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OPHTHALMIC IMAGING SYSTEMS S-1/A Filing

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OPHTHALMIC IMAGING SYSTEMS S-1/A Filing Powered By Docstoc
					                                 As filed with the Securities and Exchange Commission on August 13, 2010
                                                                                                                          File No. 333-161778



                                                            UNITED STATES
                                                SECURITIES AND EXCHANGE COMMISSION
                                                         Washington, D.C. 20549

                                                                      Form S-1
                                                                 (Amendment No. 1)

                               REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                                 OPHTHALMIC IMAGING SYSTEMS

                                                 (Exact name of registrant as specified in its charter)

                 California                                              3841                                        94-3035367
       (State or other jurisdiction of                      (Primary Standard Industrial                          (I.R.S. Employer
      incorporation or organization)                        Classification Code Number)                        Identification Number)
                                                           __________________________

                                                             221 Lathrop Way, Suite I
                                                           Sacramento, California 95815
                                                                  (916) 646-2020

                                            (Address, including zip code, and telephone number, including

                                                 area code, of registrant’s principal executive offices)

                                                                  Ariel Shenhar
                                                              Chief Financial Officer
                                                           Ophthalmic Imaging Systems
                                                             221 Lathrop Way, Suite I
                                                           Sacramento, California 95815
                                                                  (916) 646-2020

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

                                                                       Copies to:

                                                                 Henry I. Rothman
                                                              Troutman Sanders LLP
                                                               405 Lexington Avenue
                                                            New York, New York 10174
                                                                   (212)704-6000
                                                           __________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration
statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of ―large accelerated filer,‖ ―accelerated filer‖ and ―smaller reporting company‖ in Rule 12b-2 of the Exchange
Act.

Large accelerated filer                                                                           Accelerated filer 
Non-accelerated filer (Do not check if a smaller reporting company)                               Smaller reporting company 


                                                 CALCULATION OF REGISTRATION FEE


                                                                                  Proposed Maximum
                      Title of Each Class of                                          Aggregate                            Amount of
                   Securities to be Registered                                     Offering Price(2)                     Registration Fee
Common Stock, no par value                                                            $1,230,165                             $69*

*                                  Previously paid.

(1)                                We are registering 2,368,142 shares of common stock and 92,187 shares of common stock presently
                                   issuable upon exercise of warrants to purchase shares of our common stock issued to the selling security
                                   holders in connection with the June 24, 2009 private placement. In accordance with Rule 416(a) under the
                                   Securities Act of 1933, as amended, we are also registering hereunder an indeterminate number of shares
                                   that may be issued and resold resulting from stock splits, stock dividends or similar transactions. Except for
                                   the foregoing transactions, if the number of shares issuable upon exercise of the warrants exceeds the
                                   registered amount, we will not rely on Rule 416 under the Securities Act to cover the additional shares, but
                                   will instead file a new registration statement

(2)                                Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the
                                   Securities Act based on the average of the closing bid and ask prices of the common stock on September 4,
                                   2009 as reported on the OTC Bulletin Board.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

                                                Subject to completion, dated August 13, 2010.

                                                                PROSPECTUS

                                                              2,460,329 SHARES

                                                   OPHTHALMIC IMAGING SYSTEMS

                                                              COMMON STOCK

         This prospectus relates to the resale by the selling security holders for their own accounts of up to an aggregate of 2,460,329 shares of
our common stock, of which (1) 2,368,142 shares are held by U.M. AccelMed, Limited Partnership (―AccelMed‖), (2) 78,778 shares are
issuable upon exercise of a warrant issued to The Tail Wind Fund Ltd. (―Tail Wind‖), and (3) 13,409 shares are issuable upon exercise of a
warrant issued to Solomon Strategic Holdings, Inc. (―Solomon‖).

         Our common stock trades on the OTC Bulletin Board® under the symbol ―OISI.‖ The last reported sale price of our common stock on
July 30, 2010, was $0.95 per share.

         The mailing address and the telephone number of our principal executive offices are 221 Lathrop Way, Suite I, Sacramento, California
95815, (916) 646-2020.

        You should read this prospectus carefully before you invest. Investing in these securities involves significant risks. See “Risk
Factors” beginning on page 3 of this prospectus and as they appear in our reports filed with the Securities and Exchange Commission
from time to time.

         We will not receive any proceeds from the sale of the shares by the selling security holders. We may receive proceeds in connection
with the exercise of warrants whose underlying shares may be sold in this offering.

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities
or passed upon the adequacy of accuracy of this prospectus. Any representation to the contrary is a criminal offense.

                                                The date of this prospectus is __________, 2010.
                                         TABLE OF CONTENTS

                                                                                      Page

PROSPECTUS SUMMARY                                                                     1

RISK FACTORS                                                                           3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS                                      8

USE OF PROCEEDS                                                                        8

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED            9
STOCKHOLDER MATTERS

DILUTION                                                                              10

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            10
OPERATION

BUSINESS                                                                              29

MANAGEMENT                                                                            39

EXECUTIVE COMPENSATION                                                                42

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        47

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        49

SELLING SECURITY HOLDERS                                                              53

PLAN OF DISTRIBUTION                                                                  57

DESCRIPTION OF SECURITIES                                                             58

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL             60
DISCLOSURE

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES   60

TRANSFER AGENT AND REGISTRAR                                                          60

INTEREST OF EXPERTS AND COUNSEL                                                       60

WHERE YOU CAN FIND MORE INFORMATION                                                   61

INDEX TO FINANCIAL STATEMENTS                                                         62


                                                   i
Ophthalmic Imaging Systems :                                                                                                   Page


June 30, 2010
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                      F-1
Unaudited Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2010              F-2
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months ended June 30, 2010             F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 and 2009                      F-4
Notes to Unaudited Condensed Consolidated Financial Statements                                                                 F-5

December 31, 2009
Report of Independent Registered Public Accounting Firm                                                                        F-10
Consolidated Balance Sheets as of December 31, 2009 and 2008                                                                   F-11
Consolidated Statements of Operations for the Years Ended December 31, 2009 and 2008                                           F-13
Consolidated Statement of Comprehensive Loss for the Year Ended December 21, 2009 and 2008                                     F-14
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2009 and 2008                                 F-15
Consolidated Statements of Cash Flow for the Years Ended December 31, 2009 and 2008                                            F-16
Notes to Consolidated Financial Statements                                                                                     F-17

MediVision Medical Imaging, Ltd. :

September 30, 2009
Unaudited Consolidated Balance Sheets as of September 30, 2009 and 2008, and December 31, 2008                                 F-44
Unaudited Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-46
Unaudited Consolidated Statement of Changes in Equity for the Nine Month period ending September 30, 2009, and 2008            F-47
Unaudited Consolidated Statements of Cash Flows for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-49
Notes to Unaudited Consolidated Financial Statements                                                                           F-51

December 31, 2008
Report of Independent Registered Public Accounting Firm                                                                        F-59
Consolidated Balance Sheets as of December 31, 2008                                                                            F-60
Consolidated Statement of Operations for the Year Ended December 31, 2008                                                      F-61
Consolidated Statement of Changes in Equity for the Year Ended December 31, 2008                                               F-62
Consolidated Statement of Cash Flows for the Year Ended December 31, 2008                                                      F-63
Notes to Consolidated Financial Statements                                                                                     F-64

Pro Forma Financial Statements :

September 30, 2009
Unaudited Pro Forma Combined Balance Sheets as of September 30, 2009                                                           F-103
Unaudited Pro Forma Combined Statements of Operations for the Nine Months ended September 30, 2009                             F-104
Notes to Unaudited Pro Forma Combined Financial Statements                                                                     F-106

December 31, 2008
Pro Forma Combined Statement of Operations for the Year Ended December 31, 2008                                                F-105
Notes to Unaudited Combined Pro Forma Financial Statements                                                                     F-106



                                                                   ii
         References in this prospectus to ―the Company,‖ ―we,‖ ―us,‖ and ―our‖ are to Ophthalmic Imaging Systems and its subsidiaries

         You should rely only on the information contained or incorporated by reference in this prospectus. Neither we nor the selling security
holders have authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time
of delivery of this prospectus or the time of any sale of our common shares under this prospectus. Our business, financial condition, results of
operations and prospects may have changed since such date. You should not assume that the information in this prospectus is accurate as of
any date other than the date on the front of this document. Any statement contained in a document incorporated or deemed to be incorporated
by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this
prospectus modifies or supersedes that statement. Any statement that is modified or superseded will not constitute a part of this prospectus,
except as modified or superseded.



                                                                       iii
                                                          PROSPECTUS SUMMARY

        This summary highlights some information from this prospectus and does not contain all of the information necessary to your
investment decision. To understand this offering fully, you should carefully read the entire prospectus, especially the risks of investing in our
common stock discussed under “Risk Factors.”

Private Placement

          On June 24, 2009, we completed a private placement transaction in which we issued and sold to AccelMed, 9,633,228 shares of our
common stock (the ―1 st Installment Shares‖) at $0.41522 per share and a warrant to purchase up to 3,211,076 shares of our common stock (the
―1 st Installment Warrant‖), for an aggregate purchase price of $3,999,909 million before expenses. The 1 st Installment Warrant is exercisable
at $1.00 per share and expires on June 24, 2012. On May 26, 2010, we completed the 2 nd and final installment, whereby we issued and sold to
AccelMed 3,581,089 shares of common stock at $0.55848 per share at and a warrant to purchase up to 1,193,696 shares of our co mmon stock
for an aggregate purchase price of $1,999,967, before expenses. In connection with the 1 st installment private placement, we agreed to register,
for public resale, the 1 st Installment Shares and the shares of common stock issuable upon exercise of the 1 st Installment Warrant. This
prospectus has been prepared, and the registration statement of which this prospectus is a part has been filed with the Securities and Exchange
Commission (the ―SEC‖), to satisfy our obligations to AccelMed under the 1 st installment private placement transaction. Accordingly, this
prospectus covers the resale by AccelMed, a selling shareholder of the shares, of our common stock issued in the private placement. For more
details on the terms of the private placement transaction, see ―Management’s Discussion and Analysis of Financial Condition and Results of
Operations‖ and ―Certain Relationships and Related Transactions.‖

         On June 24, 2009, we also entered into an Extension Agreement, pursuant to which, among other things, we issued warrants to Tail
Wind and Solomon to purchase an aggregate of 500,000 shares of our common stock (the ―Extension Warrants‖). The Extension Warrants
have an exercise price of $1.00 per share and expire on June 24, 2012. This prospectus covers the resale of the shares issuable upon exercise of
the Extension Warrants. For more details on the terms of the Extension, see ―Management’s Discussion and Analysis of Financial Condition
and Results of Operations.‖

Our Company

         We are engaged in the business of designing, developing, manufacturing and marketing digital imaging systems, image enhancement
and analysis software and informatics solutions for use by medical practitioners primarily in the ocular health field. Our products are used for a
variety of standard diagnostic test procedures performed in most eye care practices. Since our inception, we have developed products that have
addressed primarily the needs of the ophthalmic angiography markets, both fluorescein and indocyanine green. The current flagship products in
our angiography line are our WinStation digital imaging systems. These WinStation products are targeted primarily at retinal specialists and
general ophthalmologists in the diagnosis and treatment of retinal diseases and other ocular pathologies. See ―Description of Business‖ for
more information.



                                                                         1
The Offering
Common stock offered by selling security holders   Up to an aggregate of 2,460,329 shares of common stock may be offered
                                                   under this prospectus, of which (1) 2,368,142 shares are held by
                                                   AccelMed, (2) 78,778 shares are issuable upon exercise of a warrant
                                                   issued to Tail Wind, and (3) 13,409 shares are issuable upon exercise of
                                                   a warrant issued to Solomon.

Use of Proceeds                                    All proceeds of this offering will be received by the selling security
                                                   holders for their own accounts. We may receive proceeds in connection
                                                   with the exercise of warrants whose underlying shares may be sold in
                                                   this Offering.

Risk Factors                                       You should read the ―Risk Factors‖ section beginning on page 3, as well
                                                   as other cautionary statements throughout this prospectus, before
                                                   investing in shares of our common stock.

OTC Bulletin Board                                 OISI.OB


                                                   2
                                                                RISK FACTORS

          An investment in our common stock involves a high degree of risk. In addition to the other information in this prospectus, you should
carefully consider the following risk factors before deciding to invest in shares of our common stock. If any of the following risks actually
occurs, it is likely that our business, financial condition and operating results would be harmed. As a result, the trading price of our common
stock could decline, and you could lose part or all of your investment.

                                                         Risks Related to Our Business

Current economic conditions may adversely affect our industry, business, financial position and results of operations and could cause
the market value of our common stock to decline.

       The global economy is currently undergoing a period of unprecedented volatility and the future economic environment may continue to
be less favorable than that of recent years. It is uncertain how long the economic downturn that the U.S. economy has entered will last. The
economic downturn has resulted in, and could lead to, further reduced spending specifically related to physicians’ equipment and software. Our
products require a large initial outlay of funds, which physicians in the current economic climate are hesitant to do. Also, the credit markets are
currently experiencing unprecedented contraction. If current pressures on credit continue or worsen, future debt financing may not be available
to us when required or may not be available on acceptable terms, and as a result we may be unable to grow our business, take advantage of
business opportunities, respond to competitive pressures or satisfy our obligations under our indebtedness.

If we are unable to obtain additional capital, we will be required to eliminate certain operations that may adversely affect our business.

          Our operations require substantial funds for, among other things, continuing research and development and manufacturing and
marketing our existing products. We may need to seek additional capital, possibly through public or private sales of our securities, in order to
fund our operations. However, we may not be able to obtain additional funding in sufficient amounts or on acceptable terms when needed.
Insufficient funds may require us to delay, scale back or eliminate certain or all of our research and development programs or license from third
parties products or technologies that we would otherwise seek to develop ourselves. Any of these may adversely affect our continued
operations.

If we fail to develop and successfully introduce new and enhanced products that address rapid technological changes in our markets
and meet the needs of our customers, our business may be harmed.

         Our industry is characterized by extensive research and development, rapid technological change, frequent innovations and new
product introductions, changes in customer requirements and evolving industry standards. Demand for our products could be significantly
diminished by new technologies or products that replace them or render them obsolete, which would have a material adverse effect on our
business, financial condition and results of operations.

          Our future success depends on our ability to anticipate our customers’ needs and develop products that address those needs. This will
require us to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective
basis. We have incurred substantial research and development expenditures in the past and plan to continue to do so in the future. Over the last
three fiscal years, our research and development expenses have been in the range of 18% to 21% of our net revenue. Although we have spent
considerable resources on research and development, we may still be unable to introduce new products or, if we do introduce a new product,
such product or products may not achieve sufficient market acceptance. Failure to successfully identify new product opportunities and develop
and bring new products to market in a timely and cost effective manner may lead to a reduction in sales and adversely affect our business.



                                                                        3
The markets in which we sell our products are intensely competitive and increased competition could cause reduced sales levels,
reduced gross margins or loss of market share.

         Competition for products that diagnose and evaluate eye disease is intense and is expected to increase. Although we continue to work
on developing new and improved products, many companies are engaged in research and development of new devices and alternative methods
to diagnose and evaluate eye disease. Many of our competitors and potential competitors have substantially greater financial, manufacturing,
marketing, distribution and technical resources than us. Any business combinations or mergers among our competitors, forming larger
competitors with greater resources, or the acquisition of a competitor by a major medical or technology corporation seeking to enter this
business, could result in increased competition. Introduction of new devices and alternative methods could hinder our ability to compete
effectively and could have a material adverse effect on our business, financial condition and results of operations.

We may experience a decline in the selling prices of our products as competition increases, which could adversely affect our operating
results.

         As competing products become more widely available, the average selling price of our products may decrease. Trends toward
managed care, health care, cost containment and other changes in government and private sector initiatives in the United States and other
countries in which we do business are placing increased emphasis on the delivery of more cost-effective medical therapies which could
adversely affect prices of our products. If we are unable to offset the anticipated decrease in our average selling prices by increasing our sales
volumes, our net sales will decline. To compete we must continue to reduce the cost of our products. Further, as average selling prices of our
current products decline, we must develop and introduce new products and product enhancements with higher margins. If we cannot maintain
our net sales and gross margins, our operating results could be seriously harmed, particularly if the average selling prices of our products
decreases significantly.

Our products are subject to United States, Europen Union and international medical regulations and controls, which impose
substantial financial costs on us and which can prevent or delay the introduction of new products.

         Our ability to sell our products is subject to various federal, state and international rules and regulations. In the United States, we are
subject to inspection and market surveillance by the U.S. Food and Drug Administration (the ―FDA‖), to determine compliance with regulatory
requirements. The regulatory process is costly, lengthy and uncertain. Any delays in obtaining or failure to obtain regulatory approval of any of
our products could cause a loss of sales or incurrence of additional expenses, which could adversely affect our business.

The purchase of AcerMed software and the formation of Abraxas Medical Solutions, Inc. (“Abraxas”) may not generate any
significant future revenue for us.

          In January 2008, we purchased substantially all of the assets of AcerMed, Inc., a leading software developer for Electronic Medical
Records (EMR) and Practice Management software (PM). Through the acquisition, we gained the rights to software applications that automate
the clinical, administrative and the financial operations of a medical office. Due to the formation of Abraxas, NextGen Healthcare Information
Systems, Inc., a supplier of EMR and PM software chose to discontinue its relationship with OIS in January 2008. Long sales cycles, new sales
training requirements and potential resistance to the initial high cost of the software may be among the factors contributing to us not being
successful in selling these products.

