UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D. C.

                                   FORM 10-QSB

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

                        For Quarter Ended March 31, 2004

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                      For the Transition Period From ___ to

                         Commission File Number: 0-28498

                        PARADIGM MEDICAL INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


                 Delaware                                   87-0459536
        (State or other jurisdiction of                    (I.R.S. Employer
        incorporation or organization)                   Identification No.)

         2355 South 1070 West, Salt Lake City, Utah          84119
         (Address of principal executive office)           (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 : NO 9

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:

         Common Stock, $.001 par value                        25,509,868
         -----------------------------                        ----------------
                  Title of Class                              Number of Shares
                                                              Outstanding as of
                                                              March 31, 2004
         Class A Warrant to Purchase
         One Share of Common Stock                            1,000,000
         ----------------------------                         ------------------
                  Title of Class                              Number of Warrants
                                                              Outstanding as of
                                                              March 31, 2004



                        PARADIGM MEDICAL INDUSTRIES, INC.
                                   FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2004


                                      INDEX

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance Sheet (unaudited) - March 31, 2004.......................... 3

         Statements of Operations (unaudited) for the three months
         ended March 31, 2004 and March 31, 2004............................. 4

         Statements of Cash Flows (unaudited) for the three months
         ended March 31, 2004 and March 31, 2004 ............................ 5

         Notes to Financial Statements (unaudited)........................... 6

Item 2. Management's Discussion and Analysis or
        Plan of Operation ................................................... 8

Item 3. Controls and Procedures  ........................................... 13

PART II - OTHER INFORMATION

Other Information........................................................... 13

Signature Page ............................................................. 21


                                        2

                        PARADIGM MEDICAL INDUSTRIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)


                                                                 March 31, 2004
                                                                 --------------
                                                                   (Unaudited)
ASSETS
Current Assets
  Cash & Cash Equivalents                                      $        100,000
  Receivables, Net                                                      490,000
  Inventory                                                             868,000
  Prepaid Expenses                                                      243,000
                                                               ----------------
            Total Current Assets                                      1,701,000

Intangibles, Net                                                        681,000
Property and Equipment, Net                                             216,000
                                                               -----------------
            Total Assets                                       $      2,598,000
                                                               ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Trade Accounts Payable                                                686,000
  Accrued Expenses                                                    1,492,000
  Current Portion of Long-term Debt                                      56,000
                                                               ----------------
           Total Current Liabilities                                  2,234,000
  Long-term Debt                                                         48,000
                                                               ----------------
           Total Liabilities                                          2,282,000
                                                               ================

Stockholders' Equity:
Preferred Stock, Authorized:
5,000,000 Shares, $.001 par value
     Series A
        Authorized:  500,000 shares; issued and
        outstanding: 5,627 shares at March 31, 2004                           -
     Series B
        Authorized:  500,000 shares; issued and
        outstanding: 8,986 shares at March 31, 2004                           -
     Series C
        Authorized:  30,000 shares; issued and
        outstanding: zero shares at March 31, 2004                            -
     Series D
        Authorized:  1,140,000 shares; issued and
        outstanding: 5,000 shares at March 31, 2004                           -
     Series E
        Authorized:  50,000; issued and
        outstanding: 1,000 at March 31, 2004
                                                                              -
     Series F
        Authorized:  50,000; issued and
        outstanding: 4,598.75 at March 31, 2004                               -
     Series G
        Authorized:  2,000,000; issued and
        outstanding: 1,981,560 at March 31, 2004                          2,000
Common Stock, Authorized:
80,000,000 Shares, $.001 par value; issued and
outstanding: 25,372,764 at March 31, 2004                                25,000
Additional paid-in-capital                                           57,470,000
Accumulated Deficit                                                 (57,181,000)
                                                               ----------------

           Total Stockholders' Equity                                   316,000
                                                               ----------------
           Total Liabilities and Stockholders' Equity          $      2,598,000
                                                               ================


                                        3

                See accompanying notes to financial statements



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


                                                        Three Months Ended
                                                              March 31,
                                                         2004           2003
                                                     (Unaudited)    (Unaudited)


Sales                                                $    583,000  $    727,000

Cost of Sales                                             227,000       326,000
                                                     ------------  ------------

           Gross Profit                                   356,000       401,000
                                                     ------------  ------------

Operating Expenses:
  Marketing and Selling                                   185,000       322,000
  General and Administrative                              304,000       477,000
  Research, development and service                       227,000       281,000
                                                     ------------  ------------

           Total Operating Expenses                       716,000     1,080,000
                                                     ------------  ------------

Operating Income (Loss)                                  (360,000)     (679,000)

Other Income and (Expense):
  Interest Income                                           2,000         3,000
  Interest Expense                                         (6,000)       (7,000)
                                                     ------------  ------------

    Total Other Income and (Expense)                       (4,000)       (4,000)
                                                     ------------  ------------

Net loss before provision
    for income taxes                                     (364,000)     (683,000)

Income taxes                                                    -             -
                                                     ------------  ------------

Net Loss                                             $   (364,000) $   (683,000)
                                                     ============  ============

Net Loss Per Common Share
      - Basic and Diluted                            $       (.01) $       (.03)
                                                     ============  ============

Weighted Average Outstanding
    Shares - Basic and Diluted                         25,373,000    21,976,000
                                                     ============  ============

                                        4

                See accompanying notes to financial statements



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


                                                         Three Months Ended
                                                                March 31,
                                                         2004           2003
                                                     (Unaudited)    (Unaudited)
Cash Flows from Operating Activities:
  Net Loss                                           $   (364,000) $   (683,000)
  Adjustments to Reconcile Net Loss to Net
    Cash Used In Operating Activities:
       Depreciation and Amortization                       41,000       119,000
       Issuance of Common Stock for Services                    -             -
       Issuance of Stock Option/Warrant for Services                          -
       Provision for Losses on Receivables                      -       (75,000)

(Increase) Decrease from Changes in:
       Trade Accounts Receivable                          218,000       129,000
       Inventories                                        135,000       224,000
       Prepaid Expenses                                  (102,000)       24,000
Increase (Decrease) from Changes in:
       Trade Accounts Payable                             (20,000)       (1,000)
       Accrued Expenses and Deposits                       73,000       176,000
                                                     ------------  ------------


       Net Cash Used in Operating Activities              (19,000)      (87,000)
                                                     ------------  ------------

Cash Flow from Investing Activities:
  Purchase of Property and Equipment                            -             -
  Increase in Patents and Intangibles                           -             -
  Other Assets                                                                -
  Net Cash Paid in Acquisition                                  -             -
                                                     ------------  -------------

  Net Cash Used in Investing Activities                         -             -
                                                     ------------  ------------

Cash Flows from Financing Activities:
  Additions to notes payable                                    -             -
  Principal Payments on Notes Payable                     (13,000)      (15,000)
  Sale of stock and exercise of warrants                        -             -
                                                     ------------  -------------

  Net Cash (Used) Provided by Financing Activities        (13,000)      (15,000)
                                                     ------------  ------------

  Net Decrease in Cash and Cash Equivalents               (32,000)     (102,000)

Cash and Cash Equivalents at Beginning of Period          132,000       194,000
                                                     ------------  ------------

Cash and Cash Equivalents at End of Period           $    100,000  $     92,000
                                                     ============  ============

Supplemental Disclosure of Cash Flow Information:

  Cash Paid for Interest                             $      6,000  $      7,000
                                                     ============  ============

  Cash Paid for Income Taxes                         $          -  $          -
                                                     ============  ============




                                        5

                 See accompanying notes to financial statements



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


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,  2004 and the  results of its  operations  for the three  months
ended March 31,  2004 and 2003,  and its cash flows for the three  months  ended
March 31, 2004 and 2003. The results of operations for the periods presented are
not  necessarily  indicative  of the  results to be  expected  for the full year
period.

Going Concern
-------------

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities in the normal course of business.  Historically, the Company has not
demonstrated  the ability to generate  sufficient  cash flows from operations to
satisfy its  liabilities  and sustain  operations,  and the Company has incurred
significant  losses.  These factors raise  substantial doubt about the Company's
ability to continue as a going concern.

The  Company's  continuation  as a going  concern is dependent on its ability to
generate  sufficient  income and cash flow to meet its  obligations  on a timely
basis and/or  obtain  additional  financing  as may be required.  The Company is
actively seeking options to obtain additional capital and financing.

