights to commercialize
products or technologies that the Company would otherwise seek to develop
itself.

POSSIBLE VOLATILITY OF STOCK PRICE

The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Common Stock. In addition, the market price of the Common
Stock has been and is likely to continue to be highly volatile. Factors such
as fluctuations in the Company's operating results, announcements of
technological innovations or new products by the Company or its competitors,
FDA and international regulatory actions, developments with respect to patents
or proprietary rights, public concern as to the safety of products developed
by the Company or its competitors, changes in health care policy in the United
States and internationally, changes in analysts' recommendations regarding the
Company, other medical companies or the medical laser industry generally and
general market conditions may have a significant effect on the market price of
the Company's Common Stock. The market price of the Common Stock recently
increased significantly due to Premier's receipt of the first FDA clearance to
market a laser for the treatment of tooth decay. No assurance can be given
that this increased market price of the Common Stock will be sustained over
time.

PRODUCT LIABILITY EXPOSURE

The sale of the Company's laser systems involves the inherent risk of
product liability claims against the Company. The Company currently maintains
product liability insurance coverage in the amount of $5 million per
occurrence and $5 million in the aggregate, but such insurance is expensive,
subject to various coverage exclusions and may not be obtainable by the
Company in the future on terms acceptable to the Company. There can be no
assurance that claims against the Company arising with respect to its products
will be successfully defended or that the insurance carried by the Company
will be sufficient to cover liabilities arising from such claims. A successful
claim against the Company in excess of the Company's insurance coverage could
have a material adverse effect on the Company.

10
<PAGE>

LIMITATIONS ON THIRD PARTY REIMBURSEMENT

The Company's laser systems are generally purchased by physicians,
ophthamologists, dentists and surgical centers which then bill various third
party payors, such as government programs and private insurance plans, for the
procedures conducted with the Company's lasers. Third-party payors carefully
review and are increasingly challenging the prices charged for medical
products and services. Reimbursement rates from private companies vary
depending on the procedure performed, the third-party payor, the insurance
plan and other factors. Medicare reimburses hospitals a prospectively-
determined fixed amount for the costs associated with an in-patient
hospitalization based on the patient's discharge diagnosis, and reimburses
physicians a prospectively-determined fixed amount based on the procedure
performed, regardless of the actual costs incurred by the hospital or
physician in furnishing the care and unrelated to the specific devices used in
that procedure. Third-party payors are increasingly scrutinizing whether to
cover new products and the level of reimbursement for covered products. While
the Company believes that the laser procedures using its products have
generally been reimbursed, payors may deny coverage and reimbursement for the
Company's products if they determine that the device was not reasonable and
necessary for the purpose for which used, was investigational or not cost-
effective. As a result, there can be no assurance that reimbursement from
third party payors for these procedures will be available or if available,
that reimbursement will not be limited, thereby adversely affecting the
Company's ability to sell its products on a profitable basis. Moreover, the
Company is unable to predict what 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 legislature or regulation may have
on the Company.

UNCERTAINTIES REGARDING HEALTH CARE REFORM

Several states and the United States government are investigating a variety
of alternatives to reform the health care delivery system and further reduce
and control health care spending. These reform efforts include proposals to
limit spending on health care items and services, limit coverage for new
technology and limit or control the price health care providers and drug and
device manufacturers may charge for their services and products. If adopted
and implemented, such reforms could have a material adverse effect on the
Company's business, financial condition and results of operations.

CHARGE TO EARNINGS IN THE EVENT OF RELEASE OF ESCROW SHARES

The Company has outstanding shares of Class E-1 and Class E-2 Common Stock
(the "Escrow Shares") which were issued in 1994. The Escrow Shares are being
held by the Company in escrow, and which will be released from escrow and
converted into shares of Common Stock if certain criteria are met. These
criteria relate to the achievement of specified levels of net income before
taxes, as defined. Different criteria apply to the Class E-1 Common Stock and
Class E-2 Common stock. For a description of these criteria, see "Description
of Securities--Class E-1 Common Stock" and "Description of Securities--Class
E-2 Common Stock." In the event any of these criteria are met and any shares
are released from escrow to stockholders who are officers, directors,
employees or consultants of the Company, a substantial noncash compensation
expense will be recorded for financial reporting purposes. The recognition of
such compensation expense may have an adverse effect on the market price of
the Company's securities.

SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF OUTSTANDING OPTIONS AND WARRANTS

Sales of a substantial number of shares of Common Stock in the public market
could adversely affect the market price for the Common Stock. Substantially
all of the Company's shares of Common Stock outstanding as of the date hereof
are freely tradeable, subject to compliance with Rule 144 promulgated under
the Securities Act of 1933 ("Securities Act"). As of March 10, 1998, an
additional approximately 7,592,460 shares of Common Stock are issuable upon
the exercise of the Company's outstanding Class B Warrants, and in excess of
five million shares of Common Stock are issuable upon exercise of other
outstanding warrants and options. The issuance of shares upon the exercise of
the Class B Warrants has been registered under the Securities Act, and
substantially all of the shares of Common Stock issuable upon exercise of the
remaining options and warrants

11
<PAGE>

may be resold pursuant to currently effective registration statements or Rule
144 under the Securities Act. The existence of the Company's outstanding
warrants and options could adversely affect the Company's ability to obtain
future financing. The price which the Company may receive for the Common Stock
issued upon exercise of such options and warrants will likely be less than the
market price of the Common Stock at the time such options and warrants are
exercised. Moreover, the holders of the options and warrants might be expected
to exercise them at a time when the Company would, in all likelihood, be able
to obtain needed capital by a new offering of its securities on terms more
favorable than those provided for by the options and warrants.

POTENTIAL ANTI-TAKEOVER EFFECTS OF PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of 8,850,000
shares of "blank check" preferred stock, which will have such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting
power or other rights of the holders of the Common Stock. In the event of such
issuance, the preferred stock could be utilized, under certain circumstances,
as a method of discouraging, delaying or preventing a change in control of the
Company.

12
<PAGE>

USE OF PROCEEDS

Holders of Warrants are not obligated to exercise their Warrants and there
can be no assurance that the Warrantholders will choose to exercise all or any
of their Warrants. In the event that all of the outstanding Class B Warrants
are exercised, the Company would receive additional net proceeds of
$57,702,696, after deducting the maximum Solicitation Fee, exclusive of other
expenses of the offering.

The Company intends to use the net proceeds received upon the exercise of
the Warrants, if any, for general corporate purposes and working capital to
support anticipated growth, including research and development programs and
continuing development of a distributor network. The Company may also use a
portion of the net proceeds from the exercise of Warrants for possible
acquisitions of complementary businesses, products and technologies.

13
<PAGE>

RECENT DEVELOPMENTS

The Company recently entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") with OISI pursuant to which the Company agreed to make an
Offer to all of OISI's shareholders with a view to acquiring OISI and OISI
agreed to recommend the Company's Offer and not to solicit any other
acquisition proposals.

Concurrently with the execution of the Stock Purchase Agreement, the Company
entered into individual purchase agreements with certain OISI shareholders
enabling the Company to acquire a total of 2,131,758 shares of OISI common
stock constituting approximately 51.3% of the total outstanding common stock
of the Company as of February 26, 1998. In exchange for the OISI shares, the
Company paid an aggregate consideration of $2,137,184.80 consisting of a
combination of cash and certain warrants. Pursuant to the Stock Purchase
Agreement, the Company has agreed to pay $1.75 in cash, plus stock and
warrants for each additional share of OISI common stock acquired. The
aggregate estimated value of the consideration to be paid for each share of
OISI common stock is $2.18.