The purchase of substantially all the assets of MediVision may not generate any significant future revenue for us.

          On October 21, 2009 we purchased substantially all the assets of MediVision. Such assets included the European operations which
consisted of MediVision’s business as conducted by CCS Pawlowski GmbH, its branch office in Belgium, certain agreements under which
MediVision contracted with third parties for distribution and other services, and rights to intellectual property which resulted from
MediVision’s research and development activities performed in Israel. We may experience difficulty integrating MediVision’s operations with
our own and we may have challenges in achieving strategic objectives and other benefits expected from the MediVision Asset Purchase. Such
difficulties may divert our attention and resources from our operations and other initiatives, potentially impair the acquired assets or result in
the potential loss of key employees of MediVision.



                                                                         4
Our international sales are a growing portion of our business; accordingly, we may increasingly become subject to the risks of doing
business in foreign countries.

         Our international business exposes us to certain unique and potentially greater risks than our domestic business and our exposure to
such risks may increase if our international business continues to grow, as we anticipate. Our international business is sensitive to changes in
the priorities and budgets of international customers, which may be driven by changes in worldwide economic conditions and regional and
local economic factors.

         Our international sales are also subject to local government laws and regulations and practices which may differ from U.S.
Government regulation, including regulations relating to import-export control, investments, exchange controls and varying currency and
economic risks. We are also exposed to risks associated with using foreign representatives and consultants for international sales and
operations and teaming with international consultants and partners in connection with international operations. As a result of these factors, we
could incur losses on such operations which could negatively impact our results of operations and financial condition.

We depend on skilled personnel to effectively operate our business in a rapidly changing market and if we are unable to retain existing
or hire additional personnel, our ability to develop and sell our products could be harmed.

          Our success depends to a significant extent upon the continued service of our key senior management, sales and technical personnel,
any of whom could be difficult to replace. Competition for qualified employees is intense and our business could be adversely affected by the
loss of the services of any of our existing key personnel. We cannot assure you that we will continue to be successful in hiring and retaining
properly trained personnel. Our inability to attract, retain, motivate and train qualified new personnel could have a material adverse effect on
our business.

We may not be able to protect our proprietary technology, which could adversely affect our competitive advantage.

         We rely on a combination of patent, copyright, trademark and trade secret laws, non-disclosure and confidentiality agreements and
other restrictions on disclosure to protect our intellectual property rights. We cannot assure that our patent applications will be approved, any
patents that may be issued will protect our intellectual property, any issued patents will not be challenged by third parties or any patents held by
us will not be found by a judicial authority to be invalid or unenforceable. Other parties may independently develop similar or competing
technology or design around any patents that may be issued to or held by us. We cannot be certain that the steps we have taken will prevent the
misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as fully as
in the United States. Moreover, if we lose any key personnel, we may not be able to prevent the unauthorized disclosure or use of our technical
knowledge or other trade secrets by those former employees.

The long sales cycles for our products may cause us to incur significant expenses without offsetting revenue.

          Customers typically expend significant effort in evaluating, testing and qualifying our products before making a decision to purchase
them, resulting in a lengthy initial sales cycle. While our customers are evaluating our products we may incur substantial sales, marketing and
research and development expenses to customize our products to the customer’s needs. We may also expend significant management efforts,
increase manufacturing capacity and order long-lead-time components or materials. Even after this evaluation process, a potential customer
may not purchase our products. As a result, these long sales cycles may cause us to incur significant expenses without ever receiving revenue to
offset those expenses.

If we fail to accurately forecast components and materials requirements for our products, we could incur additional costs and
significant delays in shipments, which could result in the loss of customers.



                                                                         5
         We must accurately predict both the demand for our products and the lead times required to obtain the necessary components and
materials for manufacture. Lead times for components and materials that we order vary significantly and depend on factors including the
specific supplier requirements, the size of the order, contract terms and current market demand for components. If we overestimate our
component and material requirements, we may have excess inventory, which would increase our costs, impair our available liquidity and could
have a material adverse effect on our business, operating results and financial condition. If we underestimate our component and material
requirements, we may have inadequate inventory, which could interrupt and delay delivery of our products to our customers. Any of these
occurrences would negatively impact our net sales, business and operating results and could have a material adverse effect on our business,
operating results and financial condition.

Our dependence on sole source suppliers exposes us to possible supply interruptions that could delay or prevent the manufacture of
our systems.

         Certain of the components used in our products are purchased from a single source. While we believe that most of these components
are available from alternate sources, an interruption of these or other supplies could have a material adverse effect on our ability to manufacture
some of our systems.

Some of our medical customers’ willingness to purchase our products depends on their ability to obtain reimbursement for medical
procedures using our products and our revenue could suffer from changes in third-party coverage and reimbursement policies.

         Our medical segment customers include doctors, clinics, hospitals and other health care providers whose willingness and ability to
purchase our products depends in part upon their ability to obtain reimbursement for medical procedures using our products from third-party
payers, including private insurance companies, and in the U.S. from health maintenance organizations, and federal, state and local government
programs, including Medicare and Medicaid. Third-party payers are increasingly scrutinizing health care costs submitted for reimbursement
and may deny coverage and reimbursement for the medical procedures made possible by our products. Failure by our customers to obtain
adequate reimbursement from third-party payers for medical procedures that use our products or changes in third-party coverage and
reimbursement policies could have a material adverse effect on our sales, results of operations and financial condition.

We have limited product liability insurance and if we are held liable in a products liability lawsuit for amounts in excess of our
insurance coverage, we could be rendered insolvent.

         There can be no assurance that we will not be named as a defendant in any litigation arising from the use of our products. Although we
have a product liability insurance policy which covers up to $4 million, should such litigation ensue and we are held liable for amounts in
excess of such insurance coverage, we could be rendered insolvent. In addition, there can be no assurance that product liability insurance will
continue to be available to us or that the premiums will not become prohibitively expensive.

If our facilities were to experience a catastrophic loss, our operations would be seriously harmed.

          Our facilities could be subject to a catastrophic loss such as fire, flood or earthquake. A substantial portion of our manufacturing
activities and many other critical business operations are located near major earthquake faults in California, an area with a history of seismic
events. Our corporate headquarters is also in a possible flood zone. Any such losses at our facilities could disrupt our operations, delay
production, shipments and revenue and result in large expenses to repair or replace the facility. Any such loss could have a material adverse
effect on our sales, results of operations and financial condition.

Any failure to meet our debt obligations could harm our business, financial condition and results of operations.

          As of July 30, 2010 we had debt outstanding of $2,979,136, consisting of $31,244 for a capital lease, $109,759 Abraxas loan,
$109,740 in auto loans, $150,000 line of credit, $1,500,000 United Mizrahi Bank bank loan, and $1,078,393 in outstanding notes to
institutional investors. If our cash flow and capital resources are insufficient to fund our debt obligations, we may be forced to sell assets, seek
additional equity or debt capital or restructure our debt. In addition, any failure to make scheduled payments of interest and principal on our
outstanding indebtedness would likely harm our ability to incur additional indebtedness on acceptable terms. Our cash flow and capital
resources may be insufficient to pay interest and principal on our debt in the future. If that should occur, our capital raising or debt
restructuring measures may be unsuccessful or inadequate to meet our scheduled debt service obligations, which could cause us to default on
our obligations and further impair our liquidity.


                                                                         6
                                                          Risks Related to this Offering

We may experience volatility in our stock price, which could negatively affect your investment, and you may not be able to resell your
shares at or above the offering price.

          The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our
control, including: quarterly variations in operating results; changes in financial estimates by securities analysts; changes in market valuations
of other similar companies; announcements by us or our competitors of new products or of significant technical innovations, contracts,
acquisitions, strategic partnerships or joint ventures; additions or departures of key personnel; any deviations in net sales or in losses from
levels expected by securities analysts; and future sales of common stock.

       In addition, the stock market has recently experienced extreme volatility that has often been unrelated to the performance of particular
companies. These market fluctuations may cause our stock price to fall regardless of our financial performance.

Because our securities trade on the OTC Bulletin Board, your ability to sell your shares in the secondary market may be limited.

        The shares of our common stock have been listed and principally quoted on the OTC Bulletin Board under the trading symbol ―OISI‖
since May 28, 1998. As a result, it may be more difficult for an investor to dispose of our securities or to obtain accurate quotations on their
market value. Furthermore, the prices for our securities may be lower than might otherwise be obtained.

          Moreover, because our securities currently trade on the OTC Bulletin Board, they are subject to the rules promulgated under the
Securities Exchange Act of 1934, as amended (the ―Exchange Act‖), which impose additional sales practice requirements on broker-dealers
that sell securities governed by these rules to persons other than established customers and ―accredited investors‖ (generally, individuals with a
net worth in excess of $1,000,000 or annual individual income exceeding $200,000 or $300,000 jointly with their spouses). For such
transactions, the broker-dealer must determine whether persons that are not established customers or accredited investors qualify under the rule
for purchasing such securities and must receive that person’s written consent to the transaction prior to sale. Consequently, these rules may
adversely affect the ability of purchasers to sell our securities and otherwise affect the trading market in our securities.

Because our shares are deemed “penny stocks,” you may have difficulty selling them in the secondary trading market.

          The SEC has adopted regulations which generally define a ―penny stock‖ to be any equity security that has a market price (as therein
defined) less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. Additionally, if the equity
security is not registered or authorized on a national securities exchange that makes certain reports available, the equity security may also
constitute a ―penny stock.‖ As our common stock falls within the definition of penny stock, these regulations require the delivery by the
broker-dealer, prior to any transaction involving our common stock, of a risk disclosure schedule explaining the penny stock market and the
risks associated with it. The broker-dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation
of the broker-dealer and any salesperson in the transaction, and monthly account statements indicating the market value of each penny stock
held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from
those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and
receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity
in the secondary market for our common stock. The ability of broker-dealers to sell our common stock and the ability of shareholders to sell
our common stock in the secondary market would be limited. As a result, the market liquidity for our common stock would be severely and
adversely affected. We can provide no assurance that trading in our common stock will not be subject to these or other regulations in the future,
which would negatively affect the market for our common stock.


                                                                         7
We have additional securities available for issuance, including preferred stock, which if issued could adversely affect the rights of the
holders of our common stock.

        Our articles of incorporation authorize the issuance of 100,000,000 shares of common stock and 20,000,000 shares of preferred
stock. The common stock and the preferred stock can generally be issued as determined by our Board of Directors without shareholder
approval.

         Any issuance of preferred stock could adversely affect the rights of the holders of common stock by, among other things, establishing
preferential dividends, liquidation rights or voting powers. Accordingly, shareholders will be dependent upon the judgment of OIS’
management in connection with the future issuance and sale of shares of our common stock and preferred stock, in the event that buyers can be
found therefor. Any future issuances of common stock or preferred stock would further dilute the percentage ownership of our securities held
by the public shareholders. Furthermore, the issuance of preferred stock could be used to discourage or prevent efforts to acquire control of OIS
through acquisition of shares of common stock.

                                 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          We make forward-looking statements in this prospectus, in other materials we file with the SEC or otherwise release to the public, and
on our website. In addition, our senior management might make forward-looking statements orally to analysts, investors, the media and others.
Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and
earnings) and demand for our products and services, and other statements of our plans, beliefs, or expectations, including the statements
contained under the heading, ―Management’s Discussion and Analysis of Financial Condition and Results of Operation,‖ regarding our future
plans, strategies and expectations are forward-looking statements. In some cases these statements are identifiable through the use of words such
as ―anticipate,‖ ―believe,‖ ―estimate,‖ ―expect,‖ ―intend,‖ ―plan,‖ ―project,‖ ―target,‖ ―can,‖ ―could,‖ ―may,‖ ―should,‖ ―will,‖ ―would‖ and
similar expressions. You are cautioned not to place undue reliance on these forward-looking statements because these forward-looking
statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause
actual results to differ materially from those suggested by these forward-looking statements. Thus, our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future
prospects include, but are not limited to, changes in: economic conditions generally and the medical instruments market specifically, legislative
or regulatory changes that affect us, including changes in healthcare regulation, the availability of working capital, the introduction of
competing products, and other risk factors described herein. These risks and uncertainties, together with the other risks described from time to
time in reports and documents that we filed with the SEC should be considered in evaluating forward-looking statements, and undue reliance
should not be placed on such statements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and
financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. We expressly
disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.

                                                             USE OF PROCEEDS

         We will not receive any of the proceeds from the sale of the shares of common stock offered under this prospectus. Rather, the selling
security holders will receive those proceeds directly. We may receive proceeds in connection with the exercise of warrants whose underlying
shares may in turn be sold by the selling security holder. Although the amount and timing of our receipt of any such proceeds are uncertain,
such proceeds, if received, will be used for working capital and general corporate purposes.



                                                                       8
                                  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S
                                  COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our shares of common stock, no par value, have been listed and principally quoted on the OTC Bulletin Board under the trading
symbol ―OISI‖ since May 28, 1998 and prior to that on the Nasdaq Small-Cap Market. The following table sets forth the high and low bid
prices for our common stock as reported on the OTC Bulletin Board. These prices reflect inter-dealer prices, without retail markup, markdown
or commissions, and may not represent actual transactions.

                                                                        Year Ended                 Year Ended
                                             Year Ended                 December 31,              December 31,
                                          December 31, 2010                 2009                      2008
                                          Low        High              Low       High             Low      High
First Quarter                            $ 0.75 $         1.39        $ 0.15 $ 0.34              $ 0.32 $ 0.70
Second Quarter                           $ 0.75 $         1.15        $ 0.24 $ 0.45              $ 0.30 $ 0.44
Third Quarter (through July 30,
2010)                                    $    0.70    $       1.01    $    0.25   $    0.59      $   0.27    $   0.45
Fourth Quarter                                N/A             N/A     $    0.45   $    1.57      $   0.11    $   0.38

        On July 30, 2010 , the closing price for our common stock, as reported by the OTC Bulletin Board, was $0.75 per share and there were
106 shareholders of record.

         Dividend Policy

         We have not paid any cash dividends since our inception and do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We expect to retain our earnings, if any, to provide funds for the expansion of our business. Future dividend policy will be
determined periodically by the Board of Directors based upon conditions then existing, including our earnings and financial condition, capital
requirements and other relevant factors.

         Securities Authorized for Issuance Under Equity Compensation Plans

         The following table sets forth certain information, as of December 31, 2009, with respect to our equity compensation plans:

                                         EQUITY COMPENSATION PLAN INFORMATION
                                                                                                                               Number of
                                                                                                                                securities
                                                                                                                               remaining
                                                                                                                              available for
                                                                 Number of                                                  future issuance
                                                              securities to be                                                under equity
                                                                issued upon                                                  compensation
                                                                 exercise of                   Weighted-average             plans (excluding
                                                                outstanding                     exercise price of               securities
                                                             options, warrants                outstanding options,             reflected in
                                                                 and rights                   warrants and rights             column (a))
                  Plan Category                                      (a)                               (b)                          (c)
Equity compensation plans approved by security
holders                                                          2,057,590 (a)                       $0.76                      23,074 (b)
Equity compensation plans not approved by security
holders                                                          1,527,336 (c)                       $0.39                      11,163 (d)
Total                                                            3,584,926                           $0.60                      34,237

(a)     Represents 577,831 options granted under our 2003 Stock Option Plan, 750,000 options granted under our 2005 Stock Option Plan,
        and 729,759 options granted under our 2009 Stock Option Plan.




                                                                       9
(b)       Represents 20,241 shares available for grant under the 2009 Stock Option Plan and 2,833 shares available for grant under the 2003
          Stock Option Plan to our employees, directors, and consultants. Upon the expiration, cancellation or termination of unexercised
          options, shares subject to options under the plan will again be available for the grant of options under the applicable plan.
(c)       Includes 1,223,836 shares subject to options granted under the 2000 Stock Option Plan (the ―2000 Plan‖), an option to purchase
          123,500 shares of our common stock which was issued to Alon Baraket for acting as the placement agent in the sale and issuance of
          securities to AccelMed, and an option to purchase 180,000 shares of our common stock which was issued to Noam Allon for
          consulting services during 2009
(d)       Represents 11,163 shares available for future grant under the 2000 Plan to our employees and directors, consultants, and
          non-employees. Upon the expiration, cancellation or termination of unexercised options, shares subject to options under the 2000 Plan
          will again be available for the grant of options under the applicable plan.


                                                                   DILUTION

          Sales of the shares of common stock by the selling security holders in this offering will not result in any substantial change to the net
tangible book value per share before and after the distribution of shares by the selling security holders. There will be no change in the net
tangible book value per share attributable to cash payments made by purchasers of the shares being offered by the selling security holders.
Prospective investors in the shares held by the selling security holders should be aware, however, that the price of shares being offered by the
selling security holders may not bear any rational relationship to our net tangible book value per share.