In  addition,  the  Company  has taken  significant  steps to  reduce  costs and
increase  operating  efficiencies.  Specifically,  the Company has significantly
reduced  the use of  consultants,  which has  resulted  in a large  decrease  in
expenses, and reduced the direct sales force to three representatives, which has
resulted in less payroll, travel and other selling expenses. Although these cost
savings have  significantly  reduced the Company's  losses and ongoing cash flow
needs,  if the Company is unable to obtain equity or debt  financing,  it may be
unable  to  continue  development  of  its  products  and  may  be  required  to
substantially curtail or cease operations.

Reclassifications
-----------------

Certain amounts in the financial statements for the three months ended March 31,
2003 have been  reclassified  to conform  with the  presentation  of the current
period financial statements.

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  consisting of options
and  warrants to purchase  5,704,000  and  5,051,000  shares of common stock and
preferred stock convertible into 2,302,000 and 437,000 shares of common stock at
March 31, 2004 and 2003,  respectively,  have not been  included in loss periods
because they are anti-dilutive.

Preferred Stock Conversions
---------------------------

Under the Company's Articles of Incorporation,  holders of the Company's Class A
and Class B 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  months  ended March 31,  2004,  no
shares of Series A  Preferred  Stock and no shares of Series B  Preferred  Stock
were converted to the Company's Common Stock.

Holders of Series D Preferred  have the right to convert  such stock into shares
of the  Company's  common  stock at the rate of 1 share of common stock for each
share of preferred  stock.  During the three  months  ended March 31,  2004,  no
shares of Series D Preferred Stock were converted to the Company's Common stock.



                                        6


Holders of Series E Preferred  have the right to convert  such stock into shares
of the  Company's  common  stock at the rate of 53.3 shares of common  stock for
each share of preferred stock.  During the three months ended March 31, 2004, no
shares of Series E Preferred Stock were converted to the Company's Common stock.

Holders of Series F Preferred  have the right to convert  such stock into shares
of the  Company's  common  stock at the rate of 53.3 shares of common  stock for
each share of preferred stock.  During the three months ended March 31, 2004, no
shares of Series F Preferred  Stock were  converted  to shares of the  Company's
Common stock.

Holders of Series G Preferred  have the right to convert  such stock into shares
of the  Company's  common  stock at the rate of 1 share of common stock for each
share of preferred  stock.  During the three  months  ended March 31,  2004,  no
shares of Series G Preferred  Stock were  converted  to shares of the  Company's
Common stock.

Warrants
--------

The fair value of warrants  granted as described herein is estimated at the date
of grant using the  Black-Scholes  option pricing model.  The exercise price per
share is  reflective  of the then current  market  value of the stock.  No grant
exercise price was  established at a discount to market.  All warrants are fully
vested, exercisable and nonforfeitable as of the grant date. The Company granted
no warrants to purchase the Company's common stock during the period ended March
31, 2004.

Stock - Based Compensation
--------------------------

For stock  options and warrants  granted to employees,  the Company  employs the
footnote disclosure  provisions of Statement of Financial  Accounting  Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 encourages
entities to adopt a fair-value  based method of accounting  for stock options or
similar  equity  instruments.  However,  it also  allows an  entity to  continue
measuring   compensation   cost   for   stock-based   compensation   using   the
intrinsic-value  method of accounting  prescribed by Accounting Principles Board
(APB)  Opinion No. 25,  Accounting  for Stock Issued to Employees  (APB 25). The
Company has elected to  continue to apply the  provisions  of APB 25 and provide
pro forma footnote disclosures required by SFAS No. 123. No stock-based employee
compensation cost is reflected in net income, as all options granted under those
plans had an  exercise  price equal to or greater  than the market  value of the
underlying common stock on the date of grant.

Stock options and warrants granted to  non-employees  for services are accounted
for in accordance with SFAS 123 which requires expense  recognition based on the
fair value of the  options/warrants  granted.  The Company  calculates  the fair
value of options and warrants granted by use of the Black-Scholes pricing model.
The following table  illustrates the effect on net income and earnings per share
if the  Company  had  applied  the fair  value  recognition  provisions  of FASB
Statement No. 123,  "Accounting  for Stock-Based  Compensation,"  to stock-based
employee compensation.

                                                    Three Months Ended March 31,
                                                         2004          2003
                                                     ------------  ------------
Net income (loss) - as reported                      $   (364,000)     (683,000)

Deduct:  total stock-based employee
compensation determined under fair value
based method for all awards, net of
related tax effects                                             -      (274,000)

Net loss - pro forma                                 $   (364,000)     (957,000)
                                                     ------------  ------------

Earnings per share:
     Basic and diluted - as reported                 $      (0.01)         (.03)
     Basic and diluted - pro forma                   $      (0.01)         (.04)

Related Party Transactions
--------------------------

Payments  for legal  services to the firm of which the  chairman of the board of
directors  is a partner  were  approximately  $5,000 and  $15,000  for the three
months ended March 31, 2004 and 2003, respectively.


                                        7


Accrued Expenses
----------------

Accrued expenses consist of the following at March 31, 2004:

        Accrued consulting and litigation reserve                  $    503,000
        Warranty and return allowance                                   422,000
        Accrued royalties                                                67,000
        Deferred revenue                                                 82,000
        Customer deposits                                               124,000
        Accrued payroll and employee benefits                           146,000
        Sales taxes payable                                              32,000
        Other accrued expenses                                          118,000
                                                                   ------------
         Total                                                     $  1,492,000
                                                                   ============


Item 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         This  report  contains   forward-looking   statements  and  information
relating  to the  Company  that is based on  beliefs  of  management  as well as
assumptions made by, and information  currently  available to management.  These
statements  reflect its current view respecting future events and are subject to
risks,  uncertainties  and  assumptions,  including the risks and  uncertainties
noted  throughout  the document.  Although the Company has attempted to identify
important  factors  that could  cause the actual  results to differ  materially,
there may be other factors that cause the forward-looking statements not to come
true as anticipated,  believed,  projected,  expected or intended. Should one or
more  of  these  risks  or  uncertainties  materialize,   or  should  underlying
assumptions  prove  incorrect,  actual results may differ  materially from those
described herein as anticipated,  believed,  projected,  estimated,  expected or
intended.

Critical Accounting Policies

         Revenue Recognition.  The Company recognizes revenue in compliance with
Staff Accounting Bulletin 101, Revenue Recognition in Financial  Statements (SAB
101), as revised by Staff Accounting  Bulletin No. 104, Revenue Recognition (SAB
104). SAB 101 and SAB 104 detail four criteria that must exist before revenue is
recognized:

         1. Persuasive  evidence of an arrangement  exits.  Prior to shipment of
product,  the Company  requires a signed purchase order and,  depending upon the
customer,  a down  payment  toward the final  invoiced  price or full payment in
advance with certain international product distributors.

         2. Delivery and  performance  have occurred.  Unless the purchase order
requires specific  installation or customer  acceptance,  the Company recognizes
revenue  when  the  product  ships.  If the  purchase  order  requires  specific
installation or customer  acceptance,  the Company  recognizes revenue when such
installation  or  acceptance  has occurred.  Title to the product  passes to the
customer upon shipment.  This revenue  recognition  policy does not differ among
the various different product lines. The Company guarantees the functionality of
its product.  If its product does not function as marketed  when received by the
customer,  the Company  either  makes the  necessary  repairs on site or has the
product  shipped to the Company for the repair  work.  Once the product has been
repaired and retested for functionality,  it is re-shipped to the customer.  The
Company provides  warranties that generally extend for one year from the date of
sale. Such warranties  cover the necessary parts and labor to repair the product
as well as any  shipping  costs that may be  required.  The Company  maintains a
reserve for estimated  warranty  costs based on its  historical  experience  and
management's current expectations.

         3.  The  sales  price  is fixed or  determinable.  The  purchase  order
received from the customer  includes the  agreed-upon  sales price.  The Company
does not accept customer orders, and therefore do not recognize  revenue,  until
the sales price is fixed.

         4. Collectibility is reasonably assured.  With limited exceptions,  the
Company  requires down payments on product prior to shipment.  In some cases the
Company  requires  payment in full prior to shipment.  The Company also performs
credit checks on new customers and ongoing credit checks on existing  customers.
The Company  maintains an allowance for doubtful  accounts  receivable  based on
historical experience and management's current expectations.


