UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-QSB/A
(AMENDMENT NO. 1)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998 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
1127 West 2320 South, Suite A, 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.
Common Stock, $.001 par value 3,830,308
- - ------------------------------------ -------------
Title of Class Number of Shares
Outstanding as of
March 31, 1998
Series A Preferred, $.001 par value 36,122
- - ------------------------------------ -------------
Title of Class Number of Shares
Outstanding as of
March 31, 1997
Series B Preferred, $.001 par value 33,236
- - ------------------------------------ -------------
Title of Class Number of Shares
Outstanding as of
March 31, 1998
Series C Preferred, $.001 par value 29,980
- - ------------------------------------ -------------
Title of Class Number of Shares
Outstanding as of
March 31, 1998
Transitional Small Business Disclosure Format
YES NO X
1
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PARADIGM MEDICAL INDUSTRIES, INC.
FORM 10-QSB/A-1
QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
No.
----
Item 1. Financial Statements
Balance Sheets (unaudited) - March 31, 1998 and
December 31, 1997 3
Statements of Operations (unaudited) for the three months
ended March 31, 1998 and March 31, 1997 5
Statements of Cash Flows (unaudited) for the three months
ended March 31, 1998 and March 31, 1997 6
Notes to Financial Statements (unaudited) 7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II - OTHER INFORMATION
Other Information 10
Signature Page 12
2
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PARADIGM MEDICAL INDUSTRIES, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<S> <C> <C>
March 31, December 31,
1998 1997
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,865,429 $ 886,558
Trade accounts receivable 319,523 120,853
Inventories 893,717 833,930
Prepaid expenses 20,650 15,787
------------- -------------
Total current assets 3,099,319 1,857,128
Prepaid Financing Costs -- 425,029
Capitalized engineering and design changes, net 290,832 309,396
Property and equipment, net 115,987 121,274
------------- -------------
Total assets $ 3,506,138 $ 2,712,827
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 69,862 $ 243,206
Accounts payable - related parties 460,583 458,467
Accrued expenses 89,446 349,930
Interest payable on 12% Promissory Notes 22,435 --
Note payable to bank - current 3,620 3,620
Purchase Deposits 35,000 --
------------- -------------
Total current liabilities 680,946 1,055,223
------------- -------------
Note payable, less current portion 86,137 1,081,996
------------- -------------
Total liabilities 767,083 2,137,219
------------- -------------
Stockholders' equity:
Preferred stock, authorized:
5,000,000 shares, $.001 par value
Series A
Authorized: 500,000 shares; issued and
outstanding: 50,122 shares at December 31, 1997
and 36,122 shares at March 31, 1998
36 50
Series B
Authorized: 500,000 shares; issued and
outstanding: 45,383 shares at December 31, 1997
and 33,236 shares at March 31, 1998
33 45
Series C
Authorized: 30,000 shares; issued and
outstanding: 29,980 shares at March 31, 1998 30 --
Common stock, Authorized: 20,000,000 shares,
issued and outstanding: 3,798,931 shares at December 31, 1997
and 3,830,308 shares at March 31, 1998 3,830 3,799
Additional paid-in-capital 16,280,749 8,833,897
</TABLE>
3
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<TABLE>
<S> <C> <C>
Treasury stock, 2,600 shares, at cost (3,777) (3,777)
Accumulated deficit (13,541,846) (8,258,406)
------------- -------------
Total stockholders' equity 2,739,055 575,608
------------- -------------
Total liabilities and stockholders' equity $ 3,506,138 $ 2,712,827
============= =============
</TABLE>
4
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PARADIGM MEDICAL INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three months ended
March 31,
1998 1997
(Unaudited) (Unaudited)
Sales $ 351,382 $ 256,415
------------ ------------
Cost of sales 177,470 117,768
Amortization of deferred charges 18,564 --
------------ ------------
Net cost of sales 196,034 117,768
------------ ------------
Gross profit 155,648 138,647
------------ ------------
Operating expenses:
Marketing and selling 158,162 112,152
General and administrative 334,068 458,788
Research and development 63,232 394,633
------------ ------------
Total operating expenses 555,463 965,573
------------ ------------
Operating loss (399,814) (826,926)
Other income (expense):
Interest income 11,072 24,475
Interest expense (24,674) (463)
------------ ------------
Total other income (13,602) 24,012
------------ ------------
Net loss $ (413,417) $ (802,914)
------------ ------------
------------ ------------
Net operating loss per common share $ (0.11) $ (0.24)
============ ============
Non-cash preferred stock dividend on Series "C" ( 4,870,023)<F1> --
Net loss attributable to common shareholders, after
non-cash preferred dividend $(5,283,440) $ (802,914)
Net loss per common share, after non-cash
preferred dividend $ (1.39) $ (0.24)
------------ ------------
Shares used in computing net loss per common share 3,815,000 3,386,000
</TABLE>
- - -------------------------------
<F1>Based on EITF D-60, the difference between the conversion price per share of
the Series "C" Preferred stock and the grant dates' market price per share of
the Common into which the preferred stock is convertible, multiplied by the
number of common shares into which the preferred stock is convertible, must be
recognized as a non-cash dividend.