                                          MANAGEMENT’S DISCUSSION AND ANALYSIS OF
                                       FINANCIAL CONDITION AND RESULTS OF OPERATION

          Overview

         To date, we have designed, developed, manufactured and marketed ophthalmic digital imaging systems and informatics solutions,
including Electronic Medical Records and Practice Management software, and have derived substantially all of our revenue from the sale of
such products. The primary target market for our digital angiography systems and informatics solutions has been retinal specialists and general
ophthalmologists. Through our subsidiary, Abraxas, we design, develop and market EMR and PM software to be sold to the following
ambulatory-care specialties: OB/GYN, orthopedics and primary care.

          There can be no assurance that we will be able to achieve or sustain significant positive cash flows, revenue or profitability in the
future.

          Recent Pronouncements

          FASB Accounting Standards Update No. 2010-8, Technical Corrections to Various Topics.

         In February 2010, the FASB issued Accounting Update No. 2010-8, Technical Corrections to Various Topics, to eliminate
inconsistencies and to clarify guidance on various Codification Topics. Except for certain amendments to Topic 815 and the nullification of
paragraph 852-740-45-2, Update No. 2010-08 will become effective for the first reporting period beginning after issuance. Management is
currently evaluating the potential impact of Accounting Standards Update No. 2010-08 on our consolidated financial results.

          FASB Accounting Standards Update No. 2010-06, Fair Value Measurement and Disclosures.

         In January 2010, the FASB issued Accounting Update No. 2010-06, Fair Value Measurement and Disclosures , to improve
disclosures about Fair Value Measurements. The amendments in this Update will require new disclosures related to the transfer in and out of
Level 1 and 2, and require that a reporting company present Level 3 activity on a gross basis rather than one net number. In addition, the
amendments in this Update clarify existing disclosures related to the level of disaggregation and disclosures about inputs and valuation
techniques. Update No. 2010-06 will begin to become effective for reporting periods beginning after December 15, 2009. The adoption of
Accounting Standards Update No. 2010-06 did not have a material impact on the consolidated financial statements.



                                                                        10
         FASB Accounting Standards Update No. 2010-04,           Accounting for Various Topics, Technical Corrections to SEC Paragraphs.

       In January 2010, the FASB issued Accounting Update No. 2010-4, Accounting for Various Topics, Technical Corrections to SEC
Paragraphs , to update SEC staff announcements for codification references. The adoption of Accounting Standards Update No.
2010-04 will not have a material impact on the consolidated financial statements.

         FASB Accounting Standards Update No. 2010-01 , Accounting for Distributions to Shareholders with Components of Stock and Cash.

         In January 2010, the FASB issued Accounting Update No. 2010-01 , Accounting for Distributions to Shareholders with Components
of Stock and Cash , to clarify the accounting for a distribution to shareholders that offers the ability to elect to receive the entire distribution in
cash or shares. Accounting Standards Update No. 2010-06 will be effective for reporting periods beginning after December 15, 2009. The
adoption of Accounting Standards Update No. 2010-01 did not have a material impact on the consolidated financial statements.

        FASB Accounting Standards Update No. 2009-14 , Certain Revenue Arrangements That Include Software Elements, a Consensus of
the FASB Emerging Issues Task Force.

          In October 2009, the FASB issued Accounting Standards Update No. 2009-14, Certain Revenue Arrangements That Include Software
Elements, a Consensus of the FASB Emerging Issues Task Force, to amend guidance used to allocate and measure revenues by an enterprise
that sells or leases tangible products in an arrangement that contains software that is more than incidental to the tangible product as a whole.
The amendments in the Update require that hardware components of a tangible product containing software elements always be excluded from
the software revenue guidance. The Update provides additional guidance on how to determine which software, if any, related to the tangible
products also would be excluded from the scope of the software revenue guidance. Update No. 2009-14 will be effective prospectively for
revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
Management is currently evaluating the potential impact of Accounting Standards Update No. 2009-14 on our consolidated financial results.

         FASB Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging
Issues Task Force.

          In October 2009, the FASB issued Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements , a
Consensus of the FASB Emerging Issues Task Force, to amend guidance which establishes a selling price hierarchy for determining the selling
price of a deliverable in a multiple-deliverable revenue arrangement. The amendments in this Update also will replace the term fair value in the
revenue allocation guidance with selling price to clarify that the allocation of revenues is based on entity-specific assumptions rather than
assumptions of marketplace participation. In addition, the amendment revises certain disclosure requirements. Update No. 2009-13 will
become effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15,
2010. Early adoption is permitted. Management is currently evaluating the potential impact of Accounting Standards Update No. 2009-13 on
our consolidated financial results.

         FASB Accounting Standards Update No. 2009-01, Generally            Accepted Accounting Principles.

         In October 2009, the FASB issued Accounting Standards Update No. 2009-01, Generally Accepted Accounting Principles, to amend
the FASB Accounting Standards Codification for the issuance of the FASB Statement No. 168, the FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles . The FASB Accounting Standards Codification will become the source of
authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB. Rules and interpretive releases of the Security
and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the
effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other
nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. The adoption of Update No.
2009-01 did not have a material impact on the consolidated financial statements.


                                                                          11
         FASB Accounting Standards Codification Topic 855 , Subsequent Events.

         On June 30, 2009, we adopted Topic 855, Subsequent Events, which is generally based on Financial Accounting Standard 165 which
establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. Specifically, Topic 855 sets forth the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements,
and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of Topic 855
did not have a material impact on the consolidated financial statements.

        FASB Accounting Standards Codification Topic 810, Consolidation, Subtopic 10 Overall, Section 65, Transition Related to FASB
Statement No. 160 Noncontrolling Interest in Consolidated Financial Statements – an amendment to ARB No.51.

          Topic 810, Consolidation , is based on Statement of Financial Accounting Standard No. 160, Noncontrolling Interest in Consolidated
Financial Statements – an amendment of ARB 51, which we adopted on January 1, 2009. Topic 810 establishes accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Topic defines a noncontrolling
interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. Topic
810 requires, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity
separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s
shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated
statement of operations; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be
measured at fair value and a gain or loss be recognized in net income based on such fair value. The adoption of Topic 810 has had a material
impact on our consolidated financial statements as related to the Asset Purchase Agreement with MediVision which was completed on October
21, 2009. (For additional details, see financial statements for the year ending December 31, 2009, Note 6. Related Party Transactions,
MediVision Medical Imaging Ltd., MediVision Asset Purchase.)

         FASB Accounting Standards Codification Topic 810 , Consolidation.

         Topic 810 Consolidation, is generally based on Statement of Financial Accounting Standards No. 167, Amendments to FASB
Interpretation No. 46(R), which was issued in June 2009, which among other things requires an enterprise to perform an analysis to determine
whether the enterprise’s variable interest(s) give it a controlling financial interest in a variable interest entity; to require ongoing reassessments
of whether an enterprise is the primary beneficiary of a variable interest entity; to eliminate the quantitative approach previously required for
determining the primary beneficiary of a variable interest entity; to add an additional reconsideration event for determining whether an entity is
a variable interest entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose
the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity’s
economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information
about an enterprise’s involvement in a variable interest entity. Topic 810, Consolidation , became effective on January 1, 2010. The adoption of
Topic 810 did not have a material impact on the consolidated financial statements.

         FASB Accounting Standards Codification Topic 350 , Intangibles -- Goodwill and Other.

         Topic 350, Intangibles – Goodwill and Other, is generally based on Financial Staff Position (―FSP‖) 142-3, Determination of the
Useful Life of Intangible Asset, which was issued by the FASB in April 2008, which among other things, amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under Topic 350.
The intent of the Topic is to improve the consistency between the useful life of a recognized intangible asset under Topic 350 and the period of
expected cash flows used to measure the fair value of the asset, under Topic 805, Business Combinations, which is generally based on SFAS
141R, Business Combinations , and other GAAP principles. The provisions of Topic 350 are effective for fiscal years beginning after
December 15, 2008. Topic 350 is effective for our fiscal year beginning January 1, 2009. The adoption of Topic 350 did not have a material
impact on the consolidated financial statements.



                                                                         12
         FASB Accounting Standards Codification Topic 805, Business Combinations.

         Topic 805, Business Combinations, is generally based on Financial Accounting Standards No. 141 (revised 2007), Business
Combinations, which was issued by the FASB in December 2007, which among other things, establishes principles and requirements regarding
the method in which the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the acquired business, (ii) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase, (iii) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business combination and (iv) requires costs incurred to effect an acquisition to be
recognized separately from the acquisition. Topic 805 is effective for all business combinations for which the acquisition date is on or after
January 1, 2009. Earlier adoption is prohibited. This standard changes the accounting treatment for business combinations on a prospective
basis. The adoption of Topic 805 has had a material impact on the financial position and results of operations as disclosed below.

         On March 20, 2008, we entered into a definitive merger agreement (the ―Merger Agreement‖) with MV Acquisitions Ltd., an Israeli
company and a wholly-owned subsidiary (―Merger Sub‖), and MediVision, pursuant to which the Merger Sub would have merged with and
into MediVision, with MediVision as the surviving entity. On March 16, 2009, we entered into a Termination Agreement with MediVision
pursuant to which the Merger Agreement was terminated.

         We capitalized $519,820 and $527,327 in 2008 and 2007, respectively, for a total of $1,047,047 of costs related to the proposed
merger with MediVision. In accordance with FASB Topic 805, Business Combinations , these costs should be expensed. To comply with
Topic 805 we have retroactively calculated our consolidated balance sheet as of December 31, 2008 and our consolidated statement of
operations and consolidated cash flow statements for the year ended December 31, 2008. Our consolidated balance sheet as of December 31,
2008 and consolidated statement of operations and consolidated cash flow statement for the year ended December 31, 2008 report
merger-related costs as expenses for comparative purposes. Beginning in 2009, we expensed, within general and administrative expenses in our
consolidated statement of operations, any new merger-related costs. The pro forma impact of this adjustment to our 2008 consolidated financial
statements as of and for the year ended December 31, 2008 is $519,720, respectively, as shown below:

                                                                                                                      FY 2008
                                                                                                                       Revised
                                                                                                                      For Topic
              Statement of Operations:                                                          FY 2008                 805
              Net revenues                                                                    $  12,491,117       $    12,491,117
              Cost of sales                                                                       5,768,483             5,768,483
              Gross profit                                                                    $   6,722,634       $     6,722,634
              Total operating expenses                                                            7,804,968             8,324,688
              Net loss                                                                        $ (2,465,805 )      $    (2,985,524 )
              Basic loss per share                                                            $       (0.15 )     $          (0.18 )
              Balance Sheet:
              Total Assets                                                                    $    13,671,756     $    12,624,709
              Total Liabilities                                                               $     6,178,256     $     6,178,255
              Total Stockholders’ Equity                                                      $     7,493,500     $     6,446,454
              Total Liabilities and Stockholders’ Equity                                      $    13,671,756     $    12,624,709




                                                                        13
Critical Accounting Policies

         Our consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles
(―GAAP‖). The information contained in the financial statements is, to a significant extent, based on effects of transactions and events that
have already occurred. A variety of factors could affect the ultimate value obtained when earning income, recognizing an expense, recovering
an asset or relieving a liability.

         Management is also required to make estimates and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates. In addition, GAAP itself may change from one previously acceptable method to another.
Although the economics of our transactions would not change, the timing of the recognition of such events for accounting purposes may
change.

          We re-evaluate our estimates and assumptions used in our financials on an ongoing and quarterly basis. We adjust these estimates and
assumptions as needed and as circumstances change. If circumstances change in the future, we will adjust our estimates and assumptions
accordingly. At the present time, we cannot definitively determine whether our assumptions and estimates will change in the future. Based on
history, however, it is likely that there will be changes in some of our estimates and assumptions.

Revenue Recognition

        Our revenue recognition policies are in compliance with applicable accounting rules and regulations including FASB Accounting
Standards Codification Topic 985 , Software, Topic 605 Revenue and Subtopic 25 Multiple-Element Arrangements . When accounting
for revenue with multiple element arrangements, the multiple components of our revenue are considered separate units of accounting in that
revenue recognition occurs at different points of time for (1) product shipment, (2) installation and training services, and (3) service contracts
based on performance or over the contract term as we incur expenses related to the contract revenue.

         Revenue for products is recognized when title passes to the customer, which is upon shipment, provided there are no conditions to
acceptance, including specific acceptance rights. If we make an arrangement that includes specific acceptance rights, revenue is recognized
when the specific acceptance rights are met. Upon review, we concluded that consideration received from our customer agreements are reliably
measurable because the amount of the consideration is fixed and no specific refund rights are included in the arrangement. We defer 100% of
the revenue from sales shipped during the period that we believe may be uncollectible.

         Installation revenue is recognized when the installation is complete. Separate amounts are charged and assigned in the customer quote,
sales order and invoice, for installation and training services. These amounts are determined based on fair value, which is calculated in
accordance with industry and competitor pricing of similar services and adjustments according to market acceptance. There is no price
reduction in the product price if the customer chooses not to have us complete the installation.

        Extended product service contracts are offered to our customers and are generally entered into prior to the expiration of our one year
product warranty. The revenue generated from these transactions is recognized over the contract period, normally one to four years.

          We do not have a general policy for cancellation, termination, or refunds associated with the sale of its products and services. All
items are on one quote/purchase order with payment terms specified for the whole order. Occasionally, we have customers who require
specific acceptance tests and accordingly, we do not recognize such revenue until these specific tests are met.



                                                                       14
Tax Provision

         Deferred taxes are calculated using the liability method, whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

         We calculate a tax provision quarterly and determine the amount of our deferred tax asset that will more-likely-than-not be used in the
future. In making this determination, we have to assess the amount of our unlimited and capped NOL amounts we will more likely than not be
able to use, as well as the deferred tax asset amount related to the temporary differences of our balance sheet accounts.

        FASB Accounting Standards Codification Topic No. 740, Taxes , provides the accounting for uncertainty in income taxes recognized
in a company’s financial statements. Topic No. 740 also prescribes a recognition threshold and measurement standard for the financial
statement recognition and measurement of an income tax position taken or expected to be taken in a tax return. In addition, Topic No. 740
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We apply
Topic No. 740 to all of our tax positions.

         We do not currently allocate our taxes between us and our subsidiary, Abraxas, due to the immaterial impact of Abraxas on our tax
provision.

Warranty Reserve

         Our warranty reserve contains two components, a general product reserve recorded on a per product basis and specific reserves
recorded as we become aware of system performance issues. The product reserve is calculated based on a fixed dollar amount per product
shipped each quarter. Specific reserves usually arise from the introduction of new products. When a new product is introduced, we reserve for
specific problems arising from potential issues, if any. As issues are resolved, we reduce the specific reserve. These types of issues can cause
our warranty reserve to fluctuate outside of sales fluctuations.

          We estimate the cost of the various warranty services by taking into account the estimated cost of servicing routine warranty claims in
the first year, including parts, labor and travel costs for service technicians. We analyze the gross profit margin of our service department, the
price of our extended warranty contracts, factor in the hardware costs of the various systems, and use a percentage to calculate the cost per
system to use for the first year manufacturer’s warranty.

        During the six months ended June 30, 2010 and 2009 the general warranty reserve increased from $90,000 to $162,600 and from
$67,000 to $83,425 due to the increase in product shipments versus the amount of replacements, repairs or upgrades performed.

Securities Purchase Agreement

          On June 24, 2009, we entered into a Purchase Agreement with AccelMed, whereby we authorized the issuance and sale of up to an
aggregate of 13,214,317 shares of our common stock and warrants to purchase up to an aggregate of 4,404,772 shares of our common stock in
two installments. On the date of the Purchase Agreement, we completed the 1st installment, pursuant to which we issued to AccelMed
9,633,228 shares and a warrant to purchase up to 3,211,076 shares for an aggregate purchase price of $3,999,972. This warrant has an exercise
price of $1.00 per share and expires on June 24, 2012.

         On June 24, 2009, we also issued to the placement agent, an option to purchase 123,500 shares of our common stock at an exercise
price of $0.01 per share. This option expires on June 24, 2012. We recorded the fair value of the options using the Black-Scholes-Merton
option valuation model, as a reduction to our common stock and an increase in additional paid-in-capital in the amount of $47,045.



                                                                       15
         On May 26, 2010 we completed the 2 nd Installment, under which we issued 3,581,089 shares of common stock and a warrant to
purchase up to an aggregate of 1,193,696 shares of common stock, for an aggregate purchase price of $1,999,967. In connection with the 2 nd
installment, we issued to the placement agent, an option to purchase 36,464 shares of our common stock at an exercise price of $0.01 per share.
This option expires on May 26, 2013. We recorded the fair value of the options using the Black-Scholes-Merton option valuation model, as a
reduction to our common stock and an increase in additional paid-in-capital in the amount of $18,491.

MediVision Asset Purchase

         On June 24, 2009, we entered into an Asset Purchase Agreement with MediVision to purchase substantially all the assets of
MediVision, which was completed on October 21, 2009 (the ―MediVision Asset Purchase‖). Such assets included the European operations
which consisted of MediVision’s business as conducted by CCS Pawlowski GmbH (―CCS‖), its branch office in Belgium (the ―Belgium
Activities‖), certain agreements under which MediVision contracted with third parties for distribution and other services (the ―Purchased
Agreements‖), and rights to intellectual property which resulted from MediVision’s research and development (―R&D‖) activities performed in
Israel.