In addition, the Company recently completed the redemption of all of its
outstanding publicly traded Class A Warrants. In connection with such
redemption, 2,200,043 or approximately 99% of the outstanding Class A Warrants
were exercised by the holders thereof and an aggregate of $14,300,279 was
received by the Company. This total includes the proceeds from the exercise of
warrants associated with unit purchase options granted in connection with
prior offerings and exercised during the warrant call period.

In January 1998, the Board of Directors appointed Judy McCall to the office
of Vice President--Human Resources Administration and Special Projects. Ms.
McCall joined the Company in 1993 and since that time has served as Director
of Human Resources Administration and Special Projects.

In February 1998, Randy Alexander joined the Company as Executive Vice
President--Sales, Marketing and Business Units. Prior to joining the Company,
Mr. Alexander served as Senior Vice President for Asian Pacific, Latin
American, Australian and Canadian operations at Chiron Vision, which position
he held since 1985.

Jeffrey Anderson joined the Company in 1997 as Director of Regulatory
Affairs and Quality Assurance. In January 1998, Mr. Anderson was appointed to
the office of Vice President--Regulatory Affairs and Quality Assurance. Prior
to joining the Company, Mr. Anderson served as Manager of Regulatory Affairs
and Quality Assurance for Laser Medical Technology from 1991 until 1993. From
December 1993 until November 1995, Mr. Anderson served as a Regulatory Affairs
Specialist for Sybron Dental Specialties and from November 1995 until joining
the Company, he served as Regulatory Affairs Manager for Medtronic.

Tom Hazen joined the Company in October 1997 as Executive Vice President--
Operations. From 1992 until joining the Company, Mr. Hazen had previously
served as Vice President of Operations with Imagyn Medical.

14
<PAGE>

DILUTION

The following discussion and tables treat the Company's Class A and Class E-
1 and Class E-2 Common Stock as a single class, and allocates no value to the
Warrants.

The net tangible book value of the Company at December 31, 1997 was
approximately $32,008,845 or $2.11 per share of Common Stock. Net tangible
book value per share represents the amount of total tangible assets of the
Company less the amount of its total liabilities, divided by the number of
shares of Common Stock outstanding.

After giving effect to the exercise of the 7,592,460 outstanding Class B
Warrants, the pro forma net tangible book value of the shares of Class A
Common Stock at December 31, 1997 would have been $3.95 per share,
representing an immediate dilution per share of $4.05 to individuals
exercising Class B Warrants.

The following table illustrates the per share dilution to be incurred by
individuals exercising the remaining Class B Warrants, assuming all such
Warrants are exercised:

<TABLE>
<CAPTION>
<S> <C> <C>
Exercise price............................................... $8.00
Net tangible book value per share before the exercise of
Warrants.................................................. 2.11
Increase per share attributable to the exercise of
Warrants................................................... 1.84
----
Pro forma net tangible book value after exercise............. 3.95
-----
Dilution of net tangible book value.......................... $4.05
=====
</TABLE>

15
<PAGE>

CONCURRENT OFFERING

The registration statement of which this Prospectus forms a part also
relates to certain Unit Purchase Options ("UPO's") and underlying shares of
Class A Common Stock and Warrants granted by the Company in connection with
its IPO and Secondary Offering. In connection with its IPO, the Company
granted an aggregate of 240,000 IPO Unit Purchase Options to purchase IPO
units to D.H. Blair, its designees and certain individuals in their capacities
as finders. Presently, there are 3,400 IPO Unit Purchase Options which remain
unexercised. Each IPO unit consists of (i) one share of Class A Common Stock,
(ii) one Class A Warrant and (iii) one Class B Warrant. In addition, the
Company granted an aggregate of 1,100 Unit Purchase Options ("Secondary Unit
Purchase Options") to purchase Secondary Offering units to D.H. Blair and its
designees in connection with its Secondary Offering. Each Secondary Offering
unit consists of (i) 190 shares of Class A Common Stock and (ii) 95 Class B
Warrants. For a description of the IPO Unit Purchase Options and the Secondary
Unit Purchase Options, see "Description of Securities--IPO Unit Purchase
Options" and "Description of Securities--Secondary Unit Purchase Options." The
Company is registering the securities underlying both the IPO Unit Purchase
Options and the Secondary Unit Purchase Options on behalf of the Selling
Securityholders. It is likely that sales of the Selling Securityholders Common
Stock and Warrants, or even the potential of such sales at any time, could
have an adverse effect on the market prices of the Class A Common Stock and
the Warrants. Underwriters in this concurrent offering may include D.H. Blair
and its designees and affiliates who will make their own arrangements
regarding the distribution of the Warrants and shares of Class A Common Stock,
including those underlying the Warrants.

DESCRIPTION OF SECURITIES

The following description of the Company's capital stock and selected
provisions of its Articles of Incorporation and Bylaws is a summary and is
qualified in its entirety by the Company's Articles of Incorporation and
Bylaws, copies of which have been filed with the Securities and Exchange
Commission.

COMMON STOCK

The Company is authorized to issue 35,600,000 shares of Class A Common
Stock, no par value, 2,200,000 shares of Class E-1 Common Stock, no par value,
and 2,200,000 shares of Class E-2 Common Stock. The Class A Common Stock,
Class E-1 Common Stock and the Class E-2 Common Stock have equal voting rights
and are entitled to share equally in dividends from sources available therefor
when, as and if declared by the Board of Directors. Holders of Class A Common
Stock have no preemptive rights and no right to convert their Common Stock
into any other securities. The holders of each class of Common Stock are
entitled to one vote for each share held of record on all matters submitted to
a vote of the shareholders, except that holders of Common Stock are entitled
to cumulative voting with respect to the election of directors upon giving
notice as required by law. In cumulative voting, the holders of Common Stock
are entitled to cast for each share held the number of votes equal to the
number of directors to be elected. In the event of a liquidation, dissolution
or winding up of the Company, holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities and the
liquidation preference of any then outstanding Preferred Stock. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares are, and all shares to be sold and issued as contemplated
hereby will be, fully paid and nonassessable and legally issued. The Board of
Directors is authorized to issue additional shares of Common Stock within the
limits authorized by the Company's charter and without shareholder action. As
of March 10, 1998, there were 14,838,557 shares of Class A Common Stock
outstanding.

Class E-1 Common Stock

The Company is authorized to issue 2,200,000 shares of Class E-1 Common
Stock, no par value. As of March 10, 1998, there were outstanding 1,257,178
shares of Class E-1 Common Stock and 1,257,178 shares of Class E-2 Common
Stock (the "Escrow Shares"). The Escrow Shares are not transferrable (but may
be voted), and each Escrow Share will automatically convert into one share of
Common Stock and be released to

16
<PAGE>

the owners thereof upon the achievement of the objectives described below. On
June 30, 2000, all Escrow Shares not previously converted into Common Stock
will be cancelled. This arrangement was required by the representative of the
underwriters for the Company's initial public offering as a condition of such
offering.

All of the Class E-1 Common Stock will be automatically converted into Class
A Common Stock in the event that the Company's net income before provision for
income taxes, as defined, exceeds certain amounts. These amounts were
originally $6,850,000, $8,425,000, and $9,900,000 for the fiscal years ending
March 31, 1998 through 2000, respectively, but these amounts will be increased
in future fiscal years in proportion to increases in the weighted average
number of shares of Class A Common Stock outstanding (as defined) in the
relevant year, as compared to the number of shares outstanding immediately
after the Company's initial public offering in 1994.

Class E-2 Common Stock

The Company is authorized to issue 2,200,000 shares of Class E-2 Common
Stock, no par value. All of the shares of Class E-2 Common Stock will be
automatically converted into Class A Common Stock in the event that the
Company's net income before provision for income taxes, as defined, amounts to
at least $14,750,000, $20,475,000 or $26,750,000 for years March 31, 1998
through 2000, respectively (which amounts shall be adjusted in the same manner
as those for the Class E-1 Common Stock).

