PARADIGM MEDICAL INDUSTRIES INC
10QSB, 1997-08-14
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS
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                         UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D. C.
                          FORM 10-QSB

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

For Quarter Ended June 30, 1997                Commission File
                                                Number: 0-28498

            PARADIGM MEDICAL INDUSTRIES, INC.
            ---------------------------------
                  Exact Name of Registrant

          DELAWARE                         87-0459536   
- -------------------------------           ---------------
(State or other jurisdiction              IRS Identification
of incorporation or organization)             Number  

1772 West 2300 South, Salt Lake City, Utah        84119   
- ------------------------------------------      -----------
(Address of principal executive offices)        (Zip Code)

Registrant's telephone number,
  including Area Code                           (801) 977-8970
                                                --------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                 YES  X          NO    
                    -----          ------
State the number of shares outstanding of each of the issuer's
classes of common equity as of the close of the period covered by
this report.

Class A Common Stock, $.001 par value           3,735,723     
- -------------------------------------           ----------------
      Title of Class                            Number of Shares
                                                Outstanding as of
                                                June 30, 1997

Series A Preferred, $.001 par value             71,884     
- -----------------------------------             -----------------
      Title of Class                            Number of Shares
                                                Outstanding as of
                                                June 30, 1997

Series B Preferred, $.001  par value            62,335   
- ------------------------------------            ----------------
      Title of Class                            Number of Shares
                                                Outstanding as of
                                                June 30, 1997
Transitional Small Business Disclosure Format

                  YES             NO  X 
                     -----          -----
<PAGE>


                      PARADIGM MEDICAL INDUSTRIES, INC.
                                FORM 10-QSB

                         QUARTER ENDED JUNE 30, 1997

                              TABLE OF CONTENTS

                       PART I - FINANCIAL INFORMATION

                                                                
                                                            Page
                                                             No.
                                                            ---- 
Item 1.  Financial Statements

      Balance Sheets (unaudited) - June 30, 1997 and 
      December 31, 1996  . . . . . . . . . . . . . . . . . .  3

      Statements of Operations (unaudited) for the six months 
      ended June 30, 1997 and June 30, 1996 and for the
      three months ended June 30, 1997 and June 30, 1996 . .  5

      Statements of Cash Flows (unaudited) for the six months
      ended June 30, 1997 and June 30, 1996  . . . . . . . .  6

      Notes to Financial Statements (unaudited). . . . . . .  8


Item 2.

      Management's Discussion and Analysis of
      Financial Condition and Results of 
      Operations . . . . . . . . . . . . . . . . . . . 10 to 13


                     PART II - OTHER INFORMATION

      Other Information. . . . . . . . . . . . . . . . 13 to 14

      Signature Page . . . . . . . . . . . . . . . . . 15

<PAGE>


                      PARADIGM MEDICAL INDUSTRIES, INC.
                               BALANCE SHEETS
                                (UNAUDITED)
                                                        
<TABLE>
<CAPTION>
                                 June 30,        December 31,
                                   1997              1996     
                                -----------       -----------
                                (Unaudited)       (Unaudited)
<S>                             <C>               <C>
ASSETS 
Current assets:
  Cash and cash equivalents      $    474,766       $ 2,468,988 
  Restricted cash                     715,464
  Marketable debt securities
   - restricted                       517,817           509,411 
  Trade accounts receivable           387,086            18,228 
  Inventories                         641,952           407,610 
  Prepaid expenses                     17,418            14,093 
                                 ------------       -----------
      Total current assets          2,754,503         3,418,330 
Deferred charges                      973,035           120,000 
Property and equipment, net           126,830           129,494
                                 ------------       -----------
      Total assets              $   3,854,368      $  3,667,824 
                                =============      ============
LIABILITIES AND 
  STOCKHOLDERS' EQUITY 
Current liabilities:
  Trade accounts payable        $      24,858       $    35,767
  Accounts payable - 
    related parties                   126,947               -0- 
  Accrued expenses                    132,704           277,473 
  Note payable to bank - 
    current                             3,445             3,278 
  Line of credit                      980,000               -0-
                                 ------------       -----------
      Total current liabilities     1,267,954           316,518 

Note payable, less 
  current portion                      13,840            15,605 
                                 ------------       -----------
Total liabilities                   1,281,794           332,123 