                                        8


         Recoverability  of  Inventory.  Since its  inception,  the  Company has
purchased several complete lines of inventory. In some circumstances the Company
has been able to utilize  certain items acquired and others remain unused.  On a
quarterly  basis,  the Company  attempts to identify  inventory  items that have
shown  relatively no movement or very slow movement.  Generally,  if an item has
shown  little  or no  movement  for  over a  year,  it is  determined  not to be
recoverable  and a reserve is  established  for that item.  In addition,  if the
Company identifies products that have become obsolete due to product upgrades or
enhancements, a reserve is established for such products. The Company intends to
make efforts to sell these items at significantly  discounted  prices.  If items
are sold, the cash received would be recorded as revenue,  but there would be no
cost of sales on such items due to the reserve  that has been  recorded.  At the
time of  sale,  the  inventory  would  be  reduced  for the  item  sold  and the
corresponding inventory reserve would also be reduced.

         Recoverability of Goodwill and Other Intangible  Assets.  The Company's
intangible   assets  consist  of  goodwill,   product  and  technology   rights,
engineering and design costs,  and patent costs.  Intangibles  with a determined
life are amortized on a straight-line  basis over their  determined  useful life
and are also  evaluated  for  potential  impairment  if events or  circumstances
indicate that the carrying  amount may not be recoverable.  Intangibles  with an
indefinite  life,  such as  goodwill,  are not  amortized  but  are  tested  for
impairment on an annual basis or when events and circumstances indicate that the
asset may be impaired.  Impairment  tests include  comparing the fair value of a
reporting unit with its carrying net book value,  including  goodwill.  To date,
the Company's  determination  of the fair value of the  reporting  unit has been
based on the estimated future cash flows of that reporting unit.

         Allowance for Doubtful  Accounts.  The Company records an allowance for
doubtful accounts to offset estimated  uncollectible  accounts  receivable.  Bad
debt  expense  associated  with the  increases  in the  allowance  for  doubtful
accounts  is  recorded  as part  of  general  and  administrative  expense.  The
Company's  accounting policy generally is to record an allowance for receivables
over 90 days past due unless there is  significant  evidence to support that the
receivable is collectible.

General

         The  following  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations,  contains forward-looking statements, which
involve  risks and  uncertainty.  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
is from January 1 through December 31.

         The Company is engaged in the design, development, manufacture and sale
of high technology  diagnostic and surgical eye care products.  Given the "going
concern" status of the Company, management has focused efforts on those products
and activities  that will, in its opinion,  achieve the most resource  efficient
short-term  cash flow.  As seen in the results for the three  months ended March
31, 2004,  diagnostic  products have been the major focus and the Photon(TM) and
other extensive research and development  projects have been put on hold pending
future evaluation when the Company's  financial position  improves.  The Company
does not focus on a specific  diagnostic  product or products but,  instead,  on
this entire diagnostic product group.

         The Company's ultrasound  diagnostic products include a P55 pachymetric
analyzer,  a P37 Ultrasound A/B Scan, a P40 Ultrasound  BioMicroscope  and a P45
Plus UBM  Ultrasound  BioMicroscope,  the technology for which was acquired from
Humphrey  Systems in 1998.  The Company  introduced  the P45 Plus in the fall of
2000, which combines the A/B Scan, and the biomicroscope into one instrument. In
addition,  the Company markets its Blood Flow Analyzer  acquired in the purchase
of Ocular Blood Flow Ltd. in June 2000. Other diagnostic  products are the Dicon
LD400 Auto Perimeter and the Dicon(TM)  CT200e Corneal  Topographer,  which were
acquired in the  acquisition  of Vismed  d/b/a  Dicon in June 2000.  The Company
purchased the inventory,  design and  production  rights of the SIStem(TM) , the
Odyssey and the Surgetrol  from Mentor  Corporation  in October 1999,  which was
designed to perform minimally  invasive cataract surgery.  In November 1999, the
Company  entered  into a  Mutual  Release  and  Settlement  Agreement  with  the
manufacturer  of the  Precisionist  ThirtyThousand(TM),  in  which  the  Company
purchased  the  raw  materials  and  finished  goods   inventory  to  bring  the
manufacturing of this product  in-house.  During the fourth quarter of 2003, the
Company  sold all  inventory  and  rights  associated  with the  SIStem(TM)  and
Odyssey(TM) for $125,000. This transaction resulted in sales of $125,000 with $0
cost of sales because a reserve for obsolete  inventory had been recorded on all
SIStem(TM) and Odyssey(TM) inventory.


                                        9


         Because of the "going  concern"  status of the Company,  management has
focused  efforts on those  products and  activities  that will,  in its opinion,
achieve the most  resource  efficient  short-term  cash flow to the company.  As
reflected in the results for the three  months ended March 31, 2003,  diagnostic
products are currently its major focus and the  Photon(TM)  and other  extensive
research  and  development  projects  have  been  put  on  hold  pending  future
evaluation when the financial position of the company improves.  Due to the lack
of current  evidence to support  recoverability,  the  Company  has  recorded an
inventory  reserve  to offset the  inventory  associated  with the  Precisionist
Thirty  Thousand(TM) and the Photon(TM) as well as certain other inventory items
that are estimated to be non-recoverable due to the lack of significant turnover
of such  items in recent  periods.  The  Company  does not  focus on a  specific
diagnostic product or products but, instead, on this entire product group.

         Activities  for the three months ended March 31, 2004 included sales of
the Company's products and related accessories and disposable products. On March
18, 2004,  the Board of Directors  appointed John Y. Yoon as President and Chief
Executive  Officer of the  Company to replace  Jeffrey F.  Poore,  who served in
those  positions  from March 19, 2003 to March 18, 2004. On March 23, 2004,  the
Board of Directors  appointed  Aziz A. Mohabbat as Vice  President of Operations
and Chief Operating Officer,  replacing David I. Cullumber who resigned as Chief
Operating  Officer and Chief  Technical  Officer on March 22, 2004. Mr. Mohabbat
previously  served as Chief Operating Officer of the Company from August 2002 to
March 2004, and as Vice President of Operations from 2001 to March 2003.

Results of Operations

         Three Months Ended March 31, 2004, Compared to Three Months Ended March
31, 2003

         Net sales  decreased  by  $152,000,  or 21%, to $583,000  for the three
months ended March 31, 2004, from $727,000 from the preceding quarter.  Sales of
the Company's diagnostic products and related accessories were $554,000,  or 95%
of total revenues, during the first three months of 2004 compared with $558,000,
or 77% of total revenues,  for the comparable  period of 2003. Sales of surgical
products and related  accessories  fell to $0 revenues,  for the three months of
the current year in  comparison  with $31,000,  or 4%, of total  revenues in the
comparable  period  of 2003.  In 2003,  sales of the P40 and P45 UBM  Ultrasound
Biomicroscope  and related  accessories  increased to $142,000,  or 24% of total
revenues,  compared to $43,000,  or 6% of total revenues,  in the same period of
2003. Sales from the Blood Flow Analyzer(TM) and related  accessories  decreased
slightly by $39,531 to $123,000, or 21% of total revenues, during the year ended
March 31, 2004 compared with  $163,000,  or 22% of total  revenues,  in the same
period of last year.  During the first  three  months of 2003,  sales from other
ultrasonic  products and related  accessories  totaled  $36,000,  or 6% of total
revenues,  compared with $43,000,  or 13% of total revenues,  in the same period
last  year.  Sales  of  the  perimeter  and  corneal   topographer  and  related
accessories  generated  $252,000,  increasing to 43% of total  revenues,  in the
first quarter 2004 compared with $258,000, or 36% of total revenues,  during the
same period of 2003.

         There  were a  number  of  material  reasons  that  contributed  to the
decrease in sales during the three months ended March 31, 2004,  compared to the
same period of 2003. Along with generally weak economic conditions in the United
States, the Company initiated the restructuring of its management structure, its
sales  organization  and the development of new sales channels during the twelve
months  ended  December 31,  2003.  During the first three  months of 2003,  the
Company  reduced  its  direct  sales  force  from  10  representatives  to  five
representatives,  and during the remainder of 2003,  there were only five direct
sales  representatives  compared to 10 direct sales  representatives  during the
comparable  period of 2002.  In the first quarter of 2004,  the company  further
reduced  the  number of direct  sales  employees  to two in the  United  States.
International  sales were  impacted by weakness  in the  economies  of the large
industrial  countries and by the residual impact of the  Afghanistan  situation,
which had a negative  impact on sales to the Middle  East,  Pakistan,  India and
other countries in that region.

         The decrease in sales of the surgical line is the result of the sale of
the SIStem  product line and a de-emphasis on the remaining  Precisionist  line.
The Precisionist is a fairly mature surgical  workstation and the Photon has yet
to receive FDA approval. Additional decline in sales is the direct result of the
restructuring of the sales and marketing  organization.  This  restructuring has
significantly  reduced the sales expenses and funds  dedicated to marketing.  In
addition,  the sales  channels  have been  altered  to include  distributor  and
independent  sale  representatives  instead  of relying  more on a direct  sales
force.  Domestic and international  sales have also decreased as a result of the
global financial  markets  declines  beginning in 2000 and the adverse impact of
the events of September 11, 2001.