5
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PARADIGM MEDICAL INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three months ended
March 31,
1998 1997
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (413,417) $ (802,914)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 7,586 6,804
Amortization of capitalized engineering and design changes 18,564 5,748
Common stock issued for compensation -- 41,810
(Increase) decrease from changes in:
Trade accounts receivable (198,640) (163,166)
Inventories (59,786) (365,358)
Prepaid expenses (4,863) (7,664)
Debt financing cost 164,776 --
Increase (decrease) from changes in:
Trade accounts payable (173,344) 63,664
Trade accounts payable - related parties 2,116 966,382
Accrued expenses (130,009) (246,463)
------------ ------------
Net cash used in operating activities (787,047) (501,157)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (2,298) (9,311)
Purchase of marketable debt securities - available for sale
-- (258)
Purchase of engineering services -- (329,105)
------------ ------------
Net cash used in investing activities (2,298) (338,674)
------------ ------------
Cash flows from financing activities:
Principle payments on notes payable (859) (790)
Interest payable, 12% Promissory Notes 22,435 --
Proceeds from exercise and warrants -- 41,625
Net Proceeds for Series "C" Stock Issue 1,746,640 --
------------ ------------
Net cash provided by financing activities 1,768,216 40,835
------------ ------------
Net increase (decrease) in cash and cash equivalents 978,871 (798,996)
Cash and cash equivalents at beginning of period 886,558 2,468,988
------------ ------------
Cash and cash equivalents at end of period $ 1,865,429 1,669,992
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 899 $ 463
</TABLE>
6
<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 March 31, 1998, and the results of its operations for the three months
ended March 31, 1997 and 1998, and its cash flows for the three months ended
March 31, 1997 and 1998. 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:
The company is not a party to any legal proceedings.
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 three month period ended March 31, 1998, 14,000
shares of Series A Preferred Stock and 12,147 shares of Series B Preferred Stock
were converted into 16,800 and 14,577 shares of the Company's common stock,
respectively.
4. Series C Preferred Stock
In January 1998, the Company's Board of Directors authorized the issuance of a
total of 30,000 shares of non-voting Class C Preferred Stock, $.001 par value,
$100 stated value. Each share is convertible into approximately 57.14 shares of
common stock at an initial conversion price, subject to adjustments for stock
splits, stock dividends and certain combinations or recapitalizations of the
Common stock, equal to $1.75 per share of common stock. Holders of the shares of
Series C Preferred stock are entitled to 12% non-cumulative dividends. However,
the shares shall be entitled to dividends declared on the Company's common stock
on an as-converted basis.
In March 1998, the Company closed a private placement of Series C Preferred
Stock, selling 20,030 shares at a price of $100 per share. The net proceeds to
the Company from the private placement were approximately $1.7 million.
In January 1998, the Company offered to the holders of the Notes, through an
exchange offer, the right to exchange their Notes for shares of Series C
Preferred Stock. In March 1998, Notes totaling $995,000 were exchanged for 9,950
shares of Series C Preferred Stock, at $100 per share, totaling $995,000. The
exchange offer has now expired.
7
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5. Warrants
In connection with the private placement of Series C Preferred Stock, The
Company issued to WIN Capital Corp. a warrant to purchase 100,000 shares of the
Company's common stock at a price of $3.00 per share expiring March 3, 2001. The
Company has recorded the fair value of the warrant at $336,000 which is being
recognized as commission for raising additional capital in the private
placement.
6.Related Party Transactions:
The Company has subcontracted the manufacturing of its Precisionist and Photon
laser cataract systems to a company that is a shareholder. During the three
month period ended March 31, 1998, the Company purchased design and
manufacturing services from that company in the amount of $2,116 and as of March
31, 1998 owed that company $460,583 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 probe. 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 to the Photon machine. The agreement
terminates on July 7, 2003. In the quarter ended March 31, 1998, the Company
paid royalties of $4,811.
A law firm, of which a director of the Company is a partner, had rendered legal
services to the Company. During the three month period ended March 31, 1998, the
Company paid this firm $30,224 for legal services, and as of March 31, 1998,
owed this firm $7,718, which is included in accounts payable.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The followings 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 design, development, manufacture and sale of
high technology eyecare products. The Company's surgical equipment is designed
to perform minimally invasive cataract surgery and is comprised of surgical
devices and related instruments and accessories, including disposable products.