Stockholders' equity: 
  Preferred stock, $.001 par value, 
  authorized: 5,000,000 shares
    Series A, $.001 par value, 
      authorized: 500,000 shares; 
      issued and outstanding:
      122,764 shares at December 
      31, 1996 and 71,884 shares 
      at June 30, 1997 (aggregate 
      liquidation preference of 
      $287,536 at June 30, 1997)           72               122 
    Series B, $.001 par value,
      authorized: 500,000 shares; 
      issued and outstanding:  
      448,398 shares at December 
      31, 1996 and 62,335 shares 
      at June 30, 1997 (aggregate 
      liquidation preference of 
      $249,340 at June 30, 1997)           62               448 
    Additional paid-in capital, 
      preferred stock                 157,542         1,900,637 
  Common stock, $.001 par value,
    authorized: 20,000,000 shares; 
    issued and outstanding: 3,194,061 
    shares at December 31, 1996 and 
    3,735,723 shares at June 30, 1997   3,736             3,194 
  Additional paid-in capital, 
    common stock                    8,068,593         6,261,097 
  Treasury stock, 2,600 shares, 
    at cost                            (3,777)           (3,777)
  Unearned compensation               (25,256)          (63,141)
  Accumulated deficit              (5,646,215)       (4,772,548)
  Unrealized gain 
    on marketable debt 
    securities, available-for-
    sale                               17,817             9,669 
                                   ----------         ---------
      Total stockholders' 
      equity                        2,572,574         3,335,701 
                                   ----------         ---------
      Total liabilities and 
      stockholders' equity       $  3,854,368       $ 3,667,824 
                                 ============       ===========

</TABLE>

              The accompanying notes are an integral
                  part of the financial statements

<PAGE>


                PARADIGM MEDICAL INDUSTRIES, INC.
                   STATEMENTS OF OPERATIONS
                         (UNAUDITED)


<TABLE>
<CAPTION>
                         Six months ended      Three months ended
                              June 30,              June 30,
                   ---------------------   ---------------------
                      1997        1996       1997        1996
                   ----------  ---------   ---------- ----------
                   (Unaudited)(Unaudited)  (Unaudited)(Unaudited)
<S>                <C>        <C>          <C>        <C>
Sales              $1,094,181  $ 145,717   $ 165,392  $ 122,546
Sales returns        (385,894)              (385,894)    -0-
Sales discounts      (114,900)      -0-      (59,900)    -0-
                   ----------   ---------   ---------- ----------
Net sales             593,387    145,717   $(280,402)  $ 122,546

Cost of sales         287,063     83,791     (14,957)     65,443
Amortization of
  deferred charges      4,401                 (5,114)
                   ----------   --------   ---------   ---------
Net cost of sales     291,464     83,791     (20,071)     65,443

   Gross profit       301,923     61,926    (260,331)     57,103
                    ---------   --------   ---------   ---------
   Gross margin        51%         42%        (157%)       47%

Operating expenses:
  Marketing and 
    selling           251,752     71,462     139,600      37,425
  General and 
    administrative    775,056    316,770     294,511     176,156
  Research and 
    development       190,314     50,186      92,281      26,351
                    ---------  ---------   ---------   --------- 
             
    Total operating
      expenses     $1,217,122  $ 438,418   $ 526,392   $ 239,932
                   ----------  ---------   ---------   ---------
Operating loss       (915,199)  (376,492)   (786,723)   (182,829)
                   
  Interest income      42,438      4,913      14,870       2,175
  Interest expense       (906)   (41,334)       (443)    (24,057)
                    ---------  ---------   ---------   --------- 
  
    Total other income
      (expense)        41,532    (36,421)     14,427     (21,882)
                    ---------  ---------   ---------   ---------
Net Loss             (873,667)  (412,913)   (772,296)   (204,711)


Net loss attributable
  to common 
  shareholders      $(873,667) $(412,913)  $(772,296)  $(204,711)

Net loss per common
  share               $(0.25)     $(0.18)     $(0.23)     $(0.09)

Shares used in 
  computing net 
  loss per common
  share             3,464,890  2,352,031    3,386,356   2,352,031

</TABLE>


          The accompanying notes are an integral
             part of the financial statement

<PAGE>

                 PARADIGM MEDICAL INDUSTRIES, INC.
                    STATEMENTS OF CASH FLOWS
                         (UNAUDITED)
                                                            