         As payment for such assets, we agreed to assume a bank loan outstanding with Mizrahi Tefahot Bank Ltd. (the ―United Mizrahi
Bank‖) in the amount of $1,500,000, to which we were previously a guarantor (For more details of the guaranty, see ―Note 6. Related Party
Transactions, United Mizrahi Bank Loan‖ below.), liabilities associated with the acquired assets on and after October 21, 2009, the closing
date, and certain taxes, and extinguishment of all intercompany indebtedness owed to us with a principal amount of $4,178,622.

         In addition, in early 2009, we hired all of MediVision’s research and development staff and moved them to our offices in the United
States and Israel.

         During 2009, we had recorded intercompany accounts and notes receivable due from MediVision of $450,000 and $3,168,622,
respectively, prepaid product advances to MediVision of $560,000, which were in anticipation of the completion of the Electro-optical Unit,
and $273,808 of exclusivity rights paid to MediVision to sell the Electro-optical Unit in the U.S. All such amounts were extinguished upon
completion of the MediVision Asset Purchase. At June 30, 2009, management determined the intercompany indebtedness owed to us by
MediVision was impaired and recorded an allowance for doubtful accounts for the outstanding balance equal to $4,436,187. In connection with
the MediVision Asset Purchase, management wrote off the balance of intercompany indebtedness owed to us by MediVision, thus, eliminating
the allowance for doubtful accounts. Following the completion of the MediVision Asset Purchase, management extinguished an additional
$16,243 of intercompany notes receivable due from MediVision.

United Mizrahi Bank Loan and Warrant

          On October 23, 2009, we entered into a Secured Debenture (the ―Secured Debenture‖) with United Mizrahi Bank. Under the Secured
Debenture we agreed to assume MediVision’s loan under the Debenture in the amount of $1,500,000 (the ―Loan Amount‖). We also agreed to
secure the Loan Amount by granting United Mizrahi Bank a security interest in all or substantially all of our assets. The New Loan accrues
interest at a rate equal to LIBOR plus 4.75%, which is calculated as 5.87% as of July 30, 2010. Upon assumption of this loan, our guarantee of
this same loan on behalf of MediVision will terminate. (For additional details of the loan , see Financial Statements for the Year Ended
December 31, 2009, Notes to Consolidated Financial Statements, Note 6. Related Party Transactions, United Mizrahi Bank Loan.) We also
issued to United Mizrahi Bank a warrant to purchase 350,000 shares of our common stock at an exercise price of $1.00 which will expire June
24, 2012. (For additional details of the warrant, see Financial Statements for the Year Ended December 31, 2009, Notes to Consolidated
Financial Statements, Note 6. Related Party Transactions, Warrant to United Mizrahi Bank.)



                                                                      16
Convertible Debt and Warrants

        On October 29, 2007, we issued convertible notes (the ―Notes‖) which are convertible into shares of our common stock and warrants
(the ―Warrants‖) to The Tail Wind Fund Ltd. and Solomon Strategic Holdings, Inc. (together with The Tail Wind Fund Ltd., the ―Holders‖) to
purchase an aggregate of 616,671 shares of our common stock at an exercise price of $1.87 per share. These warrants expire on December 10,
2012.

         On June 24, 2009, we entered into an Extension Agreement (the ―Extension Agreement‖) by and between us and the
Holders. Pursuant to the Extension Agreement, with respect to the Notes, the Holders agreed to extend the principal payments due thereon for
18 months, such that the next principal payment with respect to the Notes will be due December 31, 2010, and extend the maturity date of the
Notes to October 31, 2011. As consideration for these extensions and waivers, we issued warrants (the ―New Warrants‖) to the Holders to
purchase an aggregate of 500,000 shares of our common stock. These New Warrants have an exercise price of $1 per share and expire on June
24, 2012. Pursuant to certain anti-dilution provisions in the Notes and Warrants, which were triggered as a result of the sale of securities under
the Purchase Agreement with AccelMed, the conversion and exercise prices changed from $1.64 to $1.06 per share for the Notes and $1.87 to
$1.21 per share for the Warrants. Based on these changes, the Holders received an additional 371,157 and 333,686 shares of common stock
under the Notes and Warrants, respectively. During the 1 st quarter of 2010 the Holders converted an aggregate of $250,000 of the Convertible
Notes principle balance into 219,780 shares of our common stock. (For additional details, see Consolidated Financial Statements for the Year
Ended December 31, 2009, Notes to Consolidated Financial Statements, Note. 5. Notes Payable.)

          On October 23, 2009, in connection with the assumption of the United Mizrahi loan, we issued to United Mizrahi Bank a warrant
(the ―Warrant‖) to purchase 350,000 shares of our common stock at an exercise price of $1.00 which will expire upon the earlier of October 23,
2012 or twelve months following the completion of (1) a primary public offering of our common stock (a ―Public Offering‖) or (2) (a) the sale
of all or substantially all of our assets or (b) the merger or consolidation of the Company with or into another entity, pursuant to which 50% of
the Company’s outstanding common stock is held by person(s) who prior to the transaction held, in aggregate, less than 5% (together, a
―Liquidity Event,‖ and together with a Public Offering, an ―Exit Event‖); provided however, if the underwriter in a Public Offering or the
purchasing person(s) in a Liquidity Event require that all our outstanding warrants and options, including the Warrant be exercised prior to or
part of the Public Offering or Liquidity Event, as applicable, then the Warrant will terminate, subject to certain notice requirements, upon
completion of such transaction.

         The exercise price of the Warrant is $1.00, subject to the happening of certain events, including, but not limited to, the payment of a
stock dividend or a stock split. The Warrant also includes certain anti-dilution provisions if we issue or sell any equity securities or securities
convertible into equity, options or rights to purchase equity securities at a per share selling price less than the exercise price, then the exercise
price will be adjusted pursuant to a weighted-average formula. (For additional details, see Financial Statements for the Year Ended December
31, 2009, Notes to Consolidated Financial Statements, Note 6. Related Party Transactions, Warrant to United Mizrahi Bank).



                                                                         17
Software Capitalization

         In 2008, we capitalized our EMR and PM software that we acquired from AcerMed through the bankruptcy court. This software was
purchased with the intention that it would be sold, leased or marketed upon modification by our research and development team to our
customers. The amount that we capitalized for this software was $570,077. During the first three months of 2009, we began to sell this
software, and amortize this asset using the straight line method of amortization over the economic life of the asset, which we concluded to be
three years. Our EMR and PM software was amortized during the three and six months ended June 30, 2010 in the amount of $47,006 and
$95,012, respectively. The carrying value of this asset at June 30, 2010 and December 31, 2009 was $285,041 and $380,053, respectively.

          We also capitalized the development costs incurred to prepare this software for sale. Development costs were capitalized once
technological feasibility was established. We believe that the software was technologically feasible when we began to capitalize the costs
because we had worked with a model/prototype that had been in the market before our acquisition. The amount of development that we
capitalized in connection with this software is $1,150,831. During the first three months of 2009, we began to sell this software, and amortize
this asset using the straight line method of amortization over the economic life of the asset, which we concluded to be three years. The amount
of this asset that was amortized during the three and six months ended June 30, 2010 was $95,904 and $191,807, respectively. The carrying
value of this asset at June 30, 2010 and December 31, 2009 was $575,413 and $767,220, respectively.

         In 2008, we also capitalized $504,711 of costs associated with the development of a web-based software once technological feasibility
was established. During the first three months of 2009, we began to sell this software and amortize this asset using the straight line method of
amortization over the economic life of the asset, which we concluded to be three years. The amount of this asset that was amortized during the
three and six months ended June 30, 2010 was $42,059 and $84,118, respectively. The carrying value of this asset at June 30, 2010 and
December 31, 2009 was $252,357 and $336,475, respectively.

Principals of Consolidation

         The consolidated financial statements include the accounts of OIS, Abraxas, the 63% investment in CCS, OIS Europe, and OIS
Global. All significant intercompany balances and transactions have been eliminated in consolidation.

Abraxas Medical Solutions, Inc.

         Abraxas primarily markets comprehensive and advanced Electronic Medical Records (EMR) and Practice Management (PM) software
solutions to a wide range of medical practices, from sole practitioners to multi-site, multi-specialty group practices nationwide. These software
applications are used to automate the clinical, administrative, and financial operations of a medical office. This means that paper charting can
be virtually eliminated and clinical charting would be done, for example, using a wireless computer pen tablet at the point of care.

    OIS Global

        OIS Global primarily performs research and development for certain projects. Its employees include several former research and
development employees of MediVision, thereby, these employees are continuing certain research and development projects previously
overseen by MediVision.

    Segment Reporting

          Our business consists of two operating segments: OIS and Abraxas, our wholly-owned subsidiary. Our management reviews
Abraxas’ results of operations separately from that of OIS. Our operating results for Abraxas exclude income taxes. The provision for income
taxes is calculated on a consolidated basis, and accordingly, is not presented by segment. It is excluded from the measure of segment
profitability as reviewed by our management. CCS does not meet the materiality requirements for segment reporting and accordingly, CCS’
financial information is reported as Other in the following table.

        We evaluate our reporting segments in accordance with FASB Accounting Standards Codification Topic 280, Segment Reporting
(―Topic 280‖). Our Chief Financial Officer (―CFO‖) has been determined to be the Chief Operating Decision Maker as defined by Topic 280.
The CFO allocates resources to Abraxas based on its business prospects, competitive factors, net sales and operating results.

         All significant intercompany balances and transactions have been eliminated in consolidation.


                                                                       18
The following presents our financial information by segment for the three and six months ended June 30, 2010 and 2009:


                                              Three months ended                    Six months ended
                                           June 30,         June 30,            June 30,          June 30,
            Statement of Income:             2010             2009                2010              2009
            Net sales:
                OIS                $        3,680,200   $     2,418,331     $     6,895,925     $   4,699,800
                Abraxas                       827,996           480,285           1,594,561           608,347
                Other                         251,932                 -             402,957                 -
                             Total $        4,760,128   $     2,898,616     $     8,893,443     $   5,308,147

            Gross profit:
                OIS                    $    2,398,516   $     1,358,684     $     4,311,130     $   2,637,399
                Abraxas                       340,563           126,722             611,205           (12,926 )
                Other                         107,101                 -             190,407                 -
                               Total $      2,846,180   $     1,485,406     $     5,112,742     $   2,624,473

            Operating Loss:
               OIS                     $       62,123 $      (4,709,443 )   $      (100,037 )   $   (5,055,769 )
               Abraxas                       (443,952 )        (398,860 )          (901,294 )       (1,114,420 )
               Other                            4,052                 -             (15,555 )                -
                               Total $       (377,777 ) $    (5,108,303 )   $    (1,016,886 )   $   (6,170,189 )


            Net loss (consolidated):   $     (490,488 ) $    (4,004,544 )   $    (1,347,643 )   $   (5,112,493 )




                                                             19
Other

         We expense all costs as incurred; including costs of services estimated to be performed under extended warranty contracts. Estimates
are used in determining the expected useful lives of depreciable assets.

        Results of Operations

        Comparison of Three and Six Months Ended June 30, 2010 to the Three and Six Months Ended June 30, 2009

Sales

      Our sales for the three months ended June 30, 2010 were $4,760,128, representing a 64% increase from sales of $2,898,616 for the three
months ended June 30, 2009. The increase in sales is due to an increase in product sales of $1,932,663 offset by a decrease in service sales of
$71,151 during the three months ended June 30, 2010 compared to the same period in 2009. Our sales for the six months ended June 30, 2010
were $8,893,443, representing a 68% increase from sales of $5,308,147 for the six months ended June 30, 2009. The increase in sales is due to
an increase in product sales of $3,607,685 during the six months ended June 30, 2010. The increase in product sales is primarily attributable to
an increase in EMR/PM sales and marketing efforts introducing the EyeScan internationally and in the Optometry market.

         Product sales accounted for approximately 79% and 63% of our sales for the three months ended June 30, 2010 and                  2009,
respectively. Service sales accounted for approximately 21% and 37% of our sales for the three months ended June 30, 2010 and             2009,
respectively. Product sales accounted for approximately 77% and 61% of our sales for the six months ended June 30, 2010 and               2009,
respectively. Service sales accounted for approximately 23% and 37% of our sales for the six months ended June 30, 2010 and               2009,
respectively.

Gross Margins

         Gross margins were approximately 60% and 51% during the three months ended June 30, 2010 and 2009, respectively. Gross margins
were approximately 57% and 49% during the six months ended June 30, 2010 and 2009, respectively. Gross margins increased due to the
increase in product revenue covering the fixed costs and an increase in software sales which have a higher margin.

Sales and Marketing Expenses

     Sales and marketing expenses accounted for approximately 37% and 30% of total sales during the three months ended June 30, 2010 and
2009, respectively. Sales and marketing expenses increased to $1,776,435 versus $868,080 during the three months ended June 30, 2010 and
2009, respectively, representing an increase of $908,355 or 105%. This increase was due to an increase in marketing efforts introducing the
EyeScan internationally and in the optometry market of approximately $176,000, as well as the addition of sales representatives supporting the
EyeScan launch internationally and in the optometry market of approximately $484,000. Abraxas added two sales representatives which
increased their expenses by approximately $92,000. The remaining increase in sales and marketing is attributable to the acquisition of OIS
Europe and CCS on October 21, 2009 which added approximately $143,000 of sales and marketing expenses.

      Sales and marketing expenses accounted for approximately 37% and 33% of total sales during the six months ended June 30, 2010 and
2009, respectively . Sales and marketing expenses increased to $3,321,029 versus $1,772,236 during the six months ended June 30, 2010 and
2009, respectively, representing an increase of $1,548,793 or 87%. This increase was due to an increase in marketing efforts introducing the
EyeScan internationally and in the Optometry market of approximately $308,000, as well as the addition of sales representatives supporting the
EyeScan launch internationally and in the Optometry market of approximately $769,000. Abraxas added three sales representatives which
increased their expenses by approximately $178,000. The remaining increase in sales and marketing is attributable to the acquisition of OIS
Europe and CCS on October 21, 2009 which added approximately $273,000 of sales and marketing expenses.

General and Administrative Expenses

 General and administrative expenses were $585,023 and $659,884 during the three months ended June 30, 2010 and 2009, respectively,
representing a decrease of $74,861 or 11%. The decrease in general and administrative expenses is primarily due to a decrease in bad debt
expense. These expenses accounted for approximately 12% and 23% of total net sales during the three months ended June 30, 2010 and 2009,
respectively.

      General and administrative expenses were $1,101,902 and $1,170,907 during the six months ended June 30, 2010 and 2009, respectively,
representing a decrease of $69,005 or 6%. The decrease in general and administrative expenses is primarily due to a decrease in bad debt
expense. These expenses accounted for approximately 12% and 22% of total net sales during the six months ended June 30, 2010 and 2009,
respectively.
20
Impairment Related to the Debt of MediVision

 On June 30, 2009, we had accounts receivable and notes receivable from MediVision of $450,000 and $3,152,379, respectively. We also had
a balance of $560,000 in prepaid assets for funds advanced to MediVision in anticipation of the completion of the Electro-optical Unit. In
addition, we had paid MediVision $273,808 for exclusivity rights to sell the Electro-optical Unit in the U.S. Based upon revised estimates and
the shifting of our focus from the Electro-optical Unit to other products through the end of 2010, management has decided to include the
aggregate balance of the accounts and notes receivable, prepaid assets and the exclusivity rights relating to MediVision as an allowance for
doubtful accounts offsetting each respective account and thus, recording an impairment expense for the same amount. Impairment expense for
the three and six months ended June 30, 2009 is $4,436,187.

Research and Development Expenses

 Research and development expenses were $862,499 and $629,558 during the three months ended June 30, 2010 and 2009, respectively,
representing an increase of $232,941 or 37%. These expenses accounted for approximately 18% and 22% of sales during the three months
ended June 30, 2010 and 2009, respectively. This increase was due to an increase in software testing and quality control related expenses of
approximately $94,000 and Abraxas’ addition of four more employees which increased expenses by approximately $104,000.

         Research and development expenses were $1,706,697 and $1,415,332 during the six months ended June 30, 2010 and 2009,
respectively, representing a increase of $291,365 or 21%. These expenses accounted for approximately 19% and 27% of sales during the six
months ended June 30, 2010 and 2009, respectively. This increase in expense is due to an increase in software testing and quality control
related expenses of approximately $116,000 and Abraxas’ addition of four more employees which increased expenses by approximately
$148,000.

        Our research and development expenses are generated primarily from our continued research and development efforts on new digital
image capture products and our EMR and PM software.

Interest Income, Interest and Other Expenses, Net

      Interest income, interest and other expenses were $91,302 and $95,741 during the three months ended June 30, 2010 and 2009,
respectively, representing a decrease of $4,439 or 5%.

         Interest income, interest and other expenses were $322,224 and $139,651 during the six months ended June 30, 2010 and 2009,
respectively, representing an increase of $182,573 or 130%. The increase in interest expense is primarily attributable to an increase related to
the effective interest expense of the embedded conversion option in our convertible notes, which was calculated using the
Black-Scholes-Merton option valuation.

Other Income-Settlement

      On May 3, 2009, we entered into a Confidential Settlement and Mutual Release Agreement (the ―Settlement Agreement‖) by and
between us, Steven Verdooner, OPKO Health, Inc. and The Frost Group, LLC (collectively ―Defendants‖). Mr. Verdooner was formerly our
president. Pursuant to the Settlement Agreement described further under ―Legal Proceedings‖ below, we received a cash settlement of
$1,200,000 on May 13, 2009.