Any money, securities, rights or property distributed in respect of the
Escrow Shares, including any property distributed as dividends or pursuant to
any stock split, merger, recapitalization, dissolution or total or partial
liquidation of the Company, shall be held by the Company in escrow until
conversion of the Escrow Shares. If none of the foregoing earnings or market
price levels are attained, the Escrow Shares, as well as any dividends or
other distributions made with respect thereto, will be cancelled. The earnings
levels set forth above were determined by negotiation between the Company and
the representative of the underwriter in the Company's initial public offering
and should not be construed to imply or predict any future earnings by the
Company. There can be no assurance that such earnings levels will be attained
or that any or all of the Escrow Shares will be converted into Common Stock.
However, the conversion to Common Stock of all or any portion of the Escrow
Shares may result in a charge to earnings to the extent that such shares are
held by management or employees.

PREFERRED STOCK

The Company's authorized preferred stock consists of 20,000,000 shares, no
par value (the "Preferred Stock"), of which 11,150,000 shares have been
cancelled or already designated. The Board of Directors has the authority,
without further action by the shareholders, to issue from time to time up to
8,850,000 shares of Preferred Stock in one or more series and to fix the
dividend rights and terms, conversion rights, voting rights (whole, limited or
none), redemption rights and terms, liquidation preferences, sinking funds and
any other rights, preferences, privileges and restrictions applicable to each
such series of Preferred Stock. The purpose of authorizing the Board of
Directors to determine such rights and preferences is to eliminate delays
associated with a shareholder vote on specific issuances. The issuance of the
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of the holders of Common Stock and, under
certain circumstances, could make it more difficult for a third party to gain
control of the Company. Such issuance of Preferred Stock could also adversely
affect the distributions on and liquidation preference of the Common Stock by
creating more series of Preferred Stock with distribution or liquidation
preferences senior to the Common Stock. The Company has no present plan to
issue any shares of Preferred Stock.

REDEEMABLE WARRANTS

The Company has outstanding redeemable Warrants which are currently listed
on the Nasdaq National Market. These Warrants were issuable pursuant to
Warrant Agreements (the "Warrant Agreements") among the

17
<PAGE>

Company, D.H. Blair (as the underwriter in the Company's two public offerings)
and American Stock Transfer and Trust Company as warrant agent, and are
evidenced by warrant certificates in registered form. The exercise prices of
the Warrants were determined by negotiation between the Company and D.H. Blair
at the time of the IPO and should not be construed to predict or imply that
any price increase will occur in any of the Company's securities.

The Warrants may be exercised upon surrender of the Warrant certificate on
or prior to the respective expiration dates (or earlier redemption dates),
accompanied by payment of the full exercise price (by certified or bank check
payable to the order of the Company) for the number of shares with respect to
which the Warrants are being exercised. Holders of the Warrants do not have
any voting or other rights of a shareholder of the Company. Upon notice to the
holders of the Warrants, the Company has the right to unilaterally reduce the
exercise price or extend the expiration date of the Warrants. The Warrants
provide for the adjustment of the exercise price and for a change in the
number of shares issuable upon exercise to protect the holders of the Warrants
against dilution of the event of a stock dividend, stock split, combination or
reclassification of the Class A Common Stock or upon issuance of additional
shares of Class A Common Stock at prices lower than the market price then in
effect other than issuances upon exercise of options granted to employees,
directors and consultants to the Company.

Class A Warrants

Each Class A Warrant entitles the registered holder to purchase one share of
Class A Common Stock and one redeemable Class B Warrant at an exercise price
of $6.50 at any time prior to November 30, 1999. Although there are no Class A
Warrants presently outstanding, the IPO Unit Purchase Options provide the
holders thereof with the option to purchase such Warrants. The Company has the
right to redeem all of the Class A Warrants at a price of $0.05 per Class A
Warrant upon not less than 30 days' prior written notice at any time, provided
that before any such redemption can take place, the last sale price of the
Company's Class A Common Stock as reported by Nasdaq shall have averaged in
excess of $9.10 per share for 30 consecutive business days ending within 15
days of the date of the notice of redemption. During the 30-day notice period,
a holder shall have the option to exercise his Class A Warrants. This right of
redemption shall not apply to the Class A Warrants that are components of the
IPO Unit Purchase Options, as defined below.

Class B Warrants

Each Class B Warrant entitles the registered holder to purchase one share of
Common Stock at an exercise price of $8.00 per share at any time prior to
November 30, 1999. As of March 10, 1998, the Company had outstanding 7,592,460
Class B Warrants. The Company has a right to redeem all of the Class B
Warrants at a price of $.05 per Class B Warrant upon not less than 30 days'
prior written notice at any time after November 30, 1997, provided that before
any such redemption can take place, the last sale price as reported by Nasdaq
of the Company's Class A Common Stock exceeds $11.20 per share for 30
consecutive trading days ending within 15 days prior to the date of the notice
of redemption. During the 30-day notice period, a holder shall have the option
to exercise his Class B Warrants. This right of redemption shall not apply to
the Class B Warrants that are components of the IPO Unit Purchase Options or
the Secondary Unit Purchase Options, as defined below.

IPO UNIT PURCHASE OPTIONS

In connection with the Company's IPO, the Company granted to D.H. Blair, its
designees and three finders IPO Unit Purchase Options to purchase up to an
aggregate of 240,000 units. Presently, there are 3,400 such IPO Unit Purchase
Options that are unexercised. The units issuable upon exercise of the IPO Unit
Purchase Options consist of (i) one share of Class A Common Stock, (ii) one
Class A Warrant and (iii) one Class B Warrant. The Class A Warrants and Class
B Warrants included in the IPO Unit Purchase Options will not be subject to
redemption by the Company, except if at the time the Warrants are called for
redemption, the IPO Unit Purchase

18
<PAGE>

Options have been exercised and the underlying warrants are outstanding. The
IPO Unit Purchase Options are exercisable at any time prior to November 30,
1999 at an exercise price of $7.00 each subject to adjustment in certain
events to protect against dilution. The IPO Unit Purchase Options cannot be
transferred, sold, assigned or hypothecated until November 30, 1997, except in
the case of a transfer to any officer of D.H. Blair or a member of that
selling group.

SECONDARY UNIT PURCHASE OPTIONS

In connection with the Company's Secondary Offering in October 1996, the
Company granted to D.H. Blair, as the underwriter in such offering, Secondary
Unit Purchase Options to purchase up to 1,100 units. These units issuable upon
exercise of the Secondary Unit Purchase Options will be identical to the units
issued in the Secondary Offering, and therefore each will consist of 190
shares of the Company's Class A Common Stock and 95 Class B Warrants. The
Class B Warrants included therein are subject to redemption by the Company at
any time after the Secondary Unit Purchase Options have been exercised and the
underlying warrants are outstanding. The Secondary Unit Purchase Options are
exercisable during the three year period commencing October 18, 1998, at an
exercise price of $1,200 per unit, subject to adjustment in certain events to
protect against dilution. After the expiration date of the Class B Warrants
included therein, the Secondary Unit Purchase Options will be exercisable only
with respect to the shares Class A Common Stock subject to such option. The
Secondary Unit Purchase Options are not transferable until October 18, 1998,
except to officers of D.H. Blair or to members of the selling group. Subject
to certain procedural requirements and limitations relating to underwriting
offerings, the Company has agreed upon request to register under the
Securities Act the securities issuable upon exercise of the Secondary Unit
Purchase Options on two separate occasions during the four year period
commencing October 18, 1997. The initial such registration is to be at the
Company's expense and the second registration is to be at the expense of the
holders. The Secondary Unit Purchase Options include a provision permitting
the holders to elect a cashless exercise. The Company has also granted certain
"piggyback" registration rights to holders of the Secondary Unit Purchase
Options.