<TABLE>
<CAPTION>
                                                                
                                         Six months ended
                                             June 30,          
                                        -----------------------
                                          1997          1996   
                                        ---------    ---------- 
                                        (Unaudited)  (Unaudited)
<S>                                     <C>          <C>
Cash flows from operating activities:
  Net loss                               $(873,667)   $(412,913)
  Adjustments to reconcile net income 
    (loss) to net cash used in operating 
    activities:
      Depreciation and amortization        18,281         9,531 
      Common stock issued for compensation 60,760        37,885 
      Amortization of debt offering costs   -0-          15,497
  Issuance of bridge notes and 
      warrants for services                 -0-          25,000 
  Increase (decrease) from changes in:
      Trade accounts receivable          (368,858)       14,768 
      Inventories                        (234,342)         (248) 
      Prepaid expenses                     (3,325)        5,567 
      Deferred public offering costs                    (80,826)
      Deferred charges                   (857,436)         -0-  
      Accounts payable - related parties  126,947          -0-  
      Trade Accounts payable              (10,909)     (133,797)
      Accrued expenses                   (144,769)       74,008 
                                         --------       -------
      Net cash used in 
        operating activities            (2,287,318)    (445,528)
                                         --------      --------
Cash flows from investing activities:
  Purchase of property and equipment      (11,216)     ( 31,047)
  Purchase of marketable debt 
    securities - available for sale          (258)         -0-  
                                         --------       -------
      Net cash used in investing 
        activities                        (11,474)      (31,047)
                                          -------       -------
Cash flows from financing activities:
  Proceeds from issuance of promissory 
    notes and warrants                       -0-        500,000 
  Proceeds from exercise of warrants       41,632           -0- 
  Principal payments on notes payable      (1,598)      (11,197)
  Proceeds from lines of credit           980,000           -0-
  Restricted cash                        (715,464)          -0-
                                          -------        -------
      Net cash provided by
        financing activities              304,570        488,803
                                          -------        -------
Net increase (decrease) in cash 
  and cash equivalents                $(1,994,222)       $12,228 
Cash and cash equivalents 
at beginning of period                 $2,468,988       $192,454 
                                        ---------        -------
Cash and cash equivalents 
  at end of period                    $   474,766       $204,682 
                                      ===========       ========
Supplemental disclosure of 
  cash flow information:
  Cash paid for interest            $        906        $  4,164 

</TABLE>
                                                       
           The accompanying notes are an integral
             part of the financial statements.

<PAGE>

              PARADIGM MEDICAL INDUSTRIES, INC.
               NOTES TO FINANCIAL STATEMENTS
                        (UNAUDITED)        

1.    Significant Accounting Policies:
      -------------------------------

      In the opinion of management, the accompanying financial
statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the financial
position of Paradigm Medical Industries, Inc. (the Company) as of
December 31, 1996 and June 30, 1997, and the results of its
operations for the six months ended June 30, 1996 and 1997, and
its cash flows for the six months ended June 30, 1996 and 1997. 
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year period.

Net Loss Per Share
- ------------------

      Net loss per common share is computed on the weighted
average number of common and common equivalent shares outstanding
during each period.  Common stock equivalents consist of
convertible preferred stock, common stock options and warrants. 
Common equivalent shares are excluded from the computation when
their effect is anti-dilutive.  Other common stock equivalents
have not been included in loss years because they are
anti-dilutive.

2.    Legal Proceedings:
      ------------------

      On March 31, 1995, the Company entered into an agreement
with an investment banking company to obtain capitalization
through a public offering.  The agreement was deemed terminated
if the required capitalization was not obtained by December 31,
1995.  In a complaint filed in November 1996, the investment 
banking  company  and  its  principal  officer  requested 
356,780  shares of the Company's common stock, along with monthly
payments of $3,000 for three years, as compensation under the
agreement.  Shortly after the filing of the complaint, the
principal officer of the investment banking company passed away. 
His estate was substituted as a plaintiff party.  On May 9,
1997, the Company entered into an agreement with the principal
officer's estate to settle the action by the Company paying the
estate an initial payment of $5,000, plus $1,500 per month for 36
months in return for dismissal of the action with prejudice and
release of all claims.  The settlement date was June 6, 1997.  
Amounts payable under this settlement are included in accrued 
expenses in the accompanying balance sheet.

3.    Preferred Stock Conversions:
      ----------------------------

      Under the Company's Articles of Incorporation, holders of
the Company's preferred stock have the right to convert such
stock into shares of the Company's common stock at the rate of
1.2 shares of common stock for each share of preferred stock. 
During the six month period ended June 30, 1997, 44,520 shares
of Series A Preferred Stock and 386,063 shares of Series B
Preferred Stock were converted into 53,424 and 463,275 shares of
the Company's common stock, respectively.

4.    Common Stock Issuances
      ---------------------
       
      As of June 30, 1997, 12,500 shares of the Company's 
common stock had been issued for the exercise of warrants.  An
additional 6,098 shares of the Company's common stock was issued
to a former employee for past services rendered and recorded as
compensation expense.