Income Taxes

 Income tax expense was $21,409 and $500 during the three months ended June 30, 2010 and 2009, respectively. Income tax expense was
$8,533 and $2,653 during the six months ended June 30, 2010 and 2009, respectively. We calculate our tax provision quarterly and assess how
much deferred tax asset is more likely than not to be used in the future. At this time, due to our current losses and the current state of the
economy, we have established a 100% valuation allowance against our deferred tax asset.

Net loss

      We recorded net a loss of $488,137 or $0.02 basic net loss per share and a net loss of $4,004,544 or $0.23 basic net loss per share, for
three months ended June 30, 2010 and 2009, respectively. We recorded net loss of $1,334,060 or $0.05 basic net loss per share and a net loss of
$5,112,493 or $0.30 basic net loss per share, for the six months ended June 30, 2010 and 2009, respectively.

       The net loss for the three months ended June 20, 2010 is mainly attributable to an increase in sales and marketing expenses of $908,355
and an increase in research and development of $232,941. Net loss for the six months ended June 30, 2010 is mainly attributable to the increase
in sales and marketing expenses of $1,548,793, an increase in research and development expenses of $291,365, and an increase in interest
income, interest and other expenses, net of $182,573.




                                                                  21
        Comparison of Year Ended December 31, 2009 to Year Ended December 31, 2008

Revenues

         Our revenues for the year ended December 31, 2009 were $13,569,300 representing an increase of $1,078,183 or 9% as compared to
revenues of $12,491,117 for the year ended December 31, 2008. The increase in revenues for 2009 resulted from an increase in total product
sales of $1,055,767 and service sales of $22,416. The increase in product sales is due to EMR/PM product revenue of $1,638,926, product
revenue from our new subsidiaries, CCS and OIS Europe of $128,155, Symphony revenue of $501,800, offset by a decrease in WinStation
revenue of $1,213,114. The increase in service sales of $22,416 is due to an increase in service revenue from Abraxas of $84,074, service
revenue for the fourth quarter of our new subsidiaries, CCS and OIS Europe of $22,323, offset by a decrease in service revenue from our
WinStation and Symphony product line of $83,981.

         Digital angiography systems and EMR and PM products accounted for approximately 73% and 71% of our total revenues during 2009
and 2008, respectively. Service revenue for the years ended 2009 and 2008 accounted for approximately 27% and 29% of our total revenues for
the years ended 2009 and 2008, respectively.

Gross Margins

        Gross margins remained flat at 54% during fiscal 2009 and 2008, respectively. We anticipate that our gross margins will increase if
our product sales grow to cover our fixed personnel costs.

Sales and Marketing Expenses

        Sales and marketing expenses accounted for 30% and 32% of revenues during fiscal 2009 and 2008, respectively. Sales and marketing
expenses were $4,124,480 during fiscal 2009, representing an increase of $89,664 or 2% compared to sales and marketing expenses of
$4,034,816 in fiscal 2008. The increase in sales and marketing expense was primarily the result of expansion of the sales and marketing
department during the year.

General and Administrative Expenses

         General and administrative expenses as a percentage of revenues remained flat at 17% during fiscal 2009 and 2008, respectively.
Expenses were $2,255,389 during fiscal 2009, representing an increase of $185,177 or 9% compared to expenses of $2,070,212 during fiscal
2008. The increase is primarily due to an increase of bad debt expense related to customers of approximately $239,000, an increase of general
and administrative expenses related to the acquisition of the CCS and OIS Europe operations of approximately $62,000, offset by a decrease in
legal expenses of approximately $493,000.

          Impairment related to the debt of MediVision of $4,436,187 during fiscal 2009 was comprised of accounts receivable and notes
receivable from MediVision of $450,000 and $3,152,379, respectively, $560,000 in prepaid assets for funds advanced to MediVision in
anticipation of the completion of the Electro-optical Unit and $273,808 that we paid to MediVision for exclusivity rights to sell the
Electro-optical Unit in the U.S. Based upon revised estimates and the timing of the shifting of business focus from the Electro-optical Unit to
other products through the end of 2010, management decided to impair the aggregate balance of intercompany indebtedness from MediVision.

Research and Development Expenses

         Research and development expenses accounted for 21% of revenues during fiscal 2009 and 18% during fiscal 2008. Expenses were
$2,853,492 during 2009, representing an increase of $633,832 or 29% compared to expenses of $2,219,660 during 2008. The increase in
research and development is due to the capitalization of $1,150,831 of research and development expenses performed by Abraxas during fiscal
2008 offset by the decrease in research and development performed by MediVision of $439,168 and Abraxas of $77,831 during fiscal 2009.


                                                                      22
Other Income (Expense), net

         Other income (expense) was $860,918 during 2009 compared to $(84,922) during 2008. The increase of $945,840 in other income
was primarily due to a legal settlement between OIS and a former employee of $1,200,000 offset by an increase in interest expense of $70,474
from the convertible notes outstanding, combined with a decrease in interest income of $171,436 resulting from reduction of interest earned on
notes receivable which were impaired during 2009.

Income Taxes

           The income tax expense for the year ended December 31, 2009 consisted of the following:

                                                              Federal                 State                Total
                       2009
                       Current                           $                       $         3,787 $                 3,787
                       Deferred                                   (1,974,000 )          (280,000 )            (2,254,000 )
                       Change in valuation allowance               1,974,000             280,000               2,254,000
                           Total income tax expense      $                 -     $         3,787 $                 3,787


         In 2009, we determined that it is not more-likely-than-not that we will be able to use any of our deferred tax asset in the future. We
analyzed our operating results from 2008, 2009, and projected operating results for 2010, combined with the downward turn in the economy,
and determined that it is not more-likely-than-not that we will be able to use our deferred tax asset in the future.

          The Company’s effective tax rate for the years ended December 31, 2009 and 2008 was 0% and (112%), see Financial Statements for
the Year Ended December 31, 2009, Notes to Consolidated Financial Statements, Note 9. Income Taxes, for the reconciliation of the statutory
rate to the effective tax rate.

Net Loss

         We reported a net loss of $5,476,885 or $0.25 basic loss per share during 2009 compared to net loss of $2,985,524 or $0.18 basic loss
per share during 2008.

           Comparison of Year Ended December 31, 2008 to Year Ended December 31, 2007

Revenue

         Our revenue for the year ended December 31, 2008 were $12,491,117 representing a decrease of $1,997,927 or 14% as compared to
revenue of $14,489,044 for the year ended December 31, 2007. The decreased revenue for 2008 resulted from decreased product sales of
$2,644,447, including installation, offset by increased service revenue of $646,520. The decrease in product sales is primarily due to the
decrease of our main Winstation systems and installation of approximately $1,927,000. Digital angiography systems and EMR and PM
products accounted for approximately 71% and 79% of our total revenue during 2008 and 2007, respectively. The decrease in our product sales
is primarily due to personnel changes in our sales and marketing departments and, more recently, changes in the global economy. Service
revenue for the years ended 2008 and 2007 accounted for approximately 29% and 21% of our total revenue for the years ended 2008 and 2007,
respectively. The increased service revenue is primarily due to the increase in our extended service contracts due to an increase in our customer
base and more customers understanding the benefits of purchasing extended warranty contracts. Our remaining service revenue which has
remained constant consists of non-warranty repairs and parts, and technical support phone billings for customers not under warranty.



                                                                        23
Gross Margins

         Gross margins decreased to 54% from 57% in fiscal 2008 versus 2007, respectively, primarily due to the decrease in sales of our EMR
and PM products which have related fixed direct labor costs. We anticipate that our gross margins will increase if our product sales grow to
cover the fixed personnel costs.

Sales and Marketing Expenses

        Sales and marketing expenses accounted for 29% and 24% of revenue during fiscal 2008 and 2007, respectively. Sales and marketing
expenses were $4,034,816 during fiscal 2008, representing an increase of $539,890 or 15% compared to sales and marketing expenses of
$3,494,926 in fiscal 2007. The increase in sales and marketing expenses were primarily the result of filling vacant sales positions during the
year in OIS of approximately $178,000, the addition of Abraxas sales and marketing expenses of $438,000, offset by restructuring of the
marketing department at OIS of ($66,000).

General and Administrative Expenses

         General and administrative expenses accounted for 11% and 12% of revenue in fiscal 2008 and 2007, respectively. Expenses were
$1,550,492 during fiscal 2008, representing a decrease of $134,259 or 8% compared to expenses of $1,684,751 during fiscal 2007. The
decrease is primarily due to an increase in the general and administrative allocation of OIS to other departments of approximately $154,000, a
decrease in OIS bonus expense related to writing off of executive bonuses that were accrued in 2007 but not approved for payment in 2008 of
$143,000, a decrease in investor relations and business development expenses of approximately $101,000, offset by an increase in legal
expenses of approximately $132,000 and the addition of Abraxas’ general and administrative expenses of $166,000.

Research and Development Expenses

         Research and development expenses accounted for 18% of revenue during fiscal 2008 and 11% during fiscal 2007. Expenses were
$2,219,660 during 2008, representing an increase of $588,440 or 36% compared to expenses of $1,631,220 during 2007. This increase was due
to the increase in our research and development efforts on new digital image capture products. In the future, we expect our research and
development expenditures to increase with the addition of Abraxas’ research and development expenses to be offset by a reduction in the
research and development expenses subcontracted from MediVision and other consultants. In 2008 and 2007, outside consultants and
MediVision conducted most of our research and development.

Other Income (Expense), net

         Other income was ($84,922) for the twelve months ended December 31, 2008 compared to $141,104 for the twelve months ended
December 31, 2007. The increase of $226,026 in other expense was primarily due to an increase of interest expense of $92,628 from the
convertible notes outstanding, combined with a decrease in interest income of $98,638 resulting from a combination of a decrease of our cash
balance and a decrease in interest rates. (For details of the convertible notes, see Financial Statements for the Year Ended December 31, 2008,
Notes to Consolidated Financial Statements, Note 5. Note Payable)

Income Taxes

        The income tax expense for the year ended December 31, 2008 consisted of the following:


                                                                      24
                                                                        Federal            State           Total
                    2008
                    Current                                         $      (43,000 )   $         -     $     (43,000 )
                    Deferred                                              (503,000 )       (81,000 )        (584,000 )
                    Change in valuation allowance                        1,845,000          81,000         1,926,000
                              Total income tax benefit              $    1,299,000     $         -     $   1,299,000


          In 2008, we determined that we will more-likely-than-not be unable to use any of our deferred tax asset in the future. We analyzed our
operating results from 2007, 2008 and projected operating results for 2009, combined with the downward turn in the economy in 2008 and
results of our largest annual tradeshow in the fourth quarter of 2008 and determined that it is not more-likely-than-not that we will be able to
use our deferred tax asset in the future. In 2007, we determined that we will use $2,334,000 of capped net operating losses in the future and
projected taxable income in 2008. In 2007, we did not have enough information to determine whether we would use the remaining net
operating losses of $539,855. We had no net operating loss carryforward for California state income tax purposes at December 31, 2007.

          At December 31, 2008 and 2007, management reviewed recent operating results and projected future operating results, as well as the
current conditions in the global economy and medical industry. On each of these dates, management determined whether it was
more-likely-than-not that a portion of the deferred tax assets attributable to net operating losses would be realized. For a description of our
analysis in determining our deferred tax asset, see ―Critical Accounting Policies, Tax Provision‖ above.

         Due to changes in ownership which occurred in prior years, Section 382 of the Internal Revenue Code of 1986, as amended, provides
for significant limitations on the utilization of net operating loss carryforwards and tax credits. As a result of these limitations, a portion of
these loss and credit carryovers may expire without being utilized.

Net Income (loss)

         We reported a net loss of ($2,465,805) or ($0.15) basic loss per share for the twelve months ended December 31, 2008 compared to
net income of $1,552,616 or $0.09 basic earnings per share for the twelve months ended December 31, 2007. Earnings per share is calculated in
accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share (―SFAS 128‖). (See Financial Statements for the
Year Ended December 31, 2008, Notes to Consolidated Financial Statements, Note 1. Summary of Significant Accounting Policies, Earnings
per Share.) The results of operations for 2008 reflect the softening demand for our digital imaging equipment in 2008.

Export Sales

        Revenue from sales to customers located outside of the United States accounted for approximately 7% and 5% of our net sales for
2008 and 2007, respectively. Sales to MediVision, included in these totals, accounted for approximately 64% or $597,000 and 78% or
$608,000 of our export sales for 2008 and 2007, respectively.

         Balance Sheet

         As of June 30, 2010

          Our assets increased by $1,380,514 as of June 30, 2010 as compared to December 31, 2009. This increase was primarily due to an
increase in cash of $766,885, an increase in accounts receivable of $481,341, an increase in inventories of $354,458, and an increase in prepaid
expenses of $252,539, offset by the amortization of our EMR and PM software of $95,012, amortization of capitalized software development
related to our EMR and PM software of $191,807 and the amortization of our web-based software of $84,118.

                                                                        25
         Our liabilities increased by $418,902 as of June 30, 2010 as compared to December 31, 2009 primarily due to a increase in accounts
payable of $510,256, an increase of accrued liabilities of $383,966, offset by a decrease an decrease in deferred revenue of $192,162, and a
decrease in notes payable of $151,090 and customer deposits of $90,221.

          Our stockholders’ equity increased by $975,186 as of June 30, 2010 as compared to December 31, 2009 primarily due to a net loss for
the six months of $1,334,060, offset by an increase of $1,999,967 stock issued in connection with the 2 nd AccelMed installment and in increase
in additional paid-in-capital of $152,011 related to our convertible notes and common stock issued upon conversion of $250,000 of the notes.

         As of December 31, 2009

         Our assets increased by $412,668 as of December 31, 2009 as compared to the December 31, 2008. This increase was primarily due to
a increase in cash and equivalents of $3,181,614 as a result of the sale and issuance of our securities to AccelMed, an increase in accounts
receivable of $1,012,894 as a result of an increase in sales, an increase in assets associated with businesses acquired of $1,500,000, offset by a
decrease in notes and accounts receivable from related parties of $2,878,234 and $500,365, a decrease of licensing agreements and prepaid
products associated with related parties of $273,808 and $560,000, a decrease in inventory of $215,408 due to higher sales than expected at the
end of the year, amortization of prepaid financing fees of $66,585 and the amortization of capitalized software development and research and
development of $741,872.

       Our liabilities increased by $1,418,359 mainly due to the $1,500,000 loan assumed in connection with the MediVision Asset Purchase
which was completed during 2009.

         Our stockholders’ equity decreased by $1,005,692 primarily due to the net loss from fiscal 2009 of ($5,476,885), offset by the net
proceeds of the AccelMed stock purchase of $3,552,599, the increase in additional paid-in capital of $419,644 related to the warrants from the
stock purchase and debt financing, an increase of $464,489 of noncontrolling interest related to the MediVision Asset Purchase.

         Liquidity and Capital Resources

         As of June 30, 2010

         Cash used in operating activities was $1,144,406 during the six months ended June 30, 2010 as compared to cash provided by of
$77,529 during the six months ended June 30, 2009. The cash used in operations during the first six months of 2010 was principally from our
net loss of $1,347,634, an increase in net accounts receivable of $489,712, an increase in inventory of $374,336, an increase in prepaid and
other assets of $252,539, offset by depreciation and amortization of $147,555, amortization of software and capitalized R&D of $370,937, the
change in the discount related to notes payable of $142,405, and the increase in other liabilities of $605,740.

       Cash used in investing activities was $124,151 during the six months ended June 30, 2010 as compared to cash used of $41,151 during
the six months ended June 30, 2009. The cash used of $124,151 was due to the investment in capital equipment such as computers and
software used internally. We anticipate continued capital expenditures in connection with our ongoing efforts to upgrade our existing
management information and corporate communication systems. We also anticipate that related expenditures, if any, will be financed from our
cash flows from operations or other financing arrangements available to us, if any.

 We generated cash in financing activities of $2,111,586 during the six months ended June 30, 2010 as compared to cash generated of
$3,245,538 during the six months ended June 30, 2009. The cash generated in financing activities during the six months ended June 30, 2010
was primarily from proceeds from an equity investment by AccelMed of $1,989,007, net of financing fees, a loan to Abraxas of $109,759,
offset by principal payments on note and lease obligations of $13,590.

 On June 30, 2010, our cash and cash equivalents were $6,173,124.


                                                                       26
         On June 24, 2009, we consummated the 1 st Installment pursuant to the Purchase Agreement with AccelMed, whereby we received
$3,999,972 for the issuance of 9,633,228 shares of our common stock and a warrant to purchase 3,211,076 shares of our common stock On
May 26, 2010, we completed the 2 nd and final installment to the Purchase Agreement with AccelMed, whereby we issued 3,581,089 shares of
common stock at $0.55848 per share at and a warrant to purchase up to 1,193,696 shares of our common stock for an aggregate purchase price
of $1,999,967, before financing fees.

         Management anticipates that additional sources of capital beyond those currently available to us may be required to continue funding
for research and development of new products and to continue our growth and marketing of Abraxas products.