The Company's diagnostic instrument is designed to measure intraocular pressure
and ocular blood flow for the detection and treatment of glaucoma. Paradigm's
activities for the three months ended March 31, 1998 include domestic and
international sales of the Precisionist 3000 Plus™ and the Precisionist
ThirtyThousand™ Ocular Surgery Workstation™ cataract surgery
systems, domestic sales of the Blood Flow Analyzer™, and research and
development on the Photon™ laser cataract removal system which received
FDA approval for expansion to Phase II Clinical Trials on May 19, 1998.
Paradigm's activities for the three months ended March 31, 1997 include domestic
and international sales of the Precisionist 3000 Plus™, the Precisionist
ThirtyThousand™ and the Photon™ laser cataract system as well as
primary research for other new products and businesses.
Results of Operations
Sales increased by $94,967, or 37%, to $351,382 for the three months ended
March 31, 1998, from $256,415 for the comparable period in 1997. The increase in
sales was a result of the Company launching the Blood Flow Analyzer
System™ and increased sales of the Precisionist ThirtyThousand™
Ocular Surgery Workstation™. Cost of sales increased $78,266 or, 66%, to
$196,034 for the three months ended March 31, 1998, from $117,768 for the
comparable period in 1997, as a result of the increased sales.
8
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The gross margin for the three months ended March 31, 1998, of 44%, is
lower than the gross margin for the comparable period in 1997, of 54%. If the
amortization of capitalized engineering and design charges of $18,564, a
non-cash expense, is excluded for the three months ended March 31, 1998, the
gross margin was 50%.
Marketing and selling expenses increased by $46,010, or 41%, to $158,162
for the three months ended March 31 1998, from $112,152 for the comparable
period in 1997. The increase was a result of the Company adding four additional
sales representatives and increasing promotional activities in anticipation of
launching the Blood Flow Analyzer™ and increased sales of the Precisionist
ThirtyThousand™ Ocular Surgery Workstation™.
General and administrative expenses decreased by $124,720, or 27%, to
$334,068 for the three months ended March 31, 1998, from $458,788 for the
comparable period in 1997. This reduction was a result of a restructuring that
eliminated four positions.
Research and development expenses decreased by $331,40, or 84%, to $63,232
for the three months ended March 31, 1998, from $394,633 for the comparable
period in 1997. This sharp decline can be attributed to the completion of the
design and engineering phase of the Precisionist ThirtyThousand™ Ocular
Surgery Workstation™.
Upgrades
To garner sales, the Company offers the ultrasonic Precisionist™
system with an unconditional arrangement under which the customer may trade in
their Precisionist™ system to upgrade to a Precisionist
ThirtyThousand™ Ocular Surgery System™ or, upon FDA clearance, a
Photon™ 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™ system against the price of the new
Precisionist ThirtyThousand™ Ocular Surgery System™ or Photon™
laser cataract system.
In the March 31, 1998 quarter, there have been no trade-in sales in which
the customer has upgraded a Precisionist™ system to the Precisionist
ThirtyThousand™ Ocular Surgery System™, compared with two trade-in
sales in the quarter ended March 31, 1997.
Liquidity and Capital Resources
The Company's ratio of inventory to quarterly sales for the period ended
March 31, 1998 was 2.5. With the launching of two new products within the past
twelve months, management has had to build inventory in anticipation of sales.
As a result, the ratio of inventory to quarterly sales tends to fluctuate widely
depending on the company's purchase orders with the manufacturers; the time lags
between the purchase order, delivery and sales, the number of demonstration
units in the field, the accuracy of the sales forecast, and seasonal factors.
The Company used cash in operating activities of $787,047 for the three
months ended March 31, 1998, compared to $501,157 for the comparable period in
1997. The Company used cash in investing activities of $2,298 for the three
months ended March 31, 1998, compared to $338,674 for the same period in 1997,
primarily due to a reduction of $329,105 in engineering services in the quarter
ended March 31, 1998, compared to the same period in 1997. The Company received
cash from financing activities of $1,768,216 for the three months ended March
31, 1998, compared to $40,835, which the Company received in a similar period in
1997. In addition, the Company wrote off prepaid financing costs of $164,776
associated with the exchange of the 12% Convertible Notes into the Series C
Preferred Stock.