5.    Related Party Transactions:
      --------------------------

      On January 8, 1997, the Company subcontracted the
subassembly of the Laser Module piece of the Photon(trademark)
laser cataract system.  During the six month period ended June
30, 1997, the Company purchased 10 Laser Module subassemblies for
a total purchase price of $160,000, from a manufacturer whose
President was a member of the Company's Board of Directors, and
as of June 30, 1997 owed that company $64,000 which is included
in accounts payable.

      The Company has subcontracted the manufacturing of its
Precisionist and Photon laser cataract systems to a company that
is a shareholder.  During the six month period ended June 30,
1997, the Company purchased design and manufacturing services
from that company in the amount of $983,844, and as of June 30,
1997 owed that company $21,708 which is included in accounts
payable.

      In 1988, the Company signed an exclusive patent license
agreement with a company which owns the patent for the
laser-based Photon(trademark) laser system.  This company is
owned by a shareholder of the Company.  The agreement provides
for the payment of a 1% royalty on all sales proceeds related
directly or indirectly, to the Photon machine.  The agreement
terminates on July 7, 2003.  Through September 30, 1996, no
significant royalties have been earned under this agreement.  The
Company has also entered into a consulting agreement with this
individual which provides for annual consulting fees of $25,000
through July 7, 2003.

      A law firm, of which a director of the Company is a
partner, has rendered legal services to the Company.  During the
six month period ended June 30, 1997, the Company paid this
firm $12,558 for legal services, and as of June 30, 1997, owed
this firm $40,701, which is included in accounts payable.

<PAGE>

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

      The following Management's Discussion and Analysis of
Financial Condition and results of Operations contains forward
looking statements which involve risks and uncertainties.  The
Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of
certain factors discussed in this section.  The Company's fiscal
year runs from January 1 to and including December 31.

General

      The Company is engaged in the development, manufacture and
sale of ophthalmic surgical devices designed to perform minimally
invasive cataract removal surgery.  Paradigm's activities for the
six months ended June 30, 1996 include international and
domestic sales of the Precisionist 3000 Plus(trademark) Phaco
system, research and developments of the Precisionist
ThirtyThousand(trademark) and the Photon(trademark) laser
cataract system, and primary research for other new products and
businesses.  Paradigm's activities for the six months ended June
30, 1997 include international and domestic sales of the
Precisionist 3000 Plus(trademark) and Precisionist
ThirtyThousand(trademark) and Photon(trademark) laser cataract
systems, as well as primary research for other new products and
businesses.

Results of Operations 

      Sales increased by $948,464, or 651%, to $1,094,181 for the
six months ended June 30, 1997 from $145,717 for the comparable
period in 1996.  Net sales increased by $447,670, or 307%, to
$593,387.  The difference of $500,794 between sales and net sales
is a result of promotional discounts related to the Company's new
product launch and sales returns.  Sales of product in the
surgical equipment market are contingent upon customer
evaluation.  Based on the evaluation of the products shipped in
the initial new product launch, five units were returned during the
quarter ended June 30, 1997, and certain software and hardware
revisions were identified and corrected.  The increase in sales
and net sales was a result of the Company launching the Photon
Ocular Surgery System(trademark) and the Precisionist
ThirtyThousand(trademark), the latest generation of Paradigm
products on March 31, 1997.  

      Cost of sales increased $207,673, or 248%, to $291,464
for the six months ended June 30, 1997 from $83,791 for the
comparable period in 1996, as a result of the increased sales. 
The gross margin for the six months ended June 30, 1997 of 51%
more than the gross margin for the comparable period in 1996 of
42% due to the higher margin pricing structure related to the
Company's new product launch.

      Marketing and selling expenses increased by $180,290, or
252%, to $251,752 for the six months ended June 30, 1997 from
$71,462 for the comparable period in 1996.  The increase was a
result of the Company adding two additional sales representatives
and increasing promotional activities in anticipation of
launching the Photon Ocular Surgery System and the Precisionist
ThirtyThousand during the first quarter of 1997, and the
resulting service expenses associated with installing identified
software and hardware revisions.

      General and administrative expenses increased by $458,286,
or 145%, to $775,056 for the six months ended June 30, 1997
from $316,770 for the comparable period in 1996.  This was the
result of an increase in personnel and costs associated with
pre-production and new product launch activities.

      Research and development expenses increased by $140,128, or
279%, to $190,314 for the six months ended June 30, 1997 from
$50,186 for the comparable period in 1996.  This was the result
of hiring four additional employees and costs associated with
developing new products for the Company.