TRANSFER AND WARRANT AGENT

The Transfer and Warrant Agent for the Company's securities is American
Stock Transfer & Trust Company, New York, New York.

19
<PAGE>

PLAN OF DISTRIBUTION

The securities offered hereby are being offered directly by the Company
pursuant to the terms of the Warrants. No underwriter is being utilized in
connection with this offering.

The Company has agreed to pay D.H. Blair a Solicitation Fee of 5% of the
aggregate exercise price of each Warrant which is exercised that is solicited
by representatives or agents of D.H. Blair if (i) the market price of the
Class A Common Stock on the date the Warrant is exercised is greater than the
then exercise price of the Warrant; (ii) the exercise of the Warrant was
solicited by a member of the NASD; (iii) the Warrant is not held in a
discretionary account; (iv) disclosure of compensation arrangements was made
both at the time of the offering and at the time of exercise of the Warrant;
and (v) the solicitation of exercise of the Warrants was not in violation of
Rule 102 of Regulation M ("Rule 102") as promulgated under the Exchange Act or
respective state blue sky laws. Any costs incurred by the Company in
connection with the exercising of the Warrants shall be borne by the Company.

D.H. Blair acted as the underwriter of the Company's IPO in November and
December 1994, and as the underwriter of its Secondary Offering in October
1996. Other than the securities underlying the IPO Unit Purchase Options
granted to D.H. Blair in connection with the IPO, and the Secondary Unit
Purchase Options granted to D.H. Blair in connection with the Secondary
Offering, the Company is not aware of any other securities of the Company
owned by D.H. Blair. In connection with the IPO and the Secondary Offering,
the Company and D.H. Blair agreed to indemnify each other against certain
liabilities in connection with the IPO and the Secondary Offering including
liabilities under the Act.

In connection with the IPO, the Company sold to D.H. Blair, its designees,
and three finders, for nominal consideration, IPO Unit Purchase Options to
purchase up to 240,000 IPO units at an exercise price of $7.00 per IPO unit.
The IPO Unit Purchase Options are exercisable during the period commencing
November 30, 1995 and ending November 30, 1999. There are presently 3,400 IPO
Unit Purchase Options that remain outstanding. In connection with the
Secondary Offering, the Company sold to D.H. Blair and its designees, for
nominal consideration, the Secondary Unit Purchase Options to purchase up to
1,100 units of the type sold in the Secondary Offering, at an exercise price
of $1,200 per unit, subject to adjustment in certain events to protect against
dilution. See "Description of Securities--IPO Unit Purchase Options;--
Secondary Unit Purchase Options."

Subject to certain limitations and exclusions, the Company has agreed, upon
request, to register the IPO Unit Purchase Options issued to D.H. Blair and
the Secondary Unit Purchase Options and the underlying securities under the
Act on two occasions (the first at the Company's expense, and the second at
the expense of the holders of such options). The Company has also granted
certain "piggyback" registration rights to holders of D.H. Blair's IPO Unit
Purchase Options and the Secondary Unit Purchase Options.

The Company may also pay D.H. Blair a Solicitation Fee in connection with
the recent redemption of the Company's Class A Warrants. The amount of this
fee has not been determined.

The Company entered into an agreement with D.H. Blair providing for the
payment of a fee to D.H. Blair, in the event that D.H. Blair is responsible
for a merger or other acquisition transaction to which the Company is a party.
The fee is based on a percentage of the consideration paid in the transaction
ranging from 7% of the first $1,000,000 to 2 1/2% of any consideration in
excess of $9,000,000.

Unless granted an exemption by the Commission from Rule 102, D.H. Blair will
be prohibited from engaging in any market making activities with regard to the
Company's securities for the period from five business days (or such other
applicable period as Rule 102 may provide) prior to any solicitation of the
exercise of Warrants until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right that D.H.
Blair may have to receive a fee for the exercise of Warrants following such
solicitation. As a result, D.H. Blair may be unable to continue to make a
market in the Company's securities during certain periods while the Warrants
are exercisable.

20
<PAGE>

The exercise prices and other terms of the Warrants have been determined by
negotiation between the Company and D.H. Blair and are not necessarily related
to the Company's asset value, net worth or other established criteria of
value.

D.H. Blair has informed the Company that the Commission is conducting an
investigation concerning various business activities of D.H. Blair. The
investigation appears to be broad in scope, involving numerous aspects of D.H.
Blair's compliance with the federal securities laws. The Company has been
advised by D.H. Blair that the investigation has been ongoing since at least
1989 and that they are cooperating with the investigation. D.H. Blair cannot
predict whether this investigation will ever result in any type of formal
enforcement action against D.H. Blair, or, if so, whether any such action
might have an adverse effect on D.H. Blair or the securities offered hereby.
D.H. Blair makes a market in the Company's securities. An unfavorable
resolution of the Commission's investigation could have the effect of limiting
D.H. Blair's ability to make a market in the Company's securities, which could
affect the liquidity and price of such securities.

The Company has set , 199 as the Redemption Date for the Redeemable
Warrants. The Company can redeem the Redeemable Warrants for $0.05 per Warrant
(the "Redemption Price") upon at least thirty (30) days' written notice at any
time, provided that the last sale price as reported by Nasdaq, for the
Company's Class A Common Stock has been at least $11.20 per share, for the
thirty (30) consecutive trading days ending within fifteen (15) days of the
notice of redemption. All Redeemable Warrants which are not exercised prior to
the Redemption Date will be redeemed at the Redemption Price. The right to
exercise the Redeemable Warrants expires at 5:00 p.m., Eastern Daylight Time,
on the Exercise Expiration Date. Redeemable Warrants not duly surrendered for
exercise prior to such time shall be redeemed and the rights of the holders
thereof shall terminate, other than the right to receive the Redemption Price.
The Warrant Agent for the Warrants is American Stock Transfer & Trust Company,
New York, New York.

The Company has retained Bear, Stearns as the Company's financial advisor in
connection with the redemption of the Redeemable Warrants. In addition, the
Company has granted Bear, Stearns an option, exercisable in Bear, Stearns'
sole discretion, to purchase from the Company all of the shares of Class A
Common Stock that otherwise would have been delivered upon exercise of
Redeemable Warrants that are either (i) duly surrendered for redemption on or
prior to the Redemption Date, or (ii) not duly surrendered for exercise on or
prior to the Exercise Expiration Date or for redemption on or prior to the
Redemption Date. The option granted to Bear, Stearns is exercisable until
March 1, 1999 at an exercise price of $8.00 per share. In connection with the
redemption of the Class B Warrants, the Company has agreed to pay Bear,
Stearns a fee in the amount of $250,000. In addition, in the event that a
redemption of the Class B Warrants occurs, Bear, Stearns shall receive
warrants to purchase 30,000 shares of Class A Common Stock with an aggregate
exercise price of 105% of the closing sale price of the Class A Common Stock
on the date of the closing of the Class B Warrant redemption. In connection
with the redemption of the Company's Class A Warrants in January 1998, Bear,
Stearns received $150,000 for financial services and was granted a warrant to
purchase 56,580 shares of the Company's Class A Common Stock at an exercise
price of $7.25 per share.

The Company has also retained Allen & Caron Inc. ("Allen & Caron")
(telephone: 714-252-8440) as the information agent for the Redeemable
Warrants.

D.H. Blair is entitled, pursuant to the Underwriting Agreement entered into
in connection with the IPO, to act as the Company's exclusive agent for
purposes of soliciting warrantholders to exercise the Warrants during the
exercise period therefor, and the Company is required to pay to D.H. Blair a
solicitation fee of five percent (5%) on the exercise of the Warrants
solicited by representatives and agents of D.H. Blair, subject to certain
conditions.