 We will continue to evaluate alternative sources of capital to meet our growth requirements, including other asset or debt financing, issuing
equity securities and entering into other financing arrangements. There can be no assurance, however, that any of the contemplated financing
arrangements will be available and, if available, can be obtained on terms favorable to us.

         As of December 31, 2009

         The Company maintains a $150,000 line of credit agreement with Wells Fargo Bank. The line is secured by a pledged deposit with the
bank totaling $158,213 at December 31, 2009. Advances on the line bear interest at prime (3.25% at December 31, 2009) with interest due
monthly. As of December 31, 2009 we borrowed $150,000 against the line of credit. The line matures on May 10, 2011.

         Our operating activities used cash of $60,243 during 2009 as compared to $739,822 during 2008. The cash used by operations in 2009
was primarily due to the net loss of ($5,485,396), offset by the non-cash write-off of MediVision notes receivables of $3,152,042, related party
receivable of $500,365, prepaid products of $560,000, the amortization of capitalize software of $168,236, the amortization of software
licenses of $573,635, and the change in customer deposits of $463,782.

         Net cash used in investing activities was $1,368,474 during 2009 versus $4,016,871 during 2008. Our primary investing activities in
2009 consisted of costs related to the acquisition of substantially all the assets of MediVision, net of cash acquired, of $1,708,523 and capital
asset acquisitions of $132,951, offset by the acquisition of the noncontrolling interests related to the MediVision acquisition of $473,000.

         Cash provided by financing activities was $4,608,090 during 2009 as compared to cash used in financing activities of $648,966 during
2008. The cash provided by financing activities during 2009 was primarily from proceeds of $1,500,000 from new borrowings, $3 ,999,972
from the proceeds of sale of stock, offset by $732,984 of principal payments on notes receivable, and stock issuance costs of $158,898.

        On December 31, 2009, our cash and cash equivalents were $5,406,239. Management anticipates that additional sources of capital
beyond those currently available to it may be required to continue funding of research and development for new products and selling and
marketing related expenses for existing products.

         Seasonality

        Our most effective marketing tool is the demonstration and display of our products at the annual meeting of the American Academy of
Ophthalmology held during the Fall of each year. A significant amount of our sales orders are generated during or shortly after this meeting.
Accordingly, we expend a considerable amount of time and resources during the fourth quarter of our fiscal year preparing for this event.



                                                                       27
        Trends

          Under the recently approved stimulus package, The American Recovery and Reinvestment Act of 2009, physicians who implement a
certified EMR software program and become meaningful users between 2010 and 2012 will each be eligible for $44,000 in incentive payments,
and physicians who become meaningful users between 2012 and 2014 will be eligible for lower payments. Physicians who have not become
meaningful users by 2014 will not qualify for any payments. In addition, beginning in 2016, Medicare reimbursement will begin to decrease for
clinics that do not meet the above criteria. We anticipate that this legislation will have positive effects on our revenues as physicians adopt
EMR software programs at higher rates than they do currently. We expect to see this positive trend starting in mid-2010 and beyond. OIS and
Abraxas are both certified with a 2008 certification by the Commission for Healthcare Information Technology (CCHIT) in ambulatory
EMR software

        Off Balance Sheet Arrangements

        None.



                                                                      28
                                                                 BUSINESS

          Ophthalmic Imaging Systems (the ―Company,‖ ―OIS,‖ ―we,‖ ―us,‖ or ―our‖) was incorporated under the laws of the State of
California on July 14, 1986. We are headquartered in Sacramento, California and engaged in the business of designing, developing,
manufacturing and marketing digital imaging systems and informatics solutions. Since our inception, we have developed products that
primarily addressed the needs of the ophthalmic angiography markets, both fluorescein and indocyanine green. The current flagship products in
our angiography line are our WinStation digital imaging systems and EyeScan systems. These systems are targeted primarily at retinal
specialists and general ophthalmologists for use in the diagnosis and treatment of retinal diseases and other ocular pathologies. OIS also
provides PACS (―Picture Archiving and Communication Systems‖) and Electronic Medical Records (―EMR‖) and Practice Management
(―PM‖) software to such eye-care providers. In addition, though our wholly-owned subsidiary Abraxas Medical Solutions Inc., a Delaware
corporation (―Abraxas‖) we provide EMR and PM to the following ambulatory-care specialties: obstetrics/gynecology (―OB/GYN‖),
orthopedics and primary care.

         Our objective is to become a leading provider of a diverse range of complimentary ophthalmic products and services for the ocular
healthcare industry. We are currently focusing our development efforts on products for the ocular healthcare market, as well as features and
enhancements to our existing products. We are also applying our technology in the ophthalmic imaging field toward the development of new
ocular imaging devices and exploration of telemedicine/managed care applications targeted at the general ophthalmology and optometry
markets. We believe that as the U.S. healthcare system moves toward managed care, the needs of managed care providers are changing the
nature of demand for medical imaging equipment and services. New opportunities in telemedicine (the electronic delivery and provision of
health care and consultative services to patients through integrated health information systems and telecommunications technologies),
combined with lower cost imaging devices and systems, are emerging to assist physicians and managed care organizations in delivering high
quality patient care while reducing costs.

          During 2004, we entered the Ophthalmic PACS software market. PACS enables medical staff to access new and archived images
remotely, thus, improving the method in which to diagnose patients. The ability to instantaneously share information between locations allows
specialists to manage more patients in separate locations quickly and efficiently. The PACS system can be completely integrated with our
customers’ existing infrastructure, including image acquisition, image analysis, short and long-term storage, archiving, disaster recovery,
viewing and monitoring. The current flagship product in our PACS product line is our Symphony TM software.

         In January 2008, we acquired the rights to EMR and PM Software as developed by AcerMed, Inc. (―AcerMed‖). Our EMR and PM
Software were designed to automate the clinical, administrative, and financial operations of a medical office. This means that paper charting
can be virtually eliminated and clinical charting would be done using, for example, a wireless computer pen tablet at the point of care.

         On October 21, 2009, we purchased substantially all the assets of MediVision, Medical Imaging Limited, formerly our parent
Company (the ―MediVision Asset Purchase‖). (For additional details of the MediVision Asset Purchase, see Financial Statements for the Year
Ended December 31, 2009, Notes to Consolidated Financial Statement Note 6, Related Party Transactions, MediVision Asset Purchase). Such
assets included certain European operations as conducted by CCS Pawlowski GmbH, a branch office in Belgium, agreements under which
MediVision contracted with third parties for distribution and other services, and rights to intellectual property. This acquisition will provide
OIS with access to new customers and regional control over operations in the European market. In addition, we hired most of MediVision’s
R&D employees in early 2009 and moved them to our offices in the United States and Israel.

         In November 2009, OIS EyeScan received FDA 510(k) clearance. OIS EyeScan is a portable imaging device that enables practices to
capture images of both the anterior and posterior segment of the eye. OIS EyeScan diversifies our product portfolio by adding a low cost
product with more functionality than our existing image capture solutions.


                                                                      29
 Products

         OIS Products

         WinStation TM Systems

         Our WinStation systems and products, categorized by resolution, are primarily used by retina specialists and general ophthalmologists
to capture color images of the retina and to perform a diagnostic procedure known as fluorescein angiography. This procedure is used to
diagnose and monitor pathology and provide important information in making treatment decisions. Fluorescein angiography is performed by
injecting a fluorescent dye into the bloodstream. As the dye circulates through the blood vessels of the eye, the WinStation system, connected
to a medical image capture device called a fundus camera, takes detailed images of the patient’s retina. These digital images provide a ―road
map‖ for treatment.

          Over the past 40 years, fluorescein angiography has been performed using photographic film, which requires special processing and
printing. Currently fundus cameras offer an option for integration with a digital imaging system. Our digital WinStation systems allow for
immediate diagnosis and treatment of the patient. Images are automatically transferred to a database and permanently stored and archived. We
also offer a variety of networking and printer options.

          Our WinStation systems are also used by ophthalmologists to perform indocyanine green (―ICG‖) angiography. ICG angiography is a
diagnostic test procedure used for patients with Age-related Macular Degeneration, a leading cause of blindness afflicting over 8 million people
in the United States. ICG angiography, used for approximately 5% of patient angiography, is a dye procedure that can only be performed using
a digital imaging system such as our WinStation Systems.

         Digital Slit Lamp Imager (DSLI) and WinStation for Slit Lamps

         DSLI and WinStation for Slit Lamps are used by a majority of eye care practitioners, including most ophthalmologists and
optometrists, with an emphasis on imaging the front of the eye. Slit lamps are imaging devices used in virtually all ophthalmic and optometric
practices. The DSLI adapts to most slit lamp models and is capable of real-time video capture, database management and archiving.

         OIS EyeScan

         The OIS EyeScan is a portable imaging device that enables practices to capture images of both the anterior and posterior segment of
the eye. The OIS EyeScan captures live video and 5.3 megapixel images from the following imaging modules: Color Retina, Fluorescein
Angiography, Optic Nerve Head Stereo Imaging, Red Reflex Imaging Module, Corneal Fluorescence, Tear Film Analysis.

         Symphony and Symphony Web

         Symphony and Symphony Web are our Ophthalmic PACS products. The OIS Symphony Image Management System automatically
imports images and diagnostic reports from the diagnostic devices within the practice into a single system. OIS Symphony System allows
patient images and diagnostic reports captured from different devices to be viewed side-by-side on one screen with reviewing tools that are
proprietary to OIS.

         OIS Symphony Web enables OIS to deliver all of the OIS Symphony functionality to a web-based client.

         OIS EMR and OIS PM

         With OIS’ ophthalmic EMR solution, practices can make the transition to a paperless office using software that manages all aspects of
the practice. OIS EMR and OIS PM were created using a single software platform and database. OIS EMR/PM solution enables users to move
back and forth between various applications with a single click and for information to be natively present in each application, eliminating
duplicate entry or lost data.



                                                                      30
        Abraxas Products

         Abraxas’ proprietary software uses the latest technology to automate the workflow of a medical practice consisting of clinical,
financial and administrative tasks, all using a single database. Abraxas’ software modules include:

        Abraxas EMR

          EMR can be populated with Clinical Pathways that are specific to a particular medical specialty. Following these Clinical Pathways,
documenting a patient encounter can be as easy as ―point and click‖ on a wireless touch-tablet computer. Alternatively, voice recognition,
handwriting, handwriting recognition or typing can be used for charting. Clinicians can have access to the patient’s prior chart notes, test
results, clinical information, medical images and other information. They can write electronic prescriptions or electronically enter orders for
radiology, lab work and other procedures. Certain lab results will come back to the system electronically and populate patients’ data. This
eliminates the hassle of finding, pulling, carrying, filing and often times losing traditional paper charts.

        Abraxas PM

          Various codes for differing types of office visits are recommended based on the documentation and charges generated at the time of
charting, therefore, data entry for billing purposes can be eliminated. PM allows for preprocessing of claims and editing for American National
Standards Institute (ANSI) compliance prior to submission to minimize payer rejections. This results in quicker turnover of accounts receivable
and, thus, a more efficient collections process which, in turn, may improve cash flow. Staff members can review detailed management and
financial reports and access on-screen accounts receivable reports with filtering based on a wide range of criteria. These filters allow for
identification of problem accounts.

        Abraxas Scheduling

        Patient and resource scheduling is also available and built around the needs of busy practices. This software allows users to view
on-screen the schedules of one or multiple physicians at any time, reserve time frames for specific appointment reasons and color code them for
on-screen identification, and keep track of patients’ scheduling history.

        Markets

         Having reviewed various third party sources, including reports by the National Physician’s Census and data provided by the American
Osteopathic Association, we believe there are approximately 18,000 ophthalmologists in the United States and approximately 28,000
ophthalmologists practicing medicine in our target countries outside the United States. This group has been traditionally divided into two major
groups: anterior segment (front of the eye) and posterior segment (back of the eye). Within these groups there are several sub-specialties
including medical retina, retina and vitreous, glaucoma, neurology, plastics, pediatric, cataract, cornea and refractive surgery. There are also
approximately 35,000 practicing optometrists in the United States.

        WinStation and Symphony

         The WinStation market consists of current fundus camera owners and potential purchasers of fundus cameras suitable for interfacing
with our digital imaging system products. We believe there are now over 9,000 fundus cameras in clinical use in the United States and an
additional 12,000 in the international market. It is estimated that new fundus camera sales fluctuate between approximately 800 and 1,200 units
per year, worldwide, at an average per unit selling price of approximately $24,000 for a non-integrated unit. Of total cameras worldwide,
including new and previously owned, a significant number are suitable to be interfaced with our digital imaging systems.

        Currently, we know of 5 manufacturers of fundus cameras. These manufacturers produce a total of 24 models, 8 current and 16 legacy
models for each of which we have designed optical and electronic interfaces.



                                                                      31
         The Symphony and Symphony Web products are marketed to the same target market as WinStation customers.

         OIS EyeScan

         The OIS EyeScan system is targeted primarily at eye care professionals that want to capture images digitally on anterior (front) and
posterior (back) of the eye. As described above, we believe that there are approximately 18,000 eye care specialist in the United States and
approximately 28,000 eye care specialist practicing medicine in our target countries outside the United States. In addition, there are also
approximately 35,000 practicing optometrists in the United States. We currently know of 3 manufacturers of imaging systems which are similar
to the EyeScan.

         EMR and PM Software

        The primary target market for OIS EMR and PM software is ophthalmologists with various specialties, as described above, numbering
approximately 18,000 in the United States.

         In order to increase our research and development and marketing effectiveness, Abraxas focuses primarily on the following types of
office based physicians: obstetrics and gynecology, and orthopedic. Having reviewed various third-party sources, including reports by the
National Physician’s Census, we believe there are approximately 35,000 office-based obstetrics and gynecology physicians, and approximately
19,000 office-based orthopedic physicians in the United States. Abraxas’ secondary market is primary care of which there are approximately
235,000 office-based primary care physicians in the United States as reported by the National Physician’s Census.

          EMR software is used to automate the clinical workflow of medical offices and PM software is used to automate the financial and
administrative tasks of medical offices. Medical practices in the United States began automating their practice management decades ago. By
the late 1990’s, PM software had become widely accepted. The market for EMR, on the other hand, has started to increase as a result of various
financial incentives and governmental forces.

       Currently, the EMR industry has no dominant leader. It includes both large publicly traded companies and small privately held
companies.

         OIS Sales, Marketing and Distribution

          We utilize a direct and indirect sales force to distribute our products throughout the United States, Europe, and various other countries.
As of December 31, 2009, our U.S. sales and marketing organization consisted of two distribution channels. The first is an ophthalmology
channel that reports to the VP of Sales for North America and is comprised of Sales Managers, Technical Support Specialists and Product
Specialists, among others, who are located throughout the United States. These employees provide marketing, sales, maintenance, installation
and training services. The second channel is dedicated to Optometry sales and consists of various Sales Managers, among others. Each of the
two channels is supported by inside sales representatives that are outsourced from well-known providers of sales outsourcing, whose function it
is to drive broader penetration into both markets. In Europe we have several sales representatives and product specialists. These employees
provide marketing, sales, maintenance, installation and training services.

         Until October 21, 2009, upon completion of the MediVision Asset Purchase, we were parties to several agreements with MediVision,
pursuant to which MediVision distributed our WinStation and Symphony Products in Europe, Africa, Israel and India. Products were sold to
MediVision at a volume driven discount which was uniformly applicable to all of our distributors, including MediVision. Below is the volume
discount table that was available to our distributors for 2009.



                                                                        32
                                         Annual amounts purchased                              Discount
                                          $ 0       - $ 199,999                                   0%
                                          $ 200,000 - $ 299,999                                  10%
                                          $ 300,000 - $ 399,999                                  20%
                                          $ 400,000 - $ 499,999                                  30%
                                           $ 500,000 and above                                   40%

         In 2009, until the completion of the MediVision Asset Purchase, and for the year ended December 31, 2008, MediVision purchased
products of approximately $225,000 and $597,000, respectively. Sales derived from product shipments to MediVision are recorded at transfer
pricing which is based on similar volume discounts that are available to other resellers or distributors of our products.

         CCS Pawlowski GmbH

          CCS Pawlowski GmbH, a German corporation (―CCS‖), was a subsidiary of MediVision which owned 63% of CCS’ ownership
interests. We acquired this ownership interest in the MediVision Asset Purchase. (For additional details, see Financial Statements for the Year
Ended December 31, 2009, Note. 6. Related Party Transactions,, MediVision Asset Purchase.)

         During the years ending December 31, 2009 and 2008, CCS was the exclusive distributor of certain of our products in Germany and
Austria. Products were sold to CCS at a volume driven discount which was uniformly applicable to all of our distributors, including CCS.
Below is the volume discount table that was available to our distributors for 2009. CCS will continue to be our exclusive distributor of certain
products in Germany and Austria.

                                         Annual amounts purchased                              Discount
                                          $ 0        - $ 199,999                                  0%
                                           $ 200,000 - $ 299,999                                 10%
                                           $ 300,000 - $ 399,999                                 20%
                                           $ 400,000 - $ 499,999                                 30%
                                            $ 500,000 and above                                  40%

        During 2009, prior to the MediVision Asset Purchase, we sold products to CCS of approximately $113,000 compared to products sold
to CCS during the full year 2008 of $226,000. At December 31, 2008, we had $50,365 of amounts due from CCS. In 2009, after completion of
the MediVision Asset Purchase all inter-company amounts with CCS were eliminated upon consolidation.