Upgrades

      To garner sales, the Company offers the ultrasonic
Precisionist(trademark) system with an unconditional arrangement
under which the customer may trade in their
Precisionist(trademark) system to upgrade to a Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or,
upon FDA clearance, a Photon(trademark) laser cataract system
when that system becomes available.  Under this arrangement, the
customer receives full credit for the trade in purchase price of
the Precisionist(trademark) system against the price of the new
Precisionist ThirtyThousand(trademark) Ocular Surgery
System(trademark) or Photon(trademark) laser cataract system  As
of June 30, 1997, the Company has distributed approximately 51
Precisionist(trademark) systems under this provision.  The gross
margin on these original sales was approximately $295,000 or 32%.

If all of these customers were to exercise their upgrade
privilege, the Company would exchange the Precisionist(trademark)
system for the Company's new Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or
Photon(trademark) system and refurbish the ultrasonic
Precisionist(trademark) systems and sell them in the
international market.  Any losses on the sale of the refurbished
Precisionist(trademark) systems, which is not expected to be
significant, would reduce the gross margin on the Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or
Photon(trademark) system sales.  The total gross margin on the
upgrade sales is estimated to be $1,677,000 or 41%.  As of June
30, 1997, there have been two trade in sales in which the customer
has upgraded a Precisionist(trademark) system to the Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark).
                        
Liquidity and Capital Resources

      The Company used cash in operating activities of $2,287,318
for the six months ended June 30, 1997 compared to $445,528
for the comparable period in 1996.  The Company used cash in
investing activities of $11,474 for the six months ended June
31, 1997 compared to $31,047 for the comparable period in 1996.  
The investing activities for the six months ended June 30, 1997
included $11,266 used for the purchase of property and equipment.
The Company received cash from financing activities of $304,570
for the six months ended June 30, 1997 compared to $488,803 
in the comparable period in 1996.  The financing activities for the
six months ended June 30, 1997 included $980.000 from the Company's
line of credit and $41,632 in proceeds from the exercise of warrants.
These amounts were offset by $715,464 in cash which was restricted
to secure the Company's lines of credit.

      The Company currently has a $636,000 line of credit with
Merrill Lynch and a $350,000 line of credit with Bear Stearns
related to accounts receivable and inventory financing. 
The Company may seek funding to meet its working capital
requirements through collaborative arrangements and strategic
alliances, additional public offerings and/or private placements
of its securities, or bank borrowings.  There can be no
assurance, however, that additional funds, if required, will be
available from any of the foregoing or other sources on favorable
terms, if at all.

      At June 30, 1997, the Company had net operating loss
carryforwards (NOLs) of approximately $5,600,000 and research and
development tax credit carryforwards of approximately $47,700. 
These carryforwards are available to offset future taxable
income, if any, and expire in the years 2005 through 2011. 
Because the Company has yet to recognize significant revenue from
the sale of its Photon(trademark) laser cataract system, a 100%
valuation allowance has been provided for these deferred
tax assets.  The Company's ability to use its NOLs to offset
future income taxes may be subject to restrictions enacted in the
United States Internal Revenue Code of 1986, as amended.  These
restrictions could limit the Company's future use of its NOLs if
there is a cumulative ownership change of more than 50%, which
would include the changes of ownership related to any public
offering.

Effect of Inflation and Foreign Currency Exchange

      The Company has not realized a reduction in the selling
price of the Precisionist phaco system as a result of domestic
inflation.  Nor has the Company experienced unfavorable profit
reductions due to currency exchange fluctuations or inflation
with its foreign customers.

Impact of New Accounting Pronouncements

      The Company intends to adopt the disclosure approach
provided for in Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock Based Compensation, with
respect to options and warrants granted to employees.  Because
the Company has only a minimal investment in long-lived assets,
the adoption of SFAS 121, Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, and which will occur October
1, 1996, is not expected to have an impact on the Company.

      In March 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share.  This statement establishes standards for
computing and presenting earnings per share ("EPS") and applies
to entitles with publicly held common stock or potential common
stock.  This statement simplifies the standards for computing EPS
and makes them comparable to international EPS standards.  This
statement is effective for financial statements for both interim
and annual periods ending after December 15, 1997.

      The Company has reviewed all other recently issued, but not
yet adopted, accounting standards in order to determine their
effects, if any, on the results of operations or financial
position of the Company.  Based on that review, the Company
believes that none of these pronouncements will have a
significant effect on current or future earnings or operations.