At March 31, 1998, the Company had net operating loss carryforwards (NOLs)
of approximately $7,400,000, and research and development tax credit
carryforwards of approximately $64,000. 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™ laser cataract system, a 100% valuation allowance has been
provided in full 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
9
<PAGE>
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 the 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
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 130 ("SFAS 130"),
"Reporting Comprehensive Income", and SFAS No. 131 ("SFAS 131"), "Disclosures
About Segments of an Enterprise and Related Information". SFAS 130 establishes
standards for reporting and display of comprehensive income in the financial
statements. Comprehensive income is the total of net income and all other
non-owner changes in equity. SFAS 131 requires that companies disclose segment
data based on how management makes decisions about allocating resources to
segments and measuring their performance. In addition, in February 1998 the FASB
issued SFAS No. 132 ("SFAS 132"), "Employers' Disclosures About Pensions and
Other Postretirement Benefits", concerning employer disclosure about pension
plans and other postretirement benefits. SFAS 130, SFAS 131 and SFAS 132 are
effective for fiscal years beginning after December 15, 1997. Adoption of the
standards is not expected to have an effect on the Company's financial
statements, financial position or results of operations.
The Company has reviewed all recently issued 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.
Year 2000
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Management of the
Company does not anticipate that any significant modification or replacement of
the Company's software will be necessary for its computer systems to properly
utilize dates beyond December 31, 1999 or that the Company will incur
significant operating expenses to make any such computer system improvements.
The Company is not able to determine, however, whether any of its suppliers,
lenders, or service providers will need to make any such software modifications
or replacements or whether the failure to make such software corrections will
have an effect on the Company's operations or financial condition.
Part II: Other Information
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
2.1 Amended Agreement and Plan of Merger between Paradigm Medical
Industries, Inc., a California corporation and Paradigm Medical
Industries, Inc., a Delaware corporation(1)
3.1 Certificate of Incorporation(1)
3.2 Bylaws(1)
4.1 Warrant Agency Agreement with Continental Stock Transfer & Trust
Company(3)
4.2 Specimen Common Stock Certificate (2)
10
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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.(3)
4.6 Attorney's Warrant with Mackey Price & Williams(1)
4.7 Warrant to Purchase Common Stock with Win Capital Corp.
4.8 Specimen Series C Convertible Preferred Stock Certificate
4.9 Certificate of the Designations, Powers, Preferences and Rights of
the Series C Convertible Preferred Stock
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 Lease Agreement with Eden Roc
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(1)
10.16 Registering Shareholders Lock-Up Agreement(3)
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.(5)
10.22 License and Manufacturing Agreement with O.B.F. Labs, Ltd.(6)
10.23 Settlement Agreement with Estate of H.L. Federman(6)
10.24 Agreement with Win Capital Corp.(6)
10.25 12% Convertible, Redeemable Promissory Note(6)
10.26 Securities Exchange Agreement(6) 23.1 Consent of Medical Laser
Insight(3)
23.2 Consent of Frost & Sullivan(3)
23.3 Consent of Ophthalmologists Times(3)
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 Amendment No. 3 to Registration
Statement on Form SB-2, as filed on June 28, 1996.
(5) Incorporated by reference from Annual Report on Form 10-KSB, as
filed on December 30, 1996.
(6) Incorporated by reference from Annual Report on Form 10-KSB, as
filed on April 16, 1998.
(b) Reports on Form 8-K
On January 7, 1998, the Company filed a report on Form 8-K regarding pro
forma financial statements as of November 30, 1997.
On February 18, 1998, the Company filed a report on Form 8-K regarding pro
forma financial statements as of December 31, 1997.
11
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On February 27, 1998, the Company filed a report on Form 8-K regarding pro
forma financial statements as of January 31, 1998.
12
<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 18, 1998 By: Michael W. Stelzer
------------------
Michael W. Stelzer
Vice President of Operations, Secretary and
Chief Operating Officer
DATED: August 18, 1998 By: John W. Hemmer
--------------
Vice President of Finance, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PARADIGM
MEDICAL INDUSTRIES, INC., FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,865,249
<SECURITIES> 0
<RECEIVABLES> 319,523
<ALLOWANCES> 0
<INVENTORY> 893,717
<CURRENT-ASSETS> 3,099,319
<PP&E> 184,990
<DEPRECIATION> 69,003
<TOTAL-ASSETS> 3,506,138
<CURRENT-LIABILITIES> 680,946
<BONDS> 89,757
0
99
<COMMON> 3,830
<OTHER-SE> 2,735,126
<TOTAL-LIABILITY-AND-EQUITY> 2,739,055
<SALES> 351,382
<TOTAL-REVENUES> 362,454
<CGS> 177,470
<TOTAL-COSTS> 751,497
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,674
<INCOME-PRETAX> (413,417)
<INCOME-TAX> 0
<INCOME-CONTINUING> (413,417)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (413,417)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