         Abraxas Sales and Marketing

         Abraxas utilizes a direct sales force in marketing and selling its products throughout the United States. At December 31, 2009,
Abraxas’ sales and marketing organization consisted of one sales manager, five territory sales representatives, two marketing personnel, and
eight product specialists. These personnel provide marketing, sales, maintenance, installation and training services.

         OIS Europe Sales and Marketing

         OIS Europe utilizes a direct sales force in marketing and selling its products throughout Europe. At December 31, 2009, OIS Europe’s
sales and marketing organization consists of one sales representative and one product specialist. These personnel provide marketing sales,
maintenance, installation and training services. In addition to our direct sales force in Europe, we have distribution agreements with distributors
throughout Europe to sell and market our products.



                                                                        33
         CCS Sales and Marketing

          CCS utilizes a direct sales force in marketing and selling its products throughout Europe. At December 31, 2009, CCS’ and marketing
organization consists of 2 sales representative and 2 product specialists. These personnel provide marketing sales, maintenance, installation and
training services.

         OIS Manufacturing and Production

         We are primarily a systems integrator with proprietary software, optical interfaces and electronic fundus camera interfaces. The
manufacturing of certain components are subcontracted to outside vendors and assembled by OIS. We use outside vendors to minimize
production time and reduce capital requirements. We store and assemble the manufactured components in our 13,552 square foot facility
located in Sacramento, California.

          We have been audited by the Food and Drug Administration (the ―FDA‖) as recently as May 2007 and there were no findings made.
We also have Form 510(k)’s, a pre-marketing notification filed with the FDA which provides certain safety and effectiveness information, on
file for our digital angiography products.

         Abraxas’ Operations

         Abraxas is a software developer that operates in its 4,883 square foot facility located in Irvine, California.

         OIS Components, Raw Materials and Suppliers

         As a systems integrator, a significant number of the major hardware components in our products are procured from sole source
vendors. Whenever possible, however, we seek multiple vendors from which to procure our components. Moreover, we work closely with our
principal component suppliers, such as Dell Computer, MegaVision, Canon and our other vendors to maintain dependable working
relationships and to continually integrate into the manufacturing of our products, whenever feasible, the most current, proven, pertinent
technologies. But, as with any manufacturing concern dependent on subcontractors and component suppliers, significant delays in receiving
products or unexpected vendor price increases could adversely affect our business.

         OIS Warranties

         We generally provide a 12-month limited warranty for parts, labor and shipping charges in connection with the sale of our hardware
products. Peripheral products such as monitors, printers and computers also carry the original manufacturer’s warranty.

        In the North American market, in order to ensure quality control and the proper functioning of our products on-site at a doctor’s office,
we generally install the system and train the doctor and the doctor’s staff for a fee. Customers are not required to purchase such services in
connection with the purchase of our products. We also offer service plans for sale to our customers as a supplement to the original
manufacturer’s warranties.

         OIS Competition

         The healthcare industry is characterized by extensive research and development efforts and rapid technological change. Competition
for products that can diagnose and evaluate eye disease is intense and expected to increase.

          With respect to our WinStation products, we are aware of two primary competitors in the United States, which produce and deliver
digital fundus imaging systems in volume, Topcon and Zeiss. In addition, there are a few other small competitors. Both Topcon and Zeiss,
however, manufacture fundus cameras and produce angiography products that interface mostly with their own fundus cameras. In contrast, our
products interface with different models of fundus cameras from a wide variety of manufacturers. Three other companies are known to have
systems primarily in the international market, and the U.S. market to a limited extent, each with a small market share.



                                                                         34
         We are aware of five primary competitors for the DSLI, namely Veatch, MVC, Kowa, Helioasis and Lombart. Additionally, there are
several other companies, which manufacture similar systems, but these systems currently have minimal market presence.

         We are aware of three primary competitors for the EyeScan imaging capturing system, namely Zeiss, Topcon and Kowa.

         We are aware of two primary competitors for the Ophthalmic PACS that develop similar solutions.

         OIS does not consider many of the companies currently offering some type of EMR or PM products as competitors, as they sell to
hospitals and to certain medical specialties that are not in OIS’ current target market. OIS is aware of some competitors for its EMR and PM
products in ophthalmology, primarily NextGen, which provide solutions for the multi-specialty medical market, and a few smaller competitors,
primarily HCIT, Eye Doc and Compulink, which provide the EMR and or PM solutions predominantly to the ocular healthcare market.

          Although we continue to work to develop new and improved products, many companies are engaged in research and development of
new devices and alternative methods to diagnose and evaluate eye disease. Introduction of such devices and alternative methods could hinder
our ability to compete effectively and could have a material adverse effect on our business, financial condition and results of operations. Many
of our competitors and potential competitors have substantially greater financial, manufacturing, marketing, distribution and technical resources
than us.

         Abraxas Competition

         Abraxas does not consider many of the companies currently offering some type of EMR or PM products as competitors, as they sell to
hospitals, large clinics, surgery centers and other facilities, and to certain medical specialties that are not in Abraxas’ current target market.
Abraxas is aware of some competitors for its EMR and PM products, primarily Allscripts/Misys Healthcare Systems, Sage Software, and
NextGen, which provide solutions for the multi-specialty medical market. Others, mainly Digi-Chart and Greenway provide the EMR and PM
solutions predominantly to the obstetrics and gynecology market, while other companies specialize in the orthopedic market or the primary care
market.

          The acquisition of EMR, PM and Scheduling has allowed us to broaden our product offerings to the primary care, obstetrics and
gynecology, and orthopedic. However there is no guarantee that our sales efforts will be successful. Additional research and development
efforts, long sales cycles, new sales training requirements and potential resistance to the initial high cost of the EMR, PM or Scheduling
software may hinder our success in selling these products.

         OIS Europe Competition

        We are aware of 3 primary competitors for market share in Europe, namely Zeiss, Topcon and, Canon. Additionally, there are several
other companies, which manufacture similar systems, but these systems currently have minimal market presence.

         CCS Sales and Competition

          We are aware of 5 primary competitors for market share in Germany, namely Zeiss, Topcon, Scholz, Canon, Imedos. Additionally,
there are several other companies, which manufacture similar systems, but these systems currently have minimal market presence.



                                                                       35
         OIS Research and Development

        During 2009, OIS focused our recent research and development efforts on new digital image capture products. Our net research and
development expenditures in the years ended December 31, 2009 and 2008, excluding our subsidiaries, were approximately $1,956,000 and
$2,219,000, respectively. In 2008, we capitalized $504,711 of the costs associated with the development of web-based software.

          Prior to July 2009, MediVision performed our research and development services whereby MediVision billed us, on a monthly basis,
at cost plus 12%. These research and development services included direct labor, consultants’ fees, travel expenses and the applicable portion
of general and administrative expenses. During the years ended December 31, 2009 and 2008, we paid approximately $294,000 and
$1,888,000, respectively, to MediVision for research and development services.

         In 2009, we hired all of MediVision’s research and development staff and moved them to our offices in the United States and Israel,
thereby streamlining our research and development efforts. Prior to this, MediVision and other outsourced consultants conducted most of our
research and development. (See Item 1. Business, OIS Sales, Marketing and Distribution.) .

         Abraxas Research and Development

         Abraxas’ research and development team is located in Irvine, California. Abraxas continues to focus its research and development
efforts on the adaptation of its software to the target market as described above. Our net research and development expenditures in the years
ending December 31, 2009 and 2008 were approximately $1,073,000 and $0 respectively. In 2008, we capitalized $1,721,000 of the costs
associated with the development of our EMR software. During the first three months of 2009, we began to sell this software and amortize these
costs.

         Abraxas also capitalized the EMR, PM and Scheduling software it acquired from AcerMed.

         Patents, Trademarks and Other Intellectual Property

         On June 15, 1993, we were issued United States Letters Patent No. 5,220,360 for ―Apparatus and Method for Topographical Analysis
of the Retina.‖ This patent relates to the Glaucoma-Scope R apparatus, and methods used by the apparatus for topographically mapping the
retina and comparing the mapping to previous mappings.

        We currently have patent applications outstanding with the U.S. Patent and Trademark Office and for the European patent authorities
under PCT treaty for ―A Device, Method and System for Automatic Montage of Segmented Retinal Images‖ and a ―Method for Stabilizing a
Sequence Angiographic Images‖ and for an ―Integrated retinal imager and method.‖

         We have registered trademarks for ―AutoMontage,‖ ―OIS Symphony,‖ ―Ophthalmology Office‖ and ―IRI.‖

         We have copyrights for ―WinStation Version 5,‖ ―WinStation Version 6‖ and ―WinStation XP, Version 10.‖

        In 2007, we entered into a licensing agreement pursuant to which we were granted the right to commercialize background technology
and a family of patents for an ocular imaging device, integrate it into our existing and/or future products and retain exclusive rights of use,
marketing and sale thereof worldwide.

          Further, although we believe that our products do not and will not infringe on patents or violate proprietary rights of others, it is
possible that our existing rights may not be valid or that infringement of existing or future patents, trademarks or proprietary rights may occur
or be claimed to occur by third parties.



                                                                       36
          In the event that any of our products infringe patents, trademarks or proprietary rights of others, we may be required to modify the
design of such products, change the names under which the products or services are provided or obtain licenses. There can be no assurance that
we will be able to do so in a timely manner, upon acceptable terms and conditions, or at all. The failure to do any of the foregoing could have a
material adverse effect on our business. There can be no assurance that our patents or trademarks, if granted, would be upheld if challenged or
that competitors might not develop similar or superior processes or products outside the protection of any patents issued to us. In addition, there
can be no assurance that we will have the financial or other resources necessary to enforce or defend a patent or trademark infringement or
proprietary rights violation action. Moreover, if our products infringe patents, trademarks or proprietary rights of others, we could, under
certain circumstances, become liable for damages, which also could have a material adverse effect on our business.

          We also rely on trade secrets, know-how, continuing technological innovation and other unpatented proprietary technology to
maintain our competitive position. Certain of the proprietary software, optical interfaces and synchronization modules of our digital imaging
systems are largely proprietary and constitute trade secrets, but the basic computer hardware and video components are purchased from third
parties. No patent applications have been filed with respect thereto. If challenged, we anticipate aggressively defending our unpatented
proprietary technology, although there is no assurance that others will not independently develop substantially equivalent proprietary
information or techniques, or otherwise gain access to our trade secrets or disclose such technology, or that we can meaningfully protect our
rights to our unpatented trade secrets and other proprietary technology.

         We seek to protect our unpatented proprietary technology, in part, through proprietary confidentiality and nondisclosure agreements
with employees, consultants and other parties. Our confidentiality agreements with our employees and consultants generally contain standard
industry provisions requiring such individuals to assign to us, without additional consideration, any inventions conceived or reduced to practice
by them while employed or retained by OIS, subject to customary exceptions. There can be no assurance, however, that proprietary information
agreements with employees, consultants and others will not be breached, that we will have adequate remedies for any breach or that our trade
secrets will not otherwise become known to or independently developed by competitors.

         Government Regulation

          The marketing and sale of our products are subject to certain domestic and foreign governmental regulations and approvals. Pursuant
to Section 510(k) of the Federal Food, Drug and Cosmetic Act (―FDCA‖), we are required to file, and have submitted, a pre-marketing
notification with the FDA which provides certain safety and effectiveness information concerning our diagnostic imaging systems. The FDA
has approved our pre-marketing notification submittals, thereby granting us permission to market our products, subject to the general controls
and provisions of the FDCA. The classification of our products require, among other things, annual registration, listing of devices, good
manufacturing practices, labeling and prohibition against misbranding and adulteration. Further, because we are engaged in international sales,
our products must satisfy certain manufacturing requirements and may subject us to various filing and other regulatory requirements imposed
by foreign governments as a condition to the sale of such products.

        We have registered our manufacturing facility with both the FDA and certain California authorities as a medical device manufacturer
and operate such facility under FDA and California requirements concerning Quality System Requirements (―QSR‖). As a medical device
manufacturer, we are required to continuously maintain our QSR compliance status and to demonstrate such compliance during periodic FDA
and California inspections. If the facilities do not meet applicable QSR regulatory requirements, we may be required to implement changes
necessary to comply with such regulations.

         Although the FDA has made findings which permit us to sell our products in the marketplace, such findings do not constitute FDA
approval of these devices and we cannot predict the effect that future legislation or regulatory developments may have on our operations.
Additional regulations, reconsideration of approvals granted under current regulations, or a change in the manner in which existing statutes and
regulations are interpreted or applied may have a material adverse impact on our business, financial condition and results of operations.
Moreover, new products and services developed by us, if any, may also be subject to the same or other various federal and state regulations, in
addition to those of the FDA.



                                                                        37
        An FDA inspection of our Sacramento, California facility was conducted in May 2007. There were no findings during the inspection.

         A California Department of Health inspection of our Sacramento, California facility was conducted in August 2009. There were 3
violations found during the inspection. A corrective action plan was implemented to correct those issues and no further action was taken by the
Department of Health.

          Under the recently approved stimulus package, The American Recovery and Reinvestment Act of 2009, physicians who implement a
certified EMR software program and become meaningful users between 2010 and 2012 will each be eligible for $44,000 in incentive payments
and physicians who become meaningful users between 2012 and 2014 will be eligible for lower payments. Physicians who have not become
meaningful users by 2014 will not qualify for any payments. In addition, beginning in 2016, Medicare reimbursement will begin to decrease for
clinics that do not meet the above criteria. We anticipate this legislation will have positive effects on our revenues as physicians adopt EMR
software programs at higher rates than they do currently. We expect to see this positive trend begin in mid-2010 and beyond.

        Insurance

         We maintain general commercial casualty and property insurance coverage for our business operations, as well as directors and
officers insurance and product liability insurance. During 2009, we did not receive any product liability claims and are unaware of any
threatened or pending claims. To the extent that product liability claims are made against us in the future, such claims may have a material
adverse impact on our business.

        Employees

         As of July 30, 2010, we have 116 employees, 3 of whom are part-time. 68 of our employees are employed by OIS and 29 of our
employees are employed by Abraxas. We also engage the services of consultants from time to time to assist us on specific projects in the areas
of research and development, software development, regulatory affairs and product services, as well as general corporate administration.
Certain of these consultants periodically sub-contract engineers as independent consultants for specific projects.

         We have no collective bargaining agreements covering any of our employees. In addition, we have never experienced any material
labor disruption and we are unaware of any current efforts or plans to organize our employees. We consider our relationship with our
employees to be good.

          Properties

         We lease our facility space in Sacramento, California under a noncancelable lease which will expire in June 2012. This suite consists
of 13,552 square feet of office, manufacturing and warehouse space. We pay minimum monthly lease payments, with respect to this property,
of $11,926.

         Abraxas leases facility space in Irvine, California under a noncancelable lease which will expire in June 2011. This facility consists
of 6,232 square feet of office space. We pay approximately $10,000 per month for this office space.

        Legal Proceedings

         On May 3, 2009, we entered into a Confidential Settlement and Mutual Release Agreement (the ―Settlement Agreement‖) by and
between us, Steven Verdooner, OPKO Health, Inc. and The Frost Group, LLC (collectively ―Defendants‖). Mr. Verdooner was formerly our
president.

         Pursuant to the Settlement Agreement, we agreed to dismiss, with prejudice, the lawsuit between us and the Defendants, whereby we
alleged claims of breach of fiduciary duty, breach of implied contract, intentional interference with contractual relations, intentional
interference with prospective economic advantage, violation of section 502 of the Penal Code of California, aiding and abetting breach of
fiduciary duty, and aiding and abetting interference with contractual relations. We also agreed to release the Defendants from any claims that
could have been brought in the foregoing lawsuit, whether known or unknown. The Defendants paid us the full amount of the settlement of
$1,200,000 on May 13, 2009.



                                                                      38
                                                              MANAGEMENT

Directors and Executive Officers

        Directors and Executive Officers

        Each director is elected for a one year term until the next annual meeting of shareholders and their successor is elected and qualified.

        The following is a list of the names and ages of our directors and executive officers:

        Name                               Age        Position
        Gil Allon                          48         Director, and Chief Executive Officer
        Ariel Shenhar                      44         Director, Chief Financial Officer, and Secretary
        Noam Allon                         50         Chief Technology Officer
        Uri Ram                            61         Chairman of the Board
        Jonathan Phillips                  37         Director
        William Greer                      43         Director
        Eric Maurincomme                   43         Director
        Uri Geiger                         42         Director
        Menachem Inbar                     61         Director

         Gil Allon has served as a member of our Board of Directors since August 2000, as our Chief Executive Officer since September
2000. Mr. Allon is also a member of the Compensation, Option and Nomination Committees of our Board of Directors. Mr. Allon served as
the Vice President and Chief Operating Officer of MediVision from June 1993 until August 2000. Mr. Allon also served as a member of the
Board of Directors of MediVision since MediVision’s inception in June 1993 through December 2004. Mr. Allon received his B.A. and M.Sc.
in Computer Science, both with distinction, from the Technion Israel Institute of Technology in Haifa, Israel in May 1987 and December 1989,
respectively, and his M.B.A. with distinction in Business Management from the University of Haifa in September 1999. The Company believes
that Mr. Allon has the qualifications and skills to serve as a Director based upon his technological and business expertise; his more than 16
years experience in the industry; and his more than 20 year experience in executive and managerial positions with the Company and previous
positions.