         Other  reasons  for  the  decrease  in  sales  were  the  uncertainties
resulting from its efforts to reduce costs and  constraints on  availability  of
funds that reduced the Company's ability to upgrade and enhance its products and
pursue further regulatory approvals for its products.  Additionally,  changes in
the exchange rate between these  periods have  generally  made its products more
expensive  to  some  customers  outside  of the  United  States.  The  Company's
objective  is to focus  its  sales  efforts  on the  products  with the  highest
potential for sales and strong margins.



                                       10


         Gross  profit for the  quarter  ended  March 31,  2004 was 61% of total
revenues,  compared to 52% for the same  period in 2003.  Cost of goods sold for
the first three months of 2003 was $227,000 as compared to $326,000 for the same
period in 2003, a reduction  of $99,000.  Since its  inception,  the Company has
purchased  several complete lines of inventory.  While its initial intention was
to utilize the substantial  majority of inventory acquired in the manufacture of
its  products,  in some  circumstances  the  Company  has been unable to utilize
certain items acquired.

         On a quarterly basis, the Company attempts to identify  inventory items
that have shown relatively no movement or very slow movement.  Generally,  if an
item has shown little or no movement for over a year, it is determined not to be
recoverable  and a reserve is  established  for that item.  In addition,  if the
Company identifies products that have become obsolete due to product upgrades or
enhancements, a reserve is established for such products. Such analysis resulted
in material  increases in the reserve for obsolete or estimated  non-recoverable
inventory in 2003 and 2002.  There can be no assurance that the Company will not
identify  further  obsolete  inventory due to  significant  declines in sales of
certain  products or  technological  advances  of  products  in the future.  The
Company intends to make efforts to sell these items at significantly  discounted
prices.  If items are sold, the cash received would be recorded as revenue,  but
there would be no cost of sales on such items due to the  reserve  that has been
recorded.  At the time of sale, the inventory would be reduced for the item sold
and the corresponding  inventory reserve would also be reduced. The Company does
not expect the sales of these  items to be  significant  in the  future.  During
2003, the Company sold all  inventory,  rights,  and  technology  related to the
SIStem and Odyssey product lines for $125,000. The entire inventory sold in this
transaction had previously been fully  reserved.  Therefore,  upon the sale, the
Company  reduced  inventory  by  $887,000  for the  original  book  value of the
inventory,  reduced the reserve for $887,000,  and recorded revenue for the cash
received of $125,000.

         Marketing  and  selling  expenses  decreased  by  $137,000,  or 43%, to
$185,000 in the first quarter  2004,  from $322,000 in the first quarter of 2003
due primarily to the lower  headcounts  of sales persons and travel  related and
associated sales expenses.

         General and administrative  expenses decreased by $173,000,  or 36%, to
$304,000 in the first quarter 2004,  from $477,000 in the first quarter of 2003,
reflecting  the results of the Company's  efforts to reduce costs,  specifically
costs associated with a reduction of personnel and reduced travel expenses.

         Research,  development and service  expenses  decreased by $54,000,  or
19%, to $227,000 in 2004 compared to $281,000 for the same period in 2003.  This
decrease was mainly due to reduced  headcount and the redirection of development
activities.

         Other income and  (expense)  remained flat at $4000 versus for the same
period in 2003.  During the first  quarter of 2004,  interest  income was $2,000
compared with $3,000 for the same period in 2003.

Liquidity and Capital Resources

         The Company used $19,000  cash in  operating  activities  for the three
months  ended March 31,  2004,  compared to $87,000 for the three  months  ended
March 31, 2003. The reduction in cash used by operating activities for the three
months  ended March 31, 2004 was  primarily  attributable  to reduced  operating
costs, as well as other savings  resulting from ongoing efforts to substantially
reduce costs and management of current assets and current liabilities.  Net cash
used in  financing  activities  was $13,000 for the three months ended March 31,
2004,  versus $15,000 in the same period in 2003.  During the three months ended
March 31,  2004,  the  Company  did not sell any  shares of common or  preferred
stock.  In the past, the Company has relied heavily upon sales of its common and
preferred stock to fund  operations.  There can be no assurance that such equity
funding will be available on terms acceptable to the Company in the future.


                                       11


         The Company will  continue to seek funding to meet its working  capital
requirements  through   collaborative   arrangements  and  strategic  alliances,
additional public offerings and private  placements of its securities,  and bank
borrowings.  The Company is uncertain whether or not the combination of existing
working  capital and benefits  from sales of its products  will be sufficient to
assure continued operations through December 31, 2004. As of March 31, 2004, the
Company had accounts payable of $686,000, a significant portion of which is over
90 days past due.  The Company has  contacted  many of the vendors or  companies
that  have  significant  amounts  of  payables  past due in an  effort  to delay
payment,  renegotiate a reduced settlement  payment,  or establish a longer-term
payment  plan.  While  some  companies  have been  willing  to  renegotiate  the
outstanding  amounts,  others  have  demanded  payment  in full.  Under  certain
conditions,  including but not limited to judgments rendered against the Company
in a court of law, a group of creditors  could force it into  bankruptcy  due to
its inability to pay the liabilities arising out of such judgments at that time.
In  addition  to  the  accounts  payable  noted  above,  the  Company  also  has
non-cancelable  capital lease  obligations and operating lease  obligations that
require the payment of  approximately  $187,000 in 2004,  $172,000 in 2005,  and
$14,000 in 2006.

         The  Company  has taken  numerous  steps to reduce  costs and  increase
operating efficiencies. These steps consist of the following:

         1. The Company  closed its San Diego  facility.  In so doing,  numerous
manufacturing,  accounting and management responsibilities were consolidated. In
addition,  such closure resulted in significant  headcount reductions as well as
savings in rent and other overhead costs.

         2. The Company has significantly reduced the use of consultants,  which
has resulted in a large decrease to these expenses.

         3.  The  Company   has   reduced  its  direct   sales  force  to  three
representatives,  which has resulted in less  payroll,  travel and other selling
expenses.

     Because the Company has significantly fewer sales representatives, its
ability to generate sales has been reduced.

         At March 31, 2004, the Company had net operating loss carry forwards of
approximately $44,000,000 and research and development tax credit carry forwards
of  approximately  $34,000.  These loss carry  forwards are  available to offset
future taxable  income,  if any, and have begun to expire in 2001 and extend for
twenty years. The Company's  ability to use net operating loss carry forwards to
offset future income is dependant  upon certain  limitations  as a result of the
pooling  transaction  with  Vismed and the tax laws in effect at the time of the
loss carry  forwards can be utilized.  The Tax Reform Act of 1986  significantly
limits the annual  amount that can be  utilized  for certain of these loss carry
forwards as a result of change of ownership.

         The Company will  continue to 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.  The Company is uncertain whether or not the combination of existing
working  capital and benefits  from sales of its products  will be sufficient to
assure its operations through December 31, 2004.

         The  Company has taken  measures to reduce the amount of  uncollectible
accounts  receivable  such as  more  thorough  and  stringent  credit  approval,
improved  training and  instruction  by sales  personnel,  and  frequent  direct
communication  with the  customer  subsequent  to delivery  of the  system.  The
allowance for doubtful accounts was 49% of total  outstanding  receivables as of
March 31,  2004 and 40% as of December  31,  2003.  Much of the  increase in the
allowance as a percentage of total accounts  receivables  relates to outstanding
receivable  balances  pertaining to international  dealers.  The downturn in the
economy  worldwide has resulted in increased  difficulty  in collecting  certain
accounts. Certain international dealers have some aged unpaid invoices that have
not  been  resolved.  The  Company  has  addressed  its  credit  procedures  and
collection  efforts and has instituted changes that require more payments at the
time of sale via letters of credit and not on a credit  term basis.  The Company
intends to  continue  its efforts to reduce the  allowance  as a  percentage  of
accounts receivable.  While the allowance as a percentage of accounts receivable
has grown, it is mainly a result of the significant  decline in sales. The total
amount of the  allowance  was  $470,000 at March 31,  2004.  The majority of the
receivables  included in the  allowance  for  doubtful  accounts are a result of
sales  before the  Company  implemented  the  various  changes  to  improve  the
collectibility  of its  receivables.  The Company  believes  that by requiring a
large  portion  of  payment  prior to  shipment,  it has  greatly  improved  the
collectibility of its receivables.