Part II:    Other Information

Item 1.     Legal Proceedings

      On March 31, 1995, the Company entered into an agreement
with an investment banking company to obtain capitalization
through a public offering.  The agreement was deemed terminated
if the required capitalization was not obtained by December 31,
1995.  In a complaint filed in November 1996, the investment 
banking  company  and  its  principal  officer  requested 
356,780  shares of the Company's common stock, along with monthly
payments of $3,000 for three years, as compensation under the
agreement.  Shortly after the filing of the complaint, the
principal officer of the investment banking company passed away. 
His estate was substituted as a plaintiff party.  On May 9,
1997, the Company entered into an agreement with the principal
officer's estate to settle the action by the Company paying the
estate an initial payment of $5,000, plus $1,500 per month for 36
months in return for dismissal of the action with prejudice and
release of all claims.  The settlement date was June 6, 1997.  A
provision for this claim was provided in a prior period.

Item 2.   Changes in Securities

          None

Item 3.   Defaults Upon Senior Securities

          None

Item 4.   Submission of Matters to Vote of Security Holders

       At the Annual Meeting of the Company's shareholders held on
Monday, June 9, 1997, the following matters were submitted to and
acted upon by the Company's shareholders:  (i) eight directors
were elected to serve until the next Annual Meeting of the
shareholders to serve until their respective successors are
elected and qualified; (ii) an amendment to the Company's 1995
Stock Option Plan to increase the number of shares of Common
Stock reserved for issuance thereunder by an aggregate of 300,000
shares was approved; and (iii) the appointment of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the
fiscal year ending December 31, 1997 was ratified.  No other
business came before the meeting for submission to shareholders.

Item 5.   Other Information

          None


Item 6.   Exhibits and Reports on Form 8-K

       (a)    Exhibits

       The following Exhibits are filed herewith pursuant to Rule
601 of Regulation S-B or are incorporated by reference to
previous filings.

Table No.             Document
- ---------             --------

 3.1          Certificate of Incorporation(1)
 3.2          Bylaws(1)
 4.1          Warrant Agency Agreement with Continental Stock
              Transfer & Trust Company(4)
 4.2          Specimen Common Stock Certificate (2)
 4.3          Specimen Class A Warrant Certificate(2)
 4.4          Form of Class A Warrant Agreement(2)
 4.5          Underwriter's Warrant with Kenneth Jerome & Co.,
              Inc.(4)
 4.6          Attorney's Warrant with Mackey Price & Williams(1)
10.1          Exclusive Patent License Agreement with Photomed(1)
10.2          Consulting Agreement with Dr. Daniel M. Eichenbaum(1)
10.3          Confidential Disclosure Agreement with Zevex, Inc.(1)
10.4          Indemnity Agreement with Zevex International, Inc.(1)
10.5          Manufacturing Agreement with Sunrise Technologies,
              Inc.(1)
10.6          Royalty Agreement dated January 30, 1992, with Dennis
              L. Oberkamp Design Services(1)
10.7          Indemnity Agreement dated January 30, 1992, with
              Dennis L. Oberkamp Design Services(1)
10.8          Royalty Agreement (for Ultrasonic Phaco Handpiece)
              with Dennis L.Oberkamp Design Services(1)
10.9          Commercial Office Lease with Tri-Cox, L.C.(4)
10.10         Settlement and Release Agreement with Douglas A.
              MacLeod(1)
10.11         Form of Indemnification Agreement(1)
10.12         1995 Stock Option Plan and forms of Stock Option
              Grant Agreements(1)
10.13         Form of Promissory Note between the Company and third
              parties(1)
10.14         Form of Warrant to Purchase Common Stock between the
              Company and third parties(1)
10.15         Employee's Lock-Up Agreement(4)
10.16         Registering Shareholders Lock-Up Agreement(4)
10.17         Employment Agreement with Thomas F. Motter(1)
10.18         Employment Agreement with Robert W. Millar(1)
10.19         Employment Agreement with Jack W. Hemmer(1)
10.20         Amendment of Settlement and Release Agreement with
              Douglas A.MacLeod(3)
10.21         Design, Engineering and Manufacturing Agreement with
              Zevex, Inc.(4)
10.22         Engineering and Manufacturing Agreement with Sunrise
              Technologies, Inc.(5)
10.23         License and Manufacturing Agreement with O.B.F.
              Labs, Ltd., dated January 16, 1997.(5)
10.24         Settlement Agreement with the Estate of Hyman L.
              Federman
27            Financial Data Schedule

- -----------------------------               
(1)           Incorporated by reference from Registration Statement
              on Form SB-2,as filed on March 19, 1996.
(2)           Incorporated by reference from Amendment No. 1 to
              Registration Statement on Form SB-2, as filed on May
              14, 1996.
(3)           Incorporated by reference from amendment No. 2 to
              Registration Statement on Form SB-2, as filed on June
              13, 1996.
(4)           Incorporated by reference from Form 10-KSB for fiscal
              year end September 31, 1996, as filed on December 30,
              1996.
(5)           Incorporated by reference from Form 10-QSB for
              quarter ended March 31, 1997, as filed on May 15,
              1997.