21
<PAGE>

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted by California law. The Company is
also empowered under its Bylaws to enter into indemnification contracts with
its directors and officers and certain others and to purchase insurance on
behalf of any person it is required or permitted to indemnify. Pursuant to
this provision, the Company has entered into indemnity agreements with each of
its directors and executive officers and certain key consultants.

In addition, the Company's Articles of Incorporation provide that, to the
fullest extent permitted by California law, the Company's directors will not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company or its shareholders. This provision in the Articles of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
nonmonetary relief would remain available under California law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omission involving intentional misconduct
or knowing and culpable violations of law, for acts or omissions that a
director believes to be contrary to the best interests of the Company or its
shareholders or involve the absence of good faith on the part of the director,
for any transaction from which the director derived an improper personal
benefit, for acts or omissions involving a reckless disregard for the
director's duty to the Company or its shareholders when the director was aware
or should have been aware of a risk of serious injury to the Company or its
shareholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty of the
Company or its shareholders, for improper transaction between the director and
the Company, for improper distributions to shareholders and loans to directors
and officers or for acts or omissions by the director as an officer. This
provision also does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.

There is no pending litigation or proceeding involving a director or officer
of the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.

The Company believes the foregoing provisions are necessary to attract and
retain qualified persons as directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

22
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
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 FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Cautionary Statement Regarding Forward-Looking Statements.................. 3
The Company................................................................ 4
Risk Factors............................................................... 5
Use of Proceeds............................................................ 13
Recent Developments........................................................ 14
Dilution................................................................... 15
Concurrent Offering........................................................ 16
Description of Securities.................................................. 16
Plan of Distribution....................................................... 20
Indemnification of Directors and Officers.................................. 22
</TABLE>

PREMIER LASER SYSTEMS, INC.

MARCH 16, 1998

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

PROSPECTUS SUBJECT TO COMPLETION--DATED MARCH 16, 1998
PREMIER LASER SYSTEMS, INC.

3,400 CLASS A WARRANTS

327,100 SHARES OF CLASS A COMMON STOCK

AND 111,300 REDEEMABLE CLASS B WARRANTS

This Prospectus relates to certain warrants and shares of Common Stock of
Premier Laser Systems, Inc., a California corporation (the "Company") issuable
upon the exercise of 3,400 Unit Purchase Options ("IPO Unit Purchase Options")
issued to certain designees of D.H. Blair Investment Banking Corp. ("D.H.
Blair") (collectively, the "Selling Securityholders") in connection with the
Company's initial public offering in November 1994 (the "IPO"). In addition,
this Prospectus relates to certain warrants and shares of Common Stock issuable
upon the exercise of 1,100 Unit Purchase Options (the "Secondary Unit Purchase
Options," together with the IPO Unit Purchase Options, the "UPOs") issued by
the Company to D.H. Blair and its designees in connection with its secondary
public offering in October 1996 (the "Secondary Offering," which together with
the IPO, are sometimes referred to herein as the "Public Offerings"). The
securities issuable upon exercise of the UPO's include (i) 111,300 redeemable
Class B Warrants (the "Warrants" or the "Class B Warrants"), (ii) 3,400
redeemable Class A Warrants and (iii) 327,100 shares of Class A Common Stock,
no par value, of the Company, including 111,300 shares of Class A Common Stock
underlying the Class B Warrants. See "Selling Securityholders and Plan of
Distribution." Each Class A Warrant entitles the holder to purchase, at an
exercise price of $6.50, one Class B Warrant and one share of Class A Common
Stock. Each Class B Warrant entitles the holder to purchase, at an exercise
price of $8.00, one share of Class A Common Stock. The Class A and Class B
Warrants are exercisable at any time prior to November 30, 1999. The Class A
and Class B Warrants are subject to redemption by the Company, if outstanding,
for $0.05 per Warrant, upon 30 days' written notice at any time, provided that
before any such redemption can take place, the last sale price as reported by
the Nasdaq Stock Market, Inc. ("Nasdaq") of the Company's Class A Common Stock
exceeds $9.10 per share with respect to the Class A Warrants and $11.20 per
share with respect to the Class B Warrants for 30 consecutive business days
ending within 15 days of the date the warrants are called for redemption. See
"Description of the Securities."

The securities offered by this Prospectus may be sold from time to time by
the Selling Securityholders, or by their transferees. The distribution of the
securities offered hereby may be effected in one or more transactions that may
take place on the Nasdaq National Market, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the Selling Securityholders. See "Selling
Securityholders and Plan of Distribution."

The Selling Securityholders and any broker-dealers that participate in the
distribution may be deemed "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Act"), with respect to the securities offered,
and any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Act.

The Company will not receive any of the proceeds from the sale of securities
by the Selling Securityholders. In the event the UPOs and the underlying
Warrants are fully exercised by the Selling Securityholders, the Company will
receive net proceeds of $2,143,485. See "Selling Securityholders and Plan of
Distribution."

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
IMMEDIATE DILUTION. SEE "RISK FACTORS" AND "DILUTION."

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.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXERCISE PRICE PROCEEDS TO COMPANY(1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Per IPO Unit Purchase Option.................... $7.00 $6.65
- ----------------------------------------------------------------------------------------------
Total.......................................... $23,800.00 $22,610.00
- ----------------------------------------------------------------------------------------------
Per Secondary Unit Purchase Option.............. $1,200.00 $1,140.00
- ----------------------------------------------------------------------------------------------
Total.......................................... $1,320,000.00 $1,254,000.00
- ----------------------------------------------------------------------------------------------
Per Class A Warrant............................. $6.50 $6.18
- ----------------------------------------------------------------------------------------------
Total.......................................... $22,100 $20,995
- ----------------------------------------------------------------------------------------------
Per Class B Warrant............................. $8.00 $7.60
- ----------------------------------------------------------------------------------------------
Total.......................................... $890,400 $845,880
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>

(1) If the exercise of the Warrants is solicited by the Underwriter and certain
other conditions are satisfied, the Company is obligated to pay to the
Underwriter a solicitation fee equal to 5% of the aggregate exercise price
of such Warrants. These figures assume the payment of such solicitation
fee.

The date of this Prospectus is March , 1998.
<PAGE>

ALTERNATE

USE OF PROCEEDS

Holders of UPOs and underlying Warrants are not obligated to exercise such
UPOs or underlying Warrants and there can be no assurance that the Selling
Securityholders will choose to exercise all or any of their UPOs or underlying
Warrants. In the event that all of the UPOs and the 3,400 Class A Warrants and
111,300 Class B Warrants contained therein are exercised, the net proceeds to
the Company would be $2,143,485.

The Company intends to use the net proceeds received upon the exercise of
the UPOs and underlying Warrants, if any, for general corporate purposes and
working capital to support anticipated growth, including research and
development programs and continuing development of a distributor network. The
Company may also use a portion of the net proceeds from the exercise of
Warrants for possible acquisitions of complementary businesses, products and
technologies.

13
<PAGE>

ALTERNATE

DILUTION

The following discussion and tables treat the Company's Class A and Class E-
1 and Class E-2 Common Stock as a single class, and allocates no value to the
Warrants issuable upon exercise of the UPO's.

After giving effect to the exercise of the IPO Unit Purchase Options, the
pro forma net tangible book value of the shares of Class A Common Stock at
December 31, 1997 would have been $2.11 per share, representing an immediate
dilution per share of $4.89 to individuals exercising IPO Unit Purchase
Options. After giving effect to the exercise of the Secondary Unit Purchase
Options the pro forma net tangible book value of the shares of Class A Common
Stock at December 31, 1997 would have been $2.17 per share, representing an
immediate dilution per share of $4.15 to individuals exercising Secondary Unit
Purchase Options.