         The  Company   carried  an   allowance   for   obsolete  or   estimated
non-recoverable  inventory of $1,642,000 at March 31, 2004, or approximately 65%
of total  inventory.  This inventory  reserve was not increased during the three
months ended March 31, 2004. The Company's means of expansion and development of
product has been largely from acquisition of businesses, product lines, existing
inventory, and the rights to specific products.  Through such acquisitions,  the
Company has acquired substantial  inventory,  some of which the eventual use and
recoverability was uncertain.  In addition, the Company has a significant amount
of inventory  relating to the Photon(TM)  laser system,  which does not yet have
FDA approval in order to sell the product domestically. Therefore, the allowance
for inventory was established to reserve for these potential eventualities.

                                       12


         On a quarterly basis, the Company attempts to identify  inventory items
that have shown relatively no movement or very slow movement.  Generally,  if an
item has shown little or no movement for over a year, it is determined not to be
recoverable  and a reserve is  established  for that item.  In addition,  if the
Company identifies products that have become obsolete due to product upgrades or
enhancements, a reserve is established for such products. The Company intends to
make efforts to sell these items at significantly  discounted  prices.  If items
are sold, the cash received would be recorded as revenue,  but there would be no
cost of sales on such items due to the reserve  that has been  recorded.  At the
time of  sale,  the  inventory  would  be  reduced  for the  item  sold  and the
corresponding inventory reserve would also be reduced. During the fourth quarter
of 2003,  the Company sold all  inventory and rights  associated  with the Phaco
SIStem(TM) and  Odyssey(TM)  for $125,000.  Because the full amount of inventory
related to the SIStem(TM) and Odyssey(TM)  had been fully  reserved,  no cost of
sales were recorded in connection with this sale, thus resulting in gross profit
equal to the sales price of  $125,000.  The Company does not expect the sales of
these items, if any, to be significant in the future.

         At this time, the Company's Photon(TM) Laser Ocular Surgery Workstation
requires additional  development and regulatory  approvals.  Any possible future
efforts to  complete  development  of the  Photon(TM)  and obtain the  necessary
regulatory approvals would depend on the Company obtaining adequate funding. The
Company  estimates  that the  liquidity  needed to complete  development  of the
Photon(TM)  and obtain the necessary  regulatory  approvals to be  approximately
$225,000.

Effect of Inflation and Foreign Currency Exchange

         The Company has not  realized a reduction  in the selling  price of its
products as a result of domestic inflation.  Nor has it experienced  unfavorable
profit  reductions due to currency  exchange  fluctuations or inflation with its
foreign customers.  All sales transactions to date have been denominated in U.S.
Dollars.

Item 3  Controls and Procedures

           (a) Evaluation of disclosure controls and procedures

         John Yoon who serves as the Company's chief executive  officer and Luis
A.  Mostacero  who  serves  as the  Company's  chief  financial  officer,  after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules  13a-15(e)  and 15d-15(e) as of March 31, 2004
(the  "Evaluation  Date")  concluded that as of the Evaluation Date, the Company
disclosure  controls and  procedures  were adequate and effective to ensure that
material  information  relating  to the  Company  would be made known to them by
others within  company,  particularly  during the period in which this quarterly
report was being prepared.

           (b) Changes in internal controls

         There were no significant changes in the Company's internal controls or
in other  factors  that  could  significantly  affect the  Company's  disclosure
controls and procedures  subsequent to the  Evaluation  Date, nor were there any
significant  deficiencies or material weaknesses in such disclosure controls and
procedures requiring corrective actions. As a result, no corrective actions were
taken.

                            PART II Other Information

Item 1. Legal Proceedings

         An action  was  brought  against  the  Company  in March 2000 by George
Wiseman,  a former  employee,  in the Third  District Court of Salt Lake County,
State of Utah.  The  complaint  alleges that the Company owes Mr.  Wiseman 6,370
shares of its common stock plus costs, attorney's fees and a wage penalty (equal
to 1,960 additional shares of its common stock) pursuant to Utah law. The action
is based  upon an  extension  of a written  employment  agreement.  The  Company
disputes the amount allegedly owed and intends to vigorously  defend against the
action.

         An action was brought against the Company on March 7, 2000 in the Third
District  Court of Salt Lake County,  State of Utah, by the Merrill  Corporation
that alleges that the Company owes the Merrill Corporation approximately $20,000
together  with  interest  thereon at the rate of 10% per annum  from  August 30,
1999, plus costs and attorney's fees. The complaint alleges a breach of contract
relative to printing services. The Company filed an answer to the complaint.  On
August 12, 2003, the court dismissed the action without prejudice.

         An action was  brought  against the  Company on  September  11, 2000 by
PhotoMed  International,  Inc.  and  Daniel  M.  Eichenbaum,  M.D.  in the Third
District Court of Salt Lake County, State of Utah. The action involves an amount
of royalties  that are allegedly due and owing to PhotoMed  International,  Inc.
and Dr. Eichenbaum under a license agreement dated July 7, 1993, with respect to
the sale of certain  equipment,  plus costs and attorneys'  fees.  Discovery has
taken place and the Company has paid  royalties of $14,736 to bring all payments
up to date through June 30, 2001. The Company has been working with PhotoMed and
Dr.  Eichenbaum to ensure that the calculations  have been correctly made on the
royalties paid as well as the proper method of calculation for the future.

                                       13


         It is  anticipated  that  once the  parties  can  agree on the  correct
calculations on the royalties,  the legal action will be dismissed. The issue in
dispute  concerning  the method of  calculating  royalties is whether  royalties
should be paid on returned  equipment.  Since July 1, 2001,  only one Photon(TM)
laser  system  has been  sold and no  systems  returned.  Thus,  the  amount  of
royalties due,  according to its  calculations,  is $600. The Company intends to
make payment of this amount to PhotoMed and Dr.  Eichenbaum and, as a result, to
have the legal action dismissed.  However, if the parties are unable to agree on
a method  for  calculating  royalties,  there is a risk  that  PhotoMed  and Dr.
Eichenbaum  might amend their  complaint to request  termination  of the license
agreement  and, if  successful,  the Company would lose its right to manufacture
and sell the Photon(TM) laser system.

         The  Company  received  a demand  letter  dated  December  9, 2002 from
counsel for Dan Blacklock,  dba Danlin Corp.  The letter demands  payment in the
amount of  $65,160  for  manufacturing  and  supplying  parts for  microkeratome
blades.  The Company's  records show that it received  approximately  $34,824 in
parts from the Danlin  Corp.,  but that the  additional  amounts that the Danlin
Corp  contends  are owed were from parts that were  received but rejected by the
Company  because they had never been  ordered.  On August 14, 2003,  the Company
agreed to make a $13,650  payment to Danlin Corp.  in settlement of the dispute.
The Company has since made the $13,650 payment to Danlin Corp.

         The  Company  received a demand  letter  dated  December  30, 2002 from
counsel for Thomas F. Motter,  its former Chairman and Chief Executive  Officer.
Mr.  Motter  claims in the letter that he was entitled to certain  stock options
that had not been issued to him in a timely manner. By the time the options were
actually issued to him, however,  they had expired.  Mr. Motter contends that if
the options had been issued in a timely manner,  he would have exercised them in
a manner that would have given him a substantial  benefit.  Mr. Motter  requests
restitution  for the loss of the financial  opportunity.  Mr. Motter also claims
that he was  defrauded  by the Company  not being  given an extended  employment
agreement when he terminated the change of control agreement that he had entered
into with us.

         Mr. Motter is further claiming payment for accrued vacation time during
the 13 years he had been employed by the Company,  asserting  that he only had a
total of four weeks of  vacation  during that  period.  Finally,  Mr.  Motter is
threatening a shareholder  derivative  action against the Company because of the
board  of  directors'   alleged  failure  to  conduct  an   investigation   into
conversations  that took place in a chat room on Yahoo.  Mr. Motter asserts that
certain  individuals  participating  in the  conversations  were its officers or
directors   whose   interests   were  in  conflict  with  the  interest  of  the
shareholders.  The Company  believes that Mr. Motter's claims and assertions are
without merit.  The Company received a letter dated May 18, 2004 from Mr. Motter
stating  that he has no  intention  of  pursuing  any of the claims  against the
Company  that were set forth in the demand  letter,  including  filing a lawsuit
against the Company with respect to the claims.