       (b)    Reports on Form 8-K
       
              None

<PAGE>

                         SIGNATURES


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

                        REGISTRANT

                PARADIGM MEDICAL INDUSTRIES, INC.
                ---------------------------------
                           Registrant


DATED:  August 14, 1997           By:  Michael W. Stelzer
                                       President and Chief                  
                                       Executive Officer
                                       (Principal Executive     
                                       Officer)

DATED:  August 14, 1997           By:  John W. Hemmer
                                       Treasurer and Chief
                                       Financial Officer
                                       (Principal Financial
                                       and Accounting Officer)

                    SETTLEMENT AGREEMENT


      THIS SETTLEMENT AGREEMENT (hereinafter the "Agreement") is
entered into as of this 09 day of May, 1997, by and between
Paradigm Medical Industries, Inc., a Delaware corporation (the
"Company) and the Estate of H.L. Federman (the "Estate").

                          RECITALS

      WHEREAS, on November 25, 1996, the Company was served with
a Summons and Complaint in an action styled Federman Associates
and H.L. Federman v. Paradigm Medical Industries, Inc., No. 96
Civ. 8545, which was commenced in the United States District
Court for the Southern District of New York against the Company
by Federman Associates and H.L. Federman ("Federman");

      WHEREAS, the claims asserted in the Complaint are based
upon a March 31, 1995 agreement between Federman Associates and
the Company (the "March 31, 1995 Agreement") in which Federman
Associates agreed to obtain $5,000,000 to $8,000,000 in
capitalization for the Company prior to December 31, 1995 in
exchange for the right to purchase a 5% equity position in the
Company for $25,000 and the payment of $3,000 per month for a
period of 36 months, as well as additional services Federman
Associates alleges it performed for the Company;

      WHEREAS, the Company contends that Federman Associates did
not obtain the required capitalization for the Company prior to
December 31, 1995 nor was there any agreement for payment by the
Company to Federman Associates or Federman for services Federman
Associates and Federman contend they performed for the Company;

      WHEREAS, Federman passed away on November 28, 1996, and the
Estate is to be substituted for Federman as a plaintiff party to
the Action;

      WHEREAS, on January 29, 1997, the Company filed a Motion to
Transfer, or in the Alternative, to Dismiss for Improper Venue or
Lack of Personal Jurisdiction, together with a supporting
memorandum;

      WHEREAS, on April 4, 1997, Judge Barbara Jones of the
United States District Court for the Southern District of New
York granted the Company's motion to transfer the Action to the
United States District Court for the District of Utah; and

      WHEREAS, the Company and the Estate desire to dismiss the
Complaint with prejudice and settle all potential claims,
disputes or actions, known or unknown, which the Estate or heirs
of the Estate may have against the Company;

      NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

                          AGREEMENT

      1.    Payment.  The Company agrees to pay the Estate One
Thousand Five Hundred Dollars ($1,500) each month for 36 months
and to pay Five Thousand Dollars ($5,000) as reimbursement for
legal expenses.  The one time payment of Five Thousand Dollars
($5,000) to the Estate for legal expenses shall be paid on May
16, 1997, or on the date of execution of this Agreement,
whichever is later.  The monthly payments to the Estate shall
commence on May 16, 1997, or on the date of execution of this
Agreement, whichever is later, and shall he payable at the first
of each month thereafter for a total of 36 consecutive months. 
If the Company does not make a monthly payment within ten (10)
days of the date the payment is due and payable hereunder, the
Company shall be in default, and interest shall accrue on the
unpaid amounts at the rate of ten percent (10%) per annum.

      2.    Dismissal of Action.  Contemporaneous with the
execution of this Agreement, the Estate shall submit to the court
a Stipulation and Order for Dismissal with Prejudice.

      3.    Entire Agreement.  This Agreement constitutes the
entire agreement of the parties.  No modification or amendment of
this Agreement shall be of any force or effect unless in writing
and executed by all of the parties to this Agreement.  The
provisions of this Agreement shall survive the closing of the
settlement and this Agreement.