The following table illustrates the per share dilution to be incurred by
individuals exercising the UPO's, assuming all such UPO's are exercised:

<TABLE>
<CAPTION>
SECONDARY
IPO UNIT UNIT
PURCHASE PURCHASE
OPTIONS (1) OPTIONS(1)
------------ -----------
<S> <C> <C> <C> <C>
Exercise price.................................. $ 7.00 $6.32(2)
Net tangible book value per share before the
exercise of UPO's............................ 2.11 2.11
Increase per share attributable to the
exercise of the UPO........................... 0.00 0.06
Pro forma net tangible book value after
exercise(3).................................... 2.11 2.17
------ -----
Dilution of net tangible book value............. $ 4.89 $4.15
====== =====
</TABLE>
- --------
(1) Dilution amounts are calculated separately; amounts relating to IPO Unit
Purchase Options assume the Secondary Unit Purchase Options have not been
exercised, and amounts relating to the Secondary Unit Purchase Options
assume that the IPO Unit Purchase Options have not been exercised.

(2) Represents the exercise price of each Secondary Unit Purchase Option
($1,200) divided by the number of shares of Class A Common Stock (190)
issuable upon such exercise.

(3) Assumes the entire exercise price, excluding the expenses of the offering,
is allocated to the Class A Common Stock obtained upon exercise.

15
<PAGE>

ALTERNATE

CONCURRENT OFFERING

Concurrently with this offering, the Company is also offering 7,592,460
shares of Class A Common Stock issuable upon exercise of outstanding Class B
Warrants. Sales of securities by the Company pursuant to the exercise of
outstanding warrants, or by the Selling Securityholders, or the potential of
such sales, could have an adverse effect on the market price of the Warrants
and of the securities purchasable upon exercise of the Warrants.

16
<PAGE>

ALTERNATE

SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION

An aggregate of up to 3,400 Class A Warrants, 6,800 Class B Warrants and
13,600 shares of Common Stock issuable upon exercise of the Class A and Class
B Warrants may be offered for resale by Selling Securityholders who received
IPO Unit Purchase Options. An aggregate of up to 104,500 Class B Warrants and
313,500 shares of Common Stock (including 104,500 shares issuable upon
exercise of the Class B Warrants) may be offered for resale by Selling
Securityholders who received Secondary Unit Purchase Options. See "Description
of Securities."

The following table sets forth certain information with respect to each
Selling Securityholder for whom the Company is registering securities for
resale to the public. The Company will not receive any of the proceeds from
the sale of these securities. Each Selling Securityholder is or has in the
past been affiliated with D.H. Blair, which acted as the underwriter in
connection with the Public Offerings. Each of the Selling Securityholders has
sole investment power with respect to the securities offered hereby. None of
the Selling Securityholders will beneficially own in excess of 1% of the
outstanding shares of the Company after the sale of securities offered hereby.

<TABLE>
<CAPTION>
SECURITIES
BENEFICIALLY OWNED
AS OF MARCH 10, SECURITIES TO
1998 BE OFFERED(/2/)
------------------- ---------------
OWNERSHIP
AFTER THE
CLASS SALE OF
CLASS A A THE
COMMON CLASS B COMMON CLASS B OFFERED
SELLING SECURITYHOLDER STOCK(/1/) WARRANTS STOCK WARRANTS SECURITIES
- ---------------------- ---------- -------- ------ -------- ----------
<S> <C> <C> <C> <C> <C>
Martin A. Bell................... 15,694 7,847 15,694 7,847 0
David Nachamie................... 1,064 532 1,064 532 0
Alison Brown..................... 646 323 646 323 0
A. Wasserman..................... 1,264 732 1,264 732 0
J. Morton Davis.................. 15,922 7,961 15,922 7,961 0
Kenton E. Wood................... 8,270 5,135 8,270 5,135 0
Michael Siciliano................ 1,064 532 1,064 532 0
Esther Stahler................... 63,688 31,844 63,688 31,844 0
D.H. Blair Investment
Banking Corp.................... 15,846 7,923 15,846 7,923 0
D.H. Blair & Co., Inc............ 20,900 10,450 20,900 10,450 0
Ruki Renov....................... 63,688 31,844 63,688 31,844 0
Richard Maio..................... 1,000 1,000 1,000 1,000 0
Steven Monte..................... 200 200 200 200 0
Steve Sherman.................... 2,090 1,045 2,090 1,045 0
Vito Capotorto................... 1,064 532 1,064 532 0
</TABLE>
- --------
(1) Consists of shares issuable upon exercise of the UPOs excluding the shares
underlying the Warrants.
(2) Assumes the sale of all shares of Common Stock and Warrants which may be
received upon exercise of the UPOs.

The sale of the securities by the Selling Securityholders may be effected
from time to time in transactions (which may include block transactions by or
for the account of the Selling Securityholders) in the over-the- counter
market or in negotiated transactions, a combination of such methods of sale or
otherwise. Sales may be made at fixed prices which may be changed, at market
prices prevailing at the time of sale, or at negotiated prices.

Selling Securityholders may effect such transactions by selling their
securities directly to purchasers, through broker-dealers acting as agents for
the Selling Securityholders or to broker-dealers who may purchase

20
<PAGE>

ALTERNATE

securities as principals and thereafter sell the securities from time to time
in the over-the-counter market, in negotiated transactions or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers for whom such broker-dealers act as agents or to whom they may sell
as principals or otherwise (which compensation as to a particular broker-
dealer may exceed customary commissions).

The Selling Securityholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them. The Company has
paid the expenses of the preparation of this Prospectus. The Company has not
made any underwriting arrangements with respect to the sale of the Warrants
and the underlying securities offered hereby on exercise of the UPOs. Upon
exercise of the UPOs, the Warrants and underlying securities will be issued by
the Company directly to the persons exercising the UPOs.

Under applicable rules and regulations under the Securities Exchange Act of
1934 ("Exchange Act"), any person engaged in the distribution of the Warrants
may not simultaneously engage in market making activities with respect to any
securities of the Company for a period of at least one (and possibly five)
business days prior to the commencement of such distribution. Accordingly, in
the event D.H. Blair or D.H. Blair & Co. Inc. ("Blair & Co.") is engaged in a
distribution of the Warrants, neither of such firms will be able to make a
market in the Company's securities during the applicable restrictive period.
However, neither D.H. Blair nor Blair & Co. have agreed to nor are either of
them obliged to act as broker/dealer in the sale of the Warrants and the
Selling Securityholders may be required, and in the event Blair & Co. is a
market maker, will likely be required, to sell such securities through another
broker/dealer. In addition, each Selling Securityholder desiring to sell
Warrants will be subject to the applicable provisions of each of the Act and
Exchange Act and the respective rules and regulations thereunder, including
without limitation, Rule 10b-7 and Rule 102 of Regulation M, which provisions
may limit the timing of the purchases and sales of shares of the Company's
securities by such Selling Securityholders.

The Selling Securityholders and broker-dealers, if any, acting in connection
with such sales might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commission received by them and
any profit on the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.

21
<PAGE>

ALTERNATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Cautionary Statement Regarding Forward-Looking Statements.................. 3
The Company................................................................ 4
Risk Factors............................................................... 5
Use of Proceeds............................................................ 13
Dilution................................................................... 15
Concurrent Offering........................................................ 16
Selling Securityholders and Plan of Distribution........................... 20
Indemnification of Directors and Officers.................................. 22
</TABLE>

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

PREMIER LASER SYSTEMS, INC.