         On January 24, 2003, an action was brought by Dr. John Charles Casebeer
against the Company in the Montana Second Judicial  District  Court,  Silver Bow
County,  State of Montana (Civil No.  DU-0326).  The complaint  alleges that Dr.
Casebeer entered into a personal services contract with the Company memorialized
by a letter  agreement  dated April 20,  2002,  with it being  alleged  that Dr.
Casebeer  fully  performed  his  obligations.  Dr.  Casebeer  asserts that he is
entitled to $43,750 per quarter for  consultant  time and as an  incentive to be
granted  each  quarter  $5,000 in options  issued at the fair market  value.  An
additional  purported  incentive  was $50,000 in shares of stock being issued at
the time a formalized contract was to be signed by the parties. In the letter it
is provided that at its election,  the Company may pay the  consideration in the
form of stock or cash and that stock would be issued within 30 days of the close
of the quarter. Prior to the litigation, the Company issued 43,684 shares to Dr.
Casebeer.  The referenced letter provides that termination may be made by either
party upon  giving 90 days  written  notice.  Notice was given by the Company in
early  November  2002.  The Company  recently filed its answer in defense of the
action. Issues included whether or not Dr. Casebeer fully performed as asserted.
The case has been settled through the issuance of 300,000  additional  shares of
its common stock to Dr. Casebeer.

         On May 14, 2003, a complaint  was filed in the United  States  District
Court, District of Utah, captioned Richard Meyer,  individually and on behalf of
all others similarly suited v. Paradigm Medical Industries, Inc., Thomas Motter,
Mark  Miehle and John  Hemmer,  Case No.  2:03  CV00448TC.  The  complaint  also
indicates  that it is a  "Class  Action  Complaint  for  Violations  of  Federal
Securities Law and Plaintiffs  Demand a Trial by Jury." The Company has retained
legal  counsel to review the  complaint,  which appears to be focused on alleged
false and misleading  statements  pertaining to the Blood Flow  Analyzer(TM) and
concerning a purchase order from Valdespino Associates  Enterprises and Westland
Financial Corporation.

                                       14


         More  specifically,  the  complaint  alleges  that the Company  falsely
stated in its Securities and Exchange Commission filings and press releases that
the Company had received  authorization  to use an insurance  reimbursement  CPT
code from the CPT Code Research and Development Division of the American Medical
Association in connection with the Blood Flow Analyzer(TM),  adding that the CPT
code  provides for a  reimbursement  to doctors of $57.00 per patient for use of
the Blood Flow  Analyzer(TM).  The complaint also alleges that on July 11, 2002,
the  Company  issued a press  release  falsely  announcing  that the Company had
received a purchase order from  Valdespino  Associates  Enterprises and Westland
Financial Corporation for 200 sets of its entire portfolio of products, with $70
million in systems to be  delivered  over a two-year  period,  then  another $35
million  of  orders to be  completed  in the  third  year.  As a result of these
statements,  the complaint  contends  that the price of the Company's  shares of
common  stock was  artificially  inflated  during the period from April 25, 2001
through May 14, 2003,  and the persons who  purchased  its common  shares during
that period suffered  substantial  damages.  The complaint requests judgment for
unspecified damages, together with interest and attorney's fees.

         The Company  disputes  having  issued false and  misleading  statements
concerning  the Blood Flow  Analyzer(TM)  and a purchase  order from  Valdespino
Associates  Enterprises and Westland Financial  Corporation.  On April 25, 2001,
the  Company  issued a press  release  that  stated  the  Company  had  received
authorization to use common  procedure  terminology or CPT code number 92120 for
its Blood  Flow  Analyzer(TM).  This  press  release  was based on a letter  the
Company received from the CPT Editorial  Research and Development  Department of
the American Medical Association authorizing use of common procedure terminology
or CPT code  number  92120 for its Blood Flow  Analyzer(TM),  for  reimbursement
purposes for doctors using the device.

         Currently,  there is reimbursement by insurance payors to doctors using
the Blood Flow Analyzer(TM) in 22 states and partial reimbursement in four other
states. The amount of reimbursement to doctors using the Blood Flow Analyzer(TM)
generally ranges from $56.00 to $76.00 per patient, depending upon the insurance
payor. Insurance payors providing  reimbursement for the Blood Flow Analyzer(TM)
have the  discretion  to  increase  or reduce the amount of  reimbursement.  The
Company is  endeavoring  to obtain  reimbursement  by insurance  payors in other
states  where  there is  currently  no  reimbursement  being  made.  The Company
believes it has continued to correctly  represent in its Securities and Exchange
Commission  filings  that the Company has  received  authorization  from the CPT
Editorial   Research  and  Development   Department  of  the  American   Medical
Association  to use CPT code number 92120 for its Blood Flow  Analyzer(TM),  for
reimbursement purposes for doctors using the device.

         On July 11,  2002,  the Company  issued a press  release that stated it
received a purchase order from  Valdespino  Associates  Enterprises and Westland
Financial  Corporation  for 200 complete  sets of the Company's  entire  product
portfolio  of  diagnostic   and  surgical   equipment  for  Mexican   ophthalmic
practitioners,  to be followed by a second order of 100 sets of  equipment.  The
press release was based on a purchase order dated July 10, 2002 that the Company
entered into with Westland  Financial  Corporation  for the sale of 200 complete
sets of the Company's  surgical and diagnostic  equipment to Mexican  ophthalmic
practitioners.  The press release also stated that the initial order was for $70
million of the Company's  equipment to be filled over a two-year period followed
by the second  order of $35 million in  equipment  to be  completed in the third
year. The press release  further stated that delivery would be made in traunches
of 25 complete  sets of the Company's  equipment,  beginning in 30 days from the
date of the purchase order.

         On September  13, 2002,  the board of directors  issued a press release
updating   the  status  of  its  product   sales  to  the   Mexican   ophthalmic
practitioners.  In that press release the board stated that the Company had been
in discussions  for the prior nine months with Westland  Financial  Corporation,
aimed at supplying its medical  device  products to the Mexican  market.  In the
past, the Company has had a business relationship with Westland Financial.  Upon
investigation,  the board of directors had  determined  that the purchase  order
referenced  in the July 11, 2002 press release was not of such a nature as to be
enforceable for the purpose of sales or revenue  recognition.  In addition,  the
Company  had not sent any  shipment of medical  products  to Mexican  ophthalmic
practitioners  nor  received  payment  for  those  products  pursuant  to  those
discussions.  The September 13, 2002 press release also stated that  discussions
were  continuing  with  Westland  Financial   Corporation  regarding  sales  and
marketing  activities for the Company's  medical device products in Mexico,  but
the Company could not, at the time,  predict or provide any  assurance  that any
transactions would result.

         On June 2, 2003, a complaint  was filed in the United  States  District
Court captioned  Michael Marrone v. Paradigm Medical  Industries,  Inc.,  Thomas
Motter, Mark Miehle and John Hemmer, Case No. 2:03 CV00513 PGC. On or about June
11,  2003,  a  complaint  was filed in the same  United  States  District  Court
captioned  Milian v. Paradigm  Medical  Industries,  Inc.,  Thomas Motter,  Mark
Miehle and John Hemmer,  Case No. 2:03  CV00617PGC.  Both  complaints seek class
action  status.  These  cases are  substantially  similar in nature to the Meyer
case,  including the contention that as a result of allegedly  false  statements
regarding the Blood Flow  Analyzer(TM)  and the purchase  order from  Valdespino
Associates  Enterprises  and Westland  Financial  Corporation,  the price of the
Company's common stock was  artificially  inflated and the persons who purchased
its common  shares during the class period  suffered  substantial  damages.  The
cases  request  judgment for  unspecified  damages,  together  with interest and
attorneys' fees. These cases have now been consolidated with the Meyer case into
a single action.  The Company believes the consolidated  cases are without merit
and intends to vigorously defend and protect its interests in the said cases.

         The Company was issued a Directors  and Officers  Liability and Company
Reimbursement Policy by United States Fire Insurance Company for the period from
July 10, 2002 to July 10, 2003 that  contains a $5,000,000  limit of  liability,
which is excess of a $250,000 retention. The officers and directors named in the
consolidated  cases have  requested  coverage  under the  policy.  U.S.  Fire is
currently  investigating  whether it may have a right to deny  coverage  for the
consolidated  cases based upon policy  terms,  conditions  and  exclusions or to
rescind the policy based upon  misrepresentations  contained in its  application
for insurance.