      4.    No Assignment of Rights.  Federman Associates and the
Estate represent, warrant and covenant that they have not
assigned or transferred any of their rights to any claims,
disputes, losses, demands, actions, causes of action, damages,
compensation, costs, fees, expenses, contracts, covenants,
obligations, debts and liabilities related to the Action and/or
transactions between the Company and Federman or Federman
Associates or both, and that they are lawfully entitled to make
this settlement and receive the satisfaction described herein.

      5.    Successors and Assigns.  This Agreement shall be
binding on, and shall inure to the benefit of, the parties to
this Agreement and their respective legal representatives,
successors and assigns as well as heirs of the Estate.

      6.    Costs and Fees.  Except as otherwise specified in
this Agreement, each party agrees to bear its own costs, expenses
and attorneys, fees incurred in connection with or relating to
this Agreement. However, in the event any dispute or contest
shall arise hereunder or any party shall breach or fail to
perform or discharge any of its obligations hereunder, the party
to this Agreement who shall prevail in litigation concerning any
such dispute, contest or failure to perform or discharge, shall
be entitled to an award against the losing party of reasonable
attorney's fees and other costs incurred by said prevailing
party.

      7.    Release of All Claims.  The Estate hereby fully
releases the Company and its officers, directors, employees,
attorneys and agents of each, every and all claims of every kind
and nature which the Estate and heirs of the Estate ever had or
now have, or may have, and which arose, accrued, or which may
hereafter arise or accrue, including but not limited to those
claims asserted in the Complaint.  The Estate hereby represents,
warrants and agrees that no claim, right, cause of action or
demand is reserved and that this Agreement waives and releases
the Company and its officers, directors, employees, attorneys and
agents of and from any and all claims, damages, demands, costs,
expenses and causes of action, compensation of every kind and
nature, to which the Estate and heirs of the Estate may be
entitled or which the Estate and heirs of the Estate may have in
the future as a result of any events which have occurred,
including but not limited to those claims and causes of action
asserted in the Complaint.

      8.    Indemnification of Claims.  The Estate hereby agrees
to indemnify and hold the Company and its officers and directors
harmless from and against any and all claims, demands, rights,
causes of action, and other liabilities and obligations of every
kind and nature which Federman Associates and Federman ever had
or now have, or may have, and which arose, accrued, or which may
hereafter arise or accrue, including but not limited to those
claims and causes of action asserted in the Complaint.

      9.    Binding Effect.  This Agreement is binding on each of
the undersigned parties, including its respective successors,
representatives, affiliates, agents and assigns, as well as the
heirs of the Estate.

      10.   Severability.  Any term or provision of this
Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof, nor the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

      11.   Counterparts.  This Agreement may be executed in one
or more counterparts, all of which shall constitute one and the
same agreement, and when taken together this Agreement shall
become effective when one or more counterparts have been signed
by each of the parties hereto and delivered by facsimile to the
other parties hereto.

      12.   Governing Law.  This Agreement, to the extent
permitted by applicable law, shall be governed by and construed
in accordance with the laws of the State of Utah applicable to
contracts entered into and to be performed within said State.

      IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.


                             PARADIGM MEDICAL INDUSTRIES, INC.


                             By: Thomas F. Motter
                             Its: CEO


                             ESTATE OF H.L. FEDERMAN


                             By: Ruth F. Silverstone
                             Its: Executor 5/09/97


<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET OF PARADIGM MEDICAL INDUSTRIES, INC. AS OF JUNE 30,
1997, AND THE RELATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-END>                               JUN-30-1996
<CASH>                                         474,766
<SECURITIES>                                   517,817
<RECEIVABLES>                                  387,086
<ALLOWANCES>                                         0
<INVENTORY>                                    641,952
<CURRENT-ASSETS>                             2,754,503
<PP&E>                                         145,111
<DEPRECIATION>                                (18,281)
<TOTAL-ASSETS>                               3,854,368
<CURRENT-LIABILITIES>                        1,267,954
<BONDS>                                              0
                                0
                                        134
<COMMON>                                         3,736
<OTHER-SE>                                 (5,657,431)
<TOTAL-LIABILITY-AND-EQUITY>                 3,854,368
<SALES>                                      1,094,181
<TOTAL-REVENUES>                             1,178,151
<CGS>                                          287,063
<TOTAL-COSTS>                                1,217,122
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               (906)
<INCOME-PRETAX>                              (873,667)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                          (873,667)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 (873,667)
<EPS-PRIMARY>                                    (.25)
<EPS-DILUTED>                                    (.25)
        

</TABLE>


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