3,400 REDEEMABLE CLASS A WARRANTS

111,300 REDEEMABLE CLASS B WARRANTS

327,100 SHARES OF CLASS A COMMON STOCK

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

PROSPECTUS

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

MARCH 16, 1998

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses of the Registrant in
connection with the issuance and distribution of the securities described in
the Registration Statement:

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 0
Legal Fees and Expenses.......................................... $30,000.00
Accounting Fees and Expenses..................................... $30,000.00
Printing and Engraving Expenses.................................. $10,000.00
Miscellaneous.................................................... $10,000.00
----------
Total........................................................ $80,000.00
==========
</TABLE>

All of the above expenses will be paid by the Registrant.

15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The California General Corporations Law provides that California
corporations may include provisions in their articles of incorporation
relieving directors of monetary liability for breach of their fiduciary duty
as directors, except for the liability of a director resulting from (i) any
transaction from which the director derives an improper personal benefit, (ii)
acts or omissions involving intentional misconduct or a knowing and culpable
violation of law, (iii) acts or omissions that a director believes to be
contrary to the best interests of the Registrant or its shareholders or that
involves the absence of good faith on the part of the director (iv) acts or
omissions constituting an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the Registrant or its shareholders, (v)
acts or omissions showing a reckless disregard for the director's duty to the
Registrant or its shareholders in circumstances in which the director was
aware or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the Registrant or its
shareholders, (vi) any improper transaction between a director and the
Registrant in which the director has a material financial interest, or (vii)
the making of an illegal distribution to shareholders or an illegal loan or
guaranty. The Registrant's Articles of Incorporation provide that the
Registrant's directors are not liable to the Registrant or its shareholders
for monetary damages for breach of their fiduciary duties to the fullest
extent permitted by California law.

The inclusion of the above provision in the Articles of Incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefitted the Registrant and
its shareholders. At present, there is no litigation or proceeding pending
involving a director of the Registrant as to which indemnification is being
sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification by any director.

The Registrant's Articles of Incorporation provide that the Registrant shall
indemnify its directors and officers to the fullest extent permitted by
California law, including circumstances in which indemnification is otherwise
discretionary under California law. Since the California statute is
nonexclusive, it is possible that certain claims beyond the scope of the
statute may be indemnifiable. Accordingly, the Registrant has also entered
into an indemnification agreement (the "Indemnification Agreement") with
certain of its directors and officers that requires the Registrant to
indemnify such directors and officers to the fullest extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable.

II-1
<PAGE>

It is intended that the Indemnification Agreements provide a scheme of
indemnification which may be broader than that specifically provided by the
California statute. It has not yet been determined, however, the degree to
which the indemnification expressly permitted by the California statute may be
expanded.

Set forth below is a description of the principal provisions of the
Indemnification Agreement:

First, the Indemnification Agreement imposes upon the Company the burden
of proving that the Indemnified Party has not met the applicable standard
of conduct required for indemnification. The California statute requires a
finding by the Board of Directors, independent legal counsel, or the
stockholders that the applicable standard of conduct has been met.

Second, the Indemnification Agreement provides that litigation expenses
shall be advanced to an Indemnified Party at his or her request, against an
undertaking to repay the amount advanced if it is ultimately determined
that he is not entitled to indemnification for such expenses. The
California statute provides that such expenses may be advanced against such
an undertaking, upon authorization by the Board of Directors.

Third, in the event the Company does not pay a requested indemnification
amount, the Indemnification Agreement allows such Indemnified Party to
contest this determination by petitioning a court to make an independent
determination of whether such indemnified Party is entitled to
indemnification under the Indemnification Agreement. The California statute
does not set forth the procedure for contesting a corporation's
determination of a party's right to indemnification.

Finally, the Indemnification Agreement explicitly provides that actions
by an Indemnified Party at the request of the Company as a director,
officer or agent of an employee benefit plan, corporation, partnership,
joint venture or other enterprise owned or controlled by the Company shall
be covered by the indemnification. The California statute does not
specifically address this issue. It does, however, provide that to the
extent that an Indemnified Party has been successful on the merits, he
shall be entitled to such indemnification.

The Company is not aware of any threatened litigation or proceeding which
may result in a claim for indemnification under the Indemnification Agreement
by any director or officer.

16. EXHIBITS.

<TABLE>
<C> <S>
2.1 Stock Purchase Agreement by and between Premier Laser Systems, Inc. and
Ophthalmic Imaging Systems dated as of February 25, 1998 (incorporated
herein by this reference to Exhibit 99.1 to the Registrant's Current
Report on Form 8-K filed with the Commission on March 9, 1998).
2.2 Agreement and Plan of Merger dated as of April 24, 1997 among Premier
Laser Systems, Inc., EyeSys Technologies, Inc. and Premier Acquisition
of Delaware, Inc. (incorporated herein by this reference to Exhibit 2.1
to the Registrant's Registration Statement on Form S-4, Registration No.
333-29573).
2.3 First Amendment to Agreement and Plan of Merger dated as of August 6,
1997 among Premier Laser Systems, Inc., EyeSys Technologies, Inc. and
Premier Acquisition of Delaware, Inc. (incorporated herein by this
reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-K
filed with the Commission on October 15, 1997, and amended by its
Current Report on Form 8-K/A filed with the Commission on November 14,
1997).
2.4 Second Amendment to Agreement and Plan of Merger dated as of September
16, 1997 among Premier Laser Systems, Inc., EyeSys Technologies, Inc.
and Premier Acquisition of Delaware, Inc. (incorporated herein by this
reference to Exhibit 2.3 to the Registrant's Current Report on Form 8-K
filed with the Commission on October 15, 1997, and amended by its
Current Report on Form 8-K/A filed with the Commission on November 14,
1997.
4.1 Form of Stock Certificate (incorporated herein by this reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form SB-2,
file no. 33-83984).
4.2 Amended and Restated Articles of Incorporation (incorporated herein by
this reference to Exhibit 4.8 to the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended December 31, 1994).
</TABLE>

II-2
<PAGE>

<TABLE>
<C> <S>
4.3 Form of Underwriter's Unit Purchase Option (IPO) (incorporated herein
by this reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form SB-2, file no. 33-83984).
4.4 Form of Underwriter's Unit Purchase Option (Secondary) (incorporated
herein by this reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form SB-2, file no. 333-04219).
4.5 Form of Warrant Agreement (including forms of Class A and Class B
Warrant Certificates) (incorporated herein by this reference to Exhibit
4.1 to the Registrant's Registration Statement on Form SB-2, file no.
33-83984).
4.6 Form of Amendment to Warrant Agreement dated as of November 30, 1994
(incorporated herein by this reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form SB-2, file no. 333-04219).
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of Rutan & Tucker, LLP (included in Exhibit 5)
23.2 Consent of Price Waterhouse LLP*
23.3 Consent of Ernst & Young LLP*
23.4 Consent of Ernst & Young LLP*
23.5 Consent of Coopers & Lybrand L.L.P.*
24 Power of Attorney+
</TABLE>
- --------

* Filed herewith.

+ Previously filed.

17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to:

(i) Include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(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;

(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;

provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.

(2) That for the purpose of determining liability under the Securities
Act of 1933, the Registrant will treat each post-effective amendment as a
new Registration Statement of the securities offered, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To file a post-effective amendment or remove from registration any of
the securities that remain unsold at the end of the offering.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities as the time shall be deemed to be the initial bona fide offering
thereof.

II-3
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
securities and Exchange Commission such indemnification is against public
policy as expressed in the 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS POST EFFECTIVE
AMENDMENT NO. 4 TO REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF IRVINE,
STATE OF CALIFORNIA, ON THE 12TH DAY OF MARCH, 1998.

PREMIER LASER SYSTEMS, INC.