                                       15


         The Company has not paid any amounts toward satisfaction of any part of
the $250,000 retention that is applicable to the consolidated cases. The Company
has  advised  U.S.  Fire that it cannot pay the  $250,000  retention  due to its
current  financial  circumstances.  As a  consequence,  on January 8, 2004,  the
Company  entered into a non-waiver  agreement  with U.S. Fire in which U.S. Fire
agreed to fund and advance the Company's  retention  obligation in consideration
for which the  Company  has agreed to  reimburse  U.S.  Fire the sum of $5,000 a
month,  for a period  of six  months,  with the  first of such  payments  due on
February 15, 2004.  Thereafter,  commencing  on August 15, 2004,  the Company is
currently required to reimburse U.S. Fire the sum of $10,000 per month until the
entire amount of $250,000 has been reimbursed to U.S. Fire.

         In the event  U.S.  Fire  determines  that the  Company  or the  former
officers  and  directors  named in the  consolidated  cases are not  entitled to
coverage  under the policy,  or that it is  entitled  to rescind the policy,  or
should the Company be  declared in default  under the  non-waiver  agreement  on
account  of its  failure  to make the  monthly  payments  owed to U.S.  Fire for
funding the Company's retention obligation,  then the Company agrees to pay U.S.
Fire, on demand,  the full amount of all costs advanced by U.S. Fire, except for
those amounts that the Company may have  reimbursed to U.S. Fire pursuant to the
monthly payments due under the non-waiver agreement.

         The Company  will be in default  under the  non-waiver  agreement if it
fails to make any payment due to U.S. Fire  thereunder when such payment is due,
or institute proceedings to be adjudicated as bankrupt or insolvent. U.S. Fire's
obligation to advance  defense costs under the agreement  will  terminate in the
event that the $5,000,000  policy limit of liability is exhausted.  If U.S. Fire
denies coverage for the  consolidated  cases under the policy and the Company is
not successful in defending and protecting its interests in the cases, resulting
in a judgment against the Company for substantial damages, the Company would not
be able to pay  such  liability  and,  as a  result,  would  be  forced  to seek
bankruptcy protection.

         On July 10,  2003,  an action was filed in the United  States  District
Court,  District  of Utah,  by  Innovative  Optics,  Inc.  and  Barton  Dietrich
Investments,  L.P.  Defendants  include us, Thomas Motter,  Mark Miehle and John
Hemmer, former officers of the company. The complaint claims that Innovative and
Barton entered into an asset purchase  agreement with the Company on January 31,
2002,  in which the Company  agreed to purchase all the assets of  Innovative in
consideration for the issuance of 1,310,000 shares of the Company's common stock
to  Innovative.  The complaint  claims the Company  breached the asset  purchase
agreement.  The complaint also claims that the Company  allegedly made false and
misleading statements pertaining to the Blood Flow Analyzer(TM) and concerning a
purchase order from Valdespino  Associates  Enterprises  and Westland  Financial
Corporation. The purpose of these statements, according to the complaint, was to
induce  Innovative  to sell its assets and purchase the shares of the  Company's
common stock at  artificially  inflated  prices while  simultaneously  deceiving
Innovative and Barton into  believing that the Company's  shares were worth more
than they actually were.  The complaint  contends that had Innovative and Barton
known  the truth  they  would not have  sold  Innovative  to us,  would not have
purchased the Company's  stock for the assets of  Innovative,  or would not have
purchased the stock at the inflated prices that were paid. The complaint further
contends  that as a result of the allegedly  false  statements,  Innovative  and
Barton suffered substantial damages in an amount to be proven at trial.

         The  complaint  also claims that  491,250 of the shares to be issued to
Innovative in the asset purchase  transaction  were not issued on a timely basis
and the Company also did not file a  registration  statement with the Securities
and  Exchange  Commission  within five  months of the closing  date of the asset
purchase  transaction.  As a result, the complaint alleges that the value of the
shares of the Company's  common stock issued to  Innovative  in the  transaction
declined,  and Innovative and Barton suffered  damages in an amount to be proven
at  trial.  The  Company  filed  an  answer  to the  complaint  and  also  filed
counterclaims against Innovative and Barton for breach of contract.  The Company
believes the  complaint is without  merit and intends to  vigorously  defend and
protect  its  interests  in the  action.  If the  Company is not  successful  in
defending and protecting  its interests in this action,  resulting in a judgment
against the Company for  substantial  damages,  and U.S. Fire denies coverage in
the  litigation   under  the  Directors  and  Officers   Liability  and  Company
Reimbursement  Policy,  the Company would not be able to pay such liability and,
as a result, would be forced to seek bankruptcy protection.

         On October 14, 2003, an action was filed in the Third Judicial District
Court,  Salt  Lake  County,  State of Utah,  captioned  Albert  Kinzinger,  Jr.,
individually and on behalf of all others similarly situated vs. Paradigm Medical
Industries,  Inc.,  Thomas  Motter,  Mark Miehle,  Randall A.  Mackey,  and John
Hemmer,  Case No.  030922608.  The complaint  also indicates that it is a "Class
Action Complaint for Violations of Utah Securities Laws and Plaintiffs  Demand a
Trial by Jury." The Company has retained  legal counsel to review the complaint,
which appears to be focused on alleged false or misleading statements pertaining
to the Blood Flow Analyzer(TM).  More  specifically,  the complaint alleges that
the Company  falsely  stated in Securities and Exchange  Commission  filings and
press  releases  that  it  had  received   authorization  to  use  an  insurance
reimbursement  CPT code from the CPT Code Research and  Development  Division of
the American Medical Association in connection with the Blood Flow Analyzer(TM),
adding that the CPT code provides for a  reimbursement  to doctors of $57.00 per
patient for the Blood Flow Analyzer(TM).

                                       16


         The purpose of these  statements,  according to the  complaint,  was to
induce investors to purchase shares of the Company's Series E preferred stock in
a private placement  transaction at artificially  inflated prices. The complaint
contends  that as a result of these  statements,  the investors  that  purchased
shares  of its  Series  E  preferred  stock  in the  private  offering  suffered
substantial  damages to be proven at trial.  The complaint also alleges that the
Company  sold Series E preferred  shares  without  registering  the sale of such
shares or obtaining an  exemption  from  registration.  The  complaint  requests
rescission,  compensatory  damages and treble  damages,  including  interest and
attorneys'  fees.  The  Company  filed an answer to the  complaint.  The Company
believes the  complaint is without  merit and intends to  vigorously  defend its
interests  in the action.  If the Company is not  successful  in  defending  and
protecting its interests in the action,  resulting in a judgment  against it for
substantial  damages,  and U.S. Fire denies coverage in the litigation under the
Directors and Officers Liability and Company  Reimbursement  Policy, the Company
would not be able to pay such  liability  and,  as a result,  would be forced to
seek bankruptcy protection.

         An action was filed on June 20, 2003,  in the Third  Judicial  District
Court, Salt Lake County,  State of Utah (Civil No. 030914195) by CitiCorp Vendor
Finance, Inc., formerly known as Copelco Capital, Inc. The complaint claims that
$49,626  plus  interest  is due for the leasing of two copy  machines  that were
delivered to its Salt Lake City facilities on or about April of 2000. The action
also seeks an award of attorney's fees and costs incurred in the collection. The
Company  disputes the amounts  allegedly  owed,  asserting that the equipment it
returned to the leasing company did not work properly. A responsive pleading has
not yet been filed. The Company is currently  engaged in settlement  discussions
with CitiCorp.

         An action was filed in June, 2003 in the Third Judicial District Court,
Salt Lake County, State of Utah (Civil No. 030914719) by Franklin Funding,  Inc.
in which it alleges that the Company had entered into a lease  agreement for the
lease of certain equipment for which payment is due. It is claimed that there is
due  and  owing  approximately  $89,988  after  accruing  late  fees,  interest,
repossession  costs,  collection  costs and attorneys' fees. On August 28, 2003,
the Company agreed to a settlement of the case with Franklin Funding by agreeing
to make 24  monthly  payments  of $2,300  to  Franklin  Funding,  with the first
monthly payment due on August 29, 2003.

         The Company received demand letters dated July 18, 2003,  September 26,
2003 and  November  10,  2003 from  counsel  for  Douglas A.  MacLeod,  M.D.,  a
shareholder of the company.  In the July 18, 2003 letter,  Dr.  MacLeod  demands
that he and certain  entities with which he is involved or controls,  namely the
Douglas A. MacLeod,  M.D.  Profit  Sharing  Trust,  St. Marks' Eye Institute and
Milan  Holdings,  Ltd.,  be issued a total of 2,296,667  shares of the Company's
common stock and warrants to purchase 1,192,500 shares of its common stock at an
exercise  price of $.25 per share.  Dr.  MacLeod claims that these common shares
and  warrants  are owing to him and the  related  entities  under the terms of a
mutual release dated January 16, 2003, which he and the related entities entered
into with us. Dr. MacLeod renewed his request for these additional common shares
and warrants in the September 26, 2003 and November 10, 2003 demand letters. The
Company  believes that Dr. MacLeod's claims and assertions are without merit and
that neither he nor the related  entities are entitled to any additional  shares
of its common  stock or any  additional  warrants  under the terms of the mutual
release.  The Company intends to vigorously defend against any legal action that
Dr. MacLeod may bring.