By: /s/ Colette Cozean
----------------------------------
Colette Cozean, Ph.D.
President and Chief Executive
Officer

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.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Colette Cozean Chairman of the Board, March 12, 1998
____________________________________ President and Chief
Colette Cozean Executive Officer (Principal
Executive Officer)

/s/ Michael Hiebert Vice President of Finance March 12, 1998
____________________________________ and Chief Financial Officer
Michael Hiebert (Principal Financial Officer
and Principal Accounting
Officer)

/s/ * Director March 12, 1998
____________________________________
Patrick J. Day

/s/ * Director March 12, 1998
____________________________________
Grace Ching-Hsin Lin

/s/ * Director March 12, 1998
____________________________________
G. Lynn Powell, D.D.S.

/s/ * Director March 12, 1998
____________________________________
E. Donald Shapiro
</TABLE>

*By: /s/Colette Cozean
- ------------------------------- March 12,
Colette Cozean, Ph.d., 1998
Attorney-in-Fact

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 Stock Purchase Agreement by and between Premier Laser Systems, Inc.
and Ophthalmic Imaging Systems dated as of February 25, 1998
(incorporated herein by this reference to Exhibit 99.1 to the
Registrant's Current Report on Form 8-K filed with the Commission on
March 9, 1998).
2.2 Agreement and Plan of Merger dated as of April 24, 1997 among Premier
Laser Systems, Inc., EyeSys Technologies, Inc. and Premier Acquisition
of Delaware, Inc. (incorporated herein by this reference to Exhibit
2.1 to the Registrant's Registration Statement on Form S-4,
Registration No. 333-29573).
2.3 First Amendment to Agreement and Plan of Merger dated as of August 6,
1997 among Premier Laser Systems, Inc., EyeSys Technologies, Inc. and
Premier Acquisition of Delaware, Inc. (incorporated herein by this
reference to Exhibit 2.2 to the Registrant's Current Report on Form 8-
K filed with the Commission on October 15, 1997, and amended by its
Current Report on Form 8-K/A filed with the Commission on November 14,
1997).
2.4 Second Amendment to Agreement and Plan of Merger dated as of September
16, 1997 among Premier Laser Systems, Inc., EyeSys Technologies, Inc.
and Premier Acquisition of Delaware, Inc. (incorporated herein by this
reference to Exhibit 2.3 to the Registrant's Current Report on Form 8-
K filed with the Commission on October 15, 1997, and amended by its
Current Report on Form 8-K/A filed with the Commission on November 14,
1997).
4.1 Form of Stock Certificate (incorporated herein by this reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form SB-2,
file no. 33-83984).
4.2 Amended and Restated Articles of Incorporation (incorporated herein by
this reference to Exhibit 4.8 to the Registrant's Quarterly Report on
Form 10-QSB, for the quarter ended December 31, 1994).
4.3 Form of Underwriter's Unit Purchase Option (IPO)
(incorporated herein by this reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form SB-2, file no. 33-83984).
4.4 Form of Underwriter's Unit Purchase Option (Secondary)
(incorporated herein by this reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form SB-2, file no. 333-04219).
4.5 Form of Warrant Agreement (including forms of Class A and Class B
Warrant Certificates) (incorporated herein by this reference to
Exhibit 4.1 to the Registrant's Registration Statement on Form SB-2,
file no. 33-83984).
4.6 Form of Amendment to Warrant Agreement dated as of November 30, 1994
(incorporated herein by this reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form SB-2,
file no. 333-04219).
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of Rutan & Tucker, LLP (included in Exhibit 5)
23.2 Consent of Price Waterhouse LLP*
23.3 Consent of Ernst & Young LLP*
23.4 Consent of Ernst & Young LLP*
23.5 Consent of Coopers & Lybrand L.L.P.*
24 Power of Attorney+
</TABLE>

- --------

Filed herewith.*

Previously filed.+

<PAGE>

EXHIBIT 5

March 16, 1998

Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618

Ladies and Gentlemen:

We are rendering this opinion in connection with the Post-Effective
Amendment No. 4 (the "Post-Effective Amendment") to Registration Statement on
Form S-3 (the "Registration Statement"), file number 333-04219, filed by
Premier Laser Systems, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, on or about the date
hereof. The Post-Effective Amendment relates to shares of the Company's Class
A Common Stock, no par value (the "Shares"), Class A Warrants and Class B
Warrants issuable upon the exercise of certain outstanding warrants and
options, as described in the Registration Statement.

We have acted as your counsel in connection with the preparation of the
Post-Effective Amendment and the Registration Statement and are familiar with
the proceedings taken by the Company in connection with the authorization and
issuance of the securities in the manner set forth in the Post-Effective
Amendment and Registration Statement. We have examined such documents as we
consider necessary to render this opinion.

Based upon the foregoing, we are of the opinion that the Shares, Class A
Warrants and Class B Warrants to be issued in the manner set forth in the
Post-Effective Amendment and Registration Statement have been duly authorized,
and upon issuance in the manner described therein, will be validly issued,
fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.

Sincerely,

RUTAN & TUCKER, LLP

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post Effective Amendment No. 4 to Registration
Statement on Form S-3 of our report dated May 17, 1996 appearing on page 26 of
Premier Laser Systems, Inc.'s Amendment No. 1 to Annual Report on Form 10-K for
the year ended March 31, 1997. We also consent to the application of such report
to the Financial Statement Schedule for the two years ended March 31, 1996
listed under Item 14(a) of that Form 10-K when such schedule is read in
conjunction with the financial statements referred to in our report. The audits
referred to in such report also included this schedule.

/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP

Costa Mesa, California
March 13, 1998

<PAGE>

EXHIBIT 23.3

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in Post Effective Amendment No. 4
to the Registration Statement on Form S-3 (No. 333-04219) and related
Prospectuses of Premier Laser Systems, Inc. of our report dated May 1, 1997,
with respect to the consolidated financial statements and schedules of Premier
Laser Systems, Inc. included in its Annual Report (Form 10-K) for the year ended
March 31, 1997, as amended, filed with the Securities and Exchange Commission.

Orange County, California
March 16, 1998

<PAGE>

EXHIBIT 23.4

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in Post Effective Amendment No. 4
to the Registration Statement (Form S-3 No. 333-04219) and related Prospectuses
pertaining to Premier Laser Systems, Inc. for the registration of 7,592,460
shares of its Class A Common Stock upon the exercise of Class B Warrants,
327,110 shares of its Class A Common Stock, 3,400 Class A Warrants, and 111,300
redeemable Class B Warrants, of our reports dated October 21, 1997, except for
Note 10 as to which the date is November 18, 1997, and October 11, 1996, except
for Note 10 as to which the date is November 21, 1996, with respect to the
financial statements of Ophthalmic Imaging Systems included in its Annual
Reports (Form 10-KSB) for the years ended August 31, 1997 and 1996,
respectively, and included in the Current Report on Form 8-K of Premier Laser
Systems, Inc. dated February 25, 1998, filed with the Securities and Exchange
Commission.

ERNST & YOUNG LLP

Sacramento, California
March 16, 1998

<PAGE>

EXHIBIT 23.5

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement
Form S-3 Post-Effective Amendment No. 4 (File No. 333-04219) of our report,
which includes an explanatory paragraph concerning the Company's ability to
continue as a going concern, dated March 21, 1997, except for Notes 5 and 15 as
to which the date is June 3, 1997, of our audits of the financial statements of
EyeSys Technologies, Inc. as of December 31, 1996 and 1995, and for the three
years in the period ended December 31, 1996, appearing in the registration
statement on Form S-4 (File No. 333-29573) of Premier Laser Systems, Inc. filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933.

COOPERS & LYBRAND L.L.P.

Houston, Texas
March 16, 1998