         On August 3, 2003, a complaint was filed against the Company by Corinne
Powell,  a former  employee,  in the Third Judicial  District  Court,  Salt Lake
County,  State of Utah (Civil No. 030918364).  Defendants consist of the Company
and Randall A. Mackey, Dr. David M. Silver and Keith D. Ignotz, directors of the
company.  The complaint alleges that at the time the Company laid off Ms. Powell
on March 25,  2003,  she was owed  $2,030 for  business  expenses,  $11,063  for
accrued vacation days, $12,818 for unpaid commissions,  the fair market value of
50,000  stock  options  exercisable  at $5.00 per share  that she claims she was
prevented from  exercising,  attorney's fees and a continuing wage penalty under
Utah law.  The  Company  disputes  the  amounts  allegedly  owed and  intends to
vigorously defend and protect its interests in the action.

         On September 10, 2003, an action was filed against the Company by Larry
Hicks in the Third Judicial  District  Court,  Salt Lake County,  State of Utah,
(Civil No.  030922220),  for payments due under a consulting  agreement with us.
The complaint  claims that monthly  payments of $3,083 are due for the months of
October 2002 to October 2003 under a consulting  agreement and, if the agreement
is  terminated,  for the sum of $110,000 minus whatever the Company has paid Mr.
Hicks prior to such termination,  plus costs, attorney's fees and a wage penalty
pursuant to Utah law. The Company disputes the amount allegedly owed and intends
to vigorously defend against such action.

         The  Company  is not a party to any other  material  legal  proceedings
outside the ordinary  course of its business or to any other legal  proceedings,
which,  if adversely  determined,  would have a material  adverse  effect on its
financial condition or results of operations.

                                       17


Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None.

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.

Exhibit
  No.                      Document Description
-------                    --------------------

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               Amended Certificate of Incorporation(10)
3.3               Bylaws(1)
4.1               Warrant  Agency  Agreement with  Continental  Stock Transfer &
                  Trust Company(3)
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.(3)
4.6               Warrant to Purchase  Common  Stock with Note Holders re bridge
                  financing (1)
4.7               Specimen Series C Convertible Preferred Stock Certificate(4)
4.8               Certificate  of  the  Designations,  Powers,  Preferences  and
                  Rights of the Series C Convertible Preferred Stock(4)
4.9               Specimen Series D Convertible Preferred Stock Certificate (6)
4.1               Certificate  of  the  Designations,  Powers,  Preferences  and
                  Rights of the Series D Convertible Preferred Stock (7)
4.11              Warrant to Purchase Common Stock with Cyndel & Co. (6)
4.12              Warrant to  Purchase  Common  Stock with R.F.  Lafferty & Co.,
                  Inc. (6)
4.13              Warrant to Purchase  Common Stock with Dr.  Michael B. Limberg
                  (7)
4.14              Warrant to Purchase Common Stock with John W. Hemmer (7)
4.15              Stock Purchase Warrant with Triton West Group, Inc.(9)
4.16              Warrant to Purchase  Common Stock with KSH  Investment  Group,
                  Inc.(9)
4.17              Warrant to Purchase Common Stock with Consulting for Strategic
                  Growth, Ltd.(9)
4.18              Certificate of Designations, Powers, Preferences and Rights of
                  the Series G Convertible Preferred Stock (14)
5.1               Opinion of Mackey Price & Thompson
10.1              Exclusive Patent License Agreement with PhotoMed(1)
10.2              Consulting Agreement with Dr. Daniel M. Eichenbaum(1)
10.3              1995 Stock Option Plan (1)
10.4              Employment Agreement with Thomas F. Motter (5)
10.5              Stock  Purchase  Agreement  with Ocular  Blood Flow,  Ltd. and
                  Malcolm Redman (7)
10.6              Consulting Agreement with Malcolm Redman (7)

                                       18


10.7              Royalty Agreement with Malcolm Redman (7)
10.8              Registration Rights with Malcolm Redman (7)
10.9              Employment Agreement with Mark R. Miehle (8)
10.10             Agreements with Steven J. Bayern and Patrick M. Kolenik (8)
10.11             Private  Equity  Line of Credit  Agreement  with  Triton  West
                  Group, Inc. (9)
10.12             Asset Purchase  Agreement  with  Innovative  Optics,  Inc. and
                  Barton Dietrich Investments, L.P.(10)
10.13             Escrow Agreement with Innovative Optics, Inc., Barton Dietrich
                  Investments, L.P. (10)
10.14             Assignment and Assumption  Agreement with  Innovative  Optics,
                  Inc.(10)
10.15             General  Assignment and Bill of Sale with  Innovative  Optics,
                  Inc.(10)
10.16             Non-Competition  and  Confidentiality  Agreement with Mario F.
                  Barton(10)
10.17             Termination of Employment Agreement with Mark R. Miehle(12)
10.18             Consulting Agreement with Mark R. Miehle(12)
10.19             Employment Agreement with Jeffrey F. Poore (13)
10.20             License Agreement with Sunnybrook Health Science Center(15)
10.21             Major Account Facilitator Contract(15)
10.22             Mutual Release with Douglas A. MacLeod, M.D. and Others(15)
10.23             Purchase Agreement with American Optisurgical, Inc.(15)
10.24             Purchase Order with Westland Financial Corporation(16)
10.25             Non-Waiver   Agreement   with  United  States  Fire  Insurance
                  Company(16)
10.26             Employment Agreement with John Y. Yoon(17)
10.27             Consulting Agreement with Dr. John Charles Casebeer(18)
10.28             Consulting Agreement with Kinexsys Corporation(18)
31.1              Certification  pursuant to 18 U.S.C.  Section 1350, as enacted
                  by Section 302 of the Sarbanes-Oxley Act of 2002
31.2              Certification  pursuant to 18 U.S.C.  Section 1350, as enacted
                  by Section 302 of the Sarbanes-Oxley Act of 2002
32                Certification  pursuant to 18 U.S.C.  Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


-------
(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 Annual Report on Form 10-KSB,  as filed
         on April 16, 1998.
(5)      Incorporated  by  reference  from  Report on Form  10-QSB,  as filed on
         November 12, 1998.
(6)      Incorporated by reference from Registration  Statement on Form SB-2, as
         filed on April 29, 1999.
(7)      Incorporated  by  reference  from  Report on Form  10-QSB,  as filed on
         August 16, 2000.
(8)      Incorporated  by  reference  from  Report on Form  10-QSB,  as filed on
         November 1, 2000.
(9)      Incorporated by reference from Report on Form 10-KSB, as filed on April
         16, 2001.
(10)     Incorporated  by reference from Current Report on Form 8-K, as filed on
         March 5, 2002.
(11)     Incorporated   by  reference  from  Amendment  No.  1  to  Registration
         Statement on Form S-3, as filed on March 20, 2002.
(12)     Incorporated  by  reference  from  Report on Form  10-QSB,  as filed on
         November 18, 2002.
(13)     Incorporated by reference from Registration  Statement on Form SB-2, as
         filed on July 7, 2003.
(14)     Incorporated  by  reference  from  Report on Form  10-QSB,  as filed on
         November 14, 2003.

                                       19


(15)     Incorporated   by  reference  from  Amendment  No.  2  to  Registration
         Statement on Form SB-2, as filed on December 15, 2003.
(16)     Incorporated   by  reference  from  Amendment  No.  3  to  Registration
         Statement on Form SB-2, as filed on February 27, 2004.
(17)     Incorporated  by reference from Current Report on Form 8-K, as filed on
         March 23, 2004.
(18)     Incorporated  by reference from Annual Report on Form 10-KSB,  as filed
         on April 14, 2004.

     (b)  Reports on Form 8-K
      -----------------------

         No reports were filed by the Company during the quarter ended March 31,
2004.


                                       20


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.


                                           PARADIGM MEDICAL INDUSTRIES, INC.



May 24, 2004                                /s/ John Y. Yoon
                                           -------------------------------------
                                           John Y. Yoon
                                           President and Chief Executive Officer



May 24, 2004                                /s/ Luis A. Mostacero
                                           -------------------------------------
                                           Luis A. Mostacero, Controller



                                       21