         Ariel Shenhar has served as a member of our Board of Directors since August 2000, as our Vice President and Chief Financial Officer
since July 2002 and as our Secretary since August 2002. Mr. Shenhar also served as a member of the Board of Directors of MediVision from
August 1994 through December 2004 and as its Vice President and Chief Financial Officer from January 1997 until May 2005. Mr. Shenhar
served as a member of the Board of Directors of Fidelity Gold Real Estate Markets Ltd., an Israeli public company engaged in real estate, from
1994 to 1998, as an accountant at Nissan Caspi & Co. Certified Public Accountants in Jerusalem, Israel in 1996, and at Witkowski & Co.
Certified Public Accountants in Tel Aviv, Israel from 1994 to 1995. Mr. Shenhar received his B.A. in Economics and Accounting in June 1992
and his M.B.A. in Finance, with distinction, in June 1999 both from the Hebrew University in Jerusalem, Israel, and has been a Certified Public
Accountant since January 1997. The Company believes that Mr. Shenhar has the qualifications and skills to serve as a Director based upon his
accounting and finance expertise; his more than 15 years experience in the industry; and his experience in executive and managerial positions.

         Noam Allon has served as a member of our Board of Directors from August 2000 until December 31, 2004 and as our Chief
Technology Officer since October 21, 2009. Mr. Allon has served as a director and as President and Chief Executive Officer of MediVision
since MediVision’s inception in June 1993. Mr. Allon also serves as the CEO of OIS Global, OIS’s Israeli subsidiary, as the General Manager
of the company’s European branch in Belgium, as well as the Co-CEO of our German subsidiary, CCS Pawlowski, GmbH. Mr. Allon received
his B. Sc. in Computer Science with distinction, from the Technion Israel Institute of Technology in Haifa, Israel in May 1986.



                                                                       39
         Uri Ram has served as an independent director and Chairman of our Board since March 2009. Mr. Ram is the Chairman of the Audit
Committee and a member of the Compensation, Option and Nominations Committees of our Board. Currently, he serves as the Sr. Vice
President and Chief Financial Officer of Gefen Inc. and is the CEO/Owner of Juram Ltd. and Irams Inc., which are management consulting
companies that also invest in new startups. Since 1990, Mr. Ram has served as the President of Del-Ta Engineering & Equipment Ltd., a
holding company with $30 million in sales. From 1991 to 2003, Mr. Ram served as the Senior VP of Inter-Gamma Investment Ltd.
Inter-Gamma Investment Ltd. is a major shareholder of MediVision Medical Imaging Ltd., a significant shareholder. Mr. Ram has a Master of
Arts degree from Israel National Defense College, and a Bachelor of Economics and Political sciences from Bar Ilan University and
participated in an EMBA program at the Tel Aviv University. Mr. Ram is a retired Brigadier General of the Israeli Air Force. The Company
believes that Mr. Ram has the qualifications and skills to serve as a Director based upon his business expertise and his experience in executive
and managerial positions.

          Jonathan R. Phillips has served as an independent director on our Board of Directors since August 2007. Mr. Phillips is currently a
member of the Nomination, Audit and Compensation Committees of our Board of Directors. Since 2005, Mr. Phillips has been a Managing
Director and Founder of Healthcare Growth Partners, a company that specializes in strategic and financial advisory services to healthcare
technology companies. Also, he is currently Chairman of the Board of Directors of Streamline Health Solutions, a NASDAQ-listed company,
and serves on its strategy, nomination and governance and compensation committees. Prior to founding Healthcare Growth Partners, Mr.
Phillips served for five years, from 2000 to 2005, as a healthcare investment banker at William Blair & Company after working at Deloitte
Consulting for over five years specializing in projects for healthcare and non-healthcare clients. He received an undergraduate degree from
DePauw University and a Masters of Business Administration from Northwestern University. The Company believes that Mr. Phillips has the
qualifications and skills to serve as a Director based upon his significant business experience, including a diversified background of managing
and directing medical related companies.

         William Greer has served as an independent director on our Board of Directors since August 2007. Mr. Greer is currently a member of
the Audit Committee of our Board of Directors. Since 2003, Mr. Greer has been the President and CEO of Evolved Digital Systems Inc.
(TSE:EVD), a healthcare technology solutions company based in Montreal. Prior to joining Evolved Digital Systems, he served various senior
finance and accounting positions for the Investment Products unit of CAN Insurance Company, RHI Management Solutions and Southern
Financial. Additionally, Mr. Greer has worked at the accounting firms of William Crosslin, Sparks & Vaden and Kraft Bros., Esstman, Patton
& Harrell. Mr. Greer received a Bachelor of Science from the University of Tennessee at Martin and was a scholarship recipient to the
Graduate School of Banking of the South at Louisiana State University. The Company believes that Mr. Greer has the qualifications and skills
to serve as a Director based upon his significant business experience, including managing a healthcare technology company, along with his
wide range of business experiences from practicing public accounting.

         Eric Maurincomme has served as an independent director on our Board of Directors since August 2008. Dr. Maurincomme is
currently the Vice President, Chief Strategy and Marketing Officer of Agfa Healthcare N.V. (―Agfa‖), a Belgian company specializing in
analog and digital imaging systems and IT solutions, for the healthcare sector. Dr. Maurincomme joined Agfa HealthCare in 2004 as the Vice
President of Business Development. Agfa holds a significant ownership interest in MediVision Medical Imaging Ltd., a significant shareholder
of OIS. In addition, Dr. Maurincomme is currently a Board Member of COCIR, a non-for profit association in Belgium, which is the trade
association of the Radiological, Electromedical and Healthcare IT industry in Europe. Prior to working at Agfa HealthCare, Dr.
Maurincomme spent 10 years at GE Healthcare. Dr. Maurincomme graduated with a Masters Degree in Electrical Engineering from the
University of California at Davis, and a European PhD in Biomedical Engineering from the National Institute of Applied Sciences in Lyon,
France. The Company believes that Dr. Maurincomme has the qualifications to serve as a Director based upon his education, along with his
wide range of business expertise, including a diversified background of managing and directing medical related companies.



                                                                      40
         Dr. Uri Geiger has served as a director on our Board of Directors since June 2009. In 2008, Dr. Geiger founded AccelMed, a medical
device investment company, which owns 36.4% of our common stock issued and outstanding. Since January 2009, Dr. Geiger has served as
Chairman of A.M. AccelMed (1999) Ltd., AccelMed’s general partner. He is also a director with Medical Compression Systems Ltd. (TASE:
MDCL) and the Chairman of Exalenz Bioscience Ltd. (TASE: EXEN) as well as a director on the Board of Directors of Edge Medical Ltd.,
Tau Hedge Funds Management BV, Non-Linear Technologies, and Peer Medical Ltd. From May 2006 to January 2009, Dr. Geiger served as
the CEO of Exalenz Bioscience ltd, a developer of diagnostic medical equipment. Dr. Geiger received his doctorate from Columbia
University’s Center for Law & Economics. The Company believes that Dr Geiger’s education and business expertise, including a diversified
background of management and directing medical device companies, gave him the qualifications and skills to serve as a Director.

         Menachem Inbar has served as a director on our Board of Directors since August 2009. Mr. Inbar is the Chairman of the Audit
Committee. Mr. Inbar has spent most of his career as a senior executive with the banking industry in Israel and abroad. Since January 2009, he
has served as the Head of Family Office of Arkin Holdings, a financial and equity investment firm. From 2000 to 2009, he was the Managing
Partner of Shifmen Inbar Ltd., a boutique investment firm. He is currently a director on the boards of Bezeq Ltd., an Israeli telecommunications
company, PAGI Bank, a commercial bank and subsidiary of Benleumi Banking Group, and Carmel Group, a real estate company. Mr. Inbar
holds a Bachelor of Arts in Social Science and a Master of Arts in Law, both from the Bar Ilan University in Israel. The Company believes that
Mr Inbar’s financial and business expertise, including a diversified background of management and directing companies, gave him the
qualifications and skills to serve as a Director.

         Pursuant to the Voting Agreement, described below, AccelMed appointed Uri Geiger and Menachem Inbar to serve on our Board of
Directors. In addition, the parties to the Voting Agreement agreed that at the first annual meeting of our shareholders following the execution
of the Voting Agreement, AccelMed will designate Ariel Shenhar, and the MediVision/Principal MV Shareholders Group (as defined therein)
will designate Gil Allon to serve as directors until the next annual meeting, subject to their continued service as our Chief Financial Officer and
Chief Executive Officer, respectively. We anticipate that such annual meeting will be held during the year 2010 (For additional details of the
voting agreement, see Certain Relationships and Related Transactions, AccelMed, Voting Agreement below.)

         Independent Directors

          The rules of the SEC require that we, because we are not listed on any national securities exchange, choose a definition of director
―independence‖ for purposes of determining which directors are independent. We have chosen to follow the definition of independence as
determined by the Marketplace Rules of The Nasdaq National Market (―NASDAQ‖). Pursuant to NASDAQ’s definition, Uri Ram, Jonathan
Phillips, William Greer and Eric Maurincomme are independent directors.

         Gil Allon, who is not an independent director, is currently a member of the nominations and compensation committees of our board of
directors.




                                                                        41
                                                   EXECUTIVE COMPENSATION

         The following table shows the total compensation that we paid to Gil Allon, our chief executive officer, Ariel Shenhar, our chief
financial officer, and Noam Allon, our chief technology officer for the last two fiscal years. Mr. N. Allon assumed duties as an executive
officer on October 21, 2009, when he transitioned from a MediVision representative to an OIS executive officer, with the completion of the
MediVision Asset Purchase. (For additional details of the MediVision Asset Purchase, see Consolidated Financial Statements for the Year
Ended December 31, 2009, Notes to Consolidated Financial Statements, Note 6. Related party transactions, MediVision Asset Purchase). No
other executive officer received more than $100,000 in total compensation during the last two fiscal years. Therefore, for purposes of this
disclosure, Messrs. G. Allon, A. Shenhar and N. Allon are our only ―named executive officers‖ for the last two fiscal years.



                                                                    42
                                                 SUMMARY COMPENSATION TABLE

                                                                                Non-Equity  Nonqualified
                                                                                 Incentive    Deferred
     Name and                                         Stock  Option                Plan     Compensation   All other
      Principal       Fiscal     Salary        Bonus Awards Awards             Compensation   Earnings   Compensation               Total
      Position        Year         ($)          ($)    ($)     ($)                  ($)          ($)          ($)                     ($)
          (a)          (b)         (c)          (d)    (e)      (f)                 (g)         (h)            (i)                    (j)
Gil Allon             2009     $174,400(1)       -      -   $13,539(2)               -            -        $7,928 (3)              $195,867
(Chief Executive      2008      $218,000         -      -        -                   -            -       $10,909 (3)              $229,909
Officer)
Ariel Shenhar         2009     $169,600(4)    25,000       -     $16,878(5)           -                -             $7,928 (6)    $219,406
(Vice President and   2008      $209,462         -         -          -               -                -            $10,909 (6)    $220,371
Chief
Financial Officer)
Noam Allon            2009     $30,316(7)     50,000       -      $8,272(8)                                                         $88,588
Chief Technology
Officer

(1)     Gil Allon’s 2009 salary represents his annual salary of $218,000 less $43,600, or 20% of his annual salary, which was received in the
        form of an option to purchase 272,500 shares of common stock on January 6, 2009.

(2)     Option awards represent the grate date fair value of stock options granted to Gil Allon our CEO on January 6, 2009 and November 18,
        2009.

        On January 6, 2009, we granted Gil Allon, our CEO, an option to purchase 272,500 shares of our common stock. The options, vested
        in 12 equal monthly installments beginning on January 31, 2009, are exercisable at $0.16 per share and expire on January 6, 2019.
        These options were granted in lieu of $43,600 or 20% of Gil Allon’s annual salary.

        On November 18, 2009, we granted Gil Allon, our CEO, an option to purchase 242,141 shares of common stock. The options vest in 4
        equal semi-annual installments beginning on May 18, 2010, are exercisable at $0.65 per share and expire on November 18, 2019. (See
        Financial Statements for the Year Ended December 31, 2009, Notes to Consolidated Financial Statements, Note 8. Share-Based
        Compensation for the assumptions used to calculate the grant date fair value of the stock option award. See also Outstanding Equity
        Awards at Fiscal Year-End Table below.)

(3)     Represents automobile expenses we paid for on behalf of Mr. Allon.

(4)     Ariel Shenhar’s 2009 salary represents his annual salary of $212,000 less $42,400, or 20% of his annual salary, which was received in
        the form of an option to purchase 265,000 shares of common stock granted on January 6, 2009.

(5)     Option awards represent the fair value of stock options granted to Ariel Shenhar on January 6, 2009 and November 18, 2009.

        On January 6, 2009, we granted Ariel Shenhar, our CFO, an option to purchase 265,000 shares of our common stock. The options,
        vested in 12 equal monthly installments beginning on January 31, 2009, are exercisable at $0.16 per share and expire on January 6,
        2019. These options were granted in lieu of $42,600 or 20% of Ariel Shenhar’s annual salary.

        On November 18, 2009, we granted Ariel Shenhar, our CFO, an option to purchase 318,285 shares of common stock for compensation
        The options were valued at the grant date fair value, vest in 4 equal semi-annual installments beginning on May 18, 2010, are
        exercisable at $0.65 per share and expire on November 18, 2019. (Financial Statements for the Year Ended December 31, 2009, Notes
        to Consolidated Financial Statements, Note 8. Share-Based Compensation for the assumptions used to calculate the grant date fair
        value of the stock option award. See also Outstanding Equity Awards at Fiscal Year-End Table below.)

(6)     Represents automobile expenses we paid on behalf of Mr. Shenhar.

(7)     Noam Allon’s 2009 salary represents his fee from the time he assumed duties as an executive officer on October 21, 2009 when he
        transitioned from a MediVision representative to an OIS executive officer, with the completion of the MediVision Asset Purchase.
        (For additional details of the MediVision Asset Purchase, see Financial Statements for the Year Ended December 31, 2009, Notes to
        Consolidated Financial Statements, Note 6. Related party transactions, MediVision Asset Purchase).

(8)     On December 23, 2009, we granted Noam Allon, Chief Technology Officer, an option to purchase 180,000 shares of common stock.
The options were valued at the grant date fair value of the options, vested in 4 equal semi-annual installments beginning on June 23,
2010, are exercisable at $0.84 per share and expire on December 23, 2019. These options were granted in lieu of $29,642, or 20% of
his annual fee. (See Financial Statements for the Year Ended December 31, 2009, Notes to Consolidated Financial Statements, Note
8. Share-Based Compensation for the assumptions used to calculate the grant date fair value of the stock option award. See also
Outstanding Equity Awards at Fiscal Year-End Table below.)




                                                             43
Employment Agreements

         We entered into an employment agreement with Mr. G. Allon for his services as Chief Executive Officer on December 1, 2001. The
agreement provides for an indefinite term. Mr. G. Allon is also eligible to participate in our health and welfare insurance plans and is provided
an automobile for business use. Either party may terminate the employment agreement upon six months advance notice. The agreement, as
amended, sets Mr. G. Allon’s annual salary at $218,000. In January 2009, Mr. G. Allon agreed to waive his bonus plan for 2008 and 2009
which allowed him to earn a maximum bonus of $65,000 per year and to reduce his salary by 20% for 2009. He received options in lieu of the
reduction in salary.

         We also entered into an employment agreement with Mr. Shenhar for his services as Chief Financial Officer, commencing on July 22,
2002. Mr. Shenhar is also eligible to participate in our health and welfare insurance plans and is provided an automobile for business use.
Either party may terminate the agreement upon six months advance notice. The agreement, as amended, sets Mr. Shenhar’s annual salary at
$212,000. In January 2009, Mr. Shenhar agreed to waive his bonus plan for 2008 and 2009 which allowed him to earn a maximum bonus of
$55,000 per year and to reduce his salary by 20% for 2009. He received options in lieu of the reduction in salary.

         On October 21, 2009, in connection with the consummation of the MediVision Asset Purchase. Mr. N. Allon assumed duties as an
executive officer. In January 2004 we entered into a services agreement with MediStrategy Ltd. (―MS‖), an Israeli company owned by Mr. N.
Allon, for his services as our Chief Technology Officer. This agreement between OIS and MS was terminated effective January 1, 2010. On
December 23, 2009, Mr. N. Allon received stock options in lieu of the reduction of his fees. In addition, Mr. N. Allon received a $50,000 bonus
plan for 2009, based on achieving specific milestones. As of January 1, 2010, OIS Global signed an agreement with MS for Noam Allon’s
consulting service. Under the terms of the agreement, MS is to be compensated $13,272 monthly for Noam Allon’s services effective October
1, 2009 through December 31, 2009 and approximately $18,000 monthly effective January 1, 2010 through December 31, 2010.


                                                                       44
                                                 OUTSTANDING EQUITY AWARDS AT JUNE 30, 2010
                                         Option Awards                                                            Stock Award
                                                                                                          Market     Equity
                                                                                                           Value Incentive
                                                                                                             of       Plan
                                                             Equity                                       Shares Awards:
                                                         Incentive Plan                                     or     Number of
                                                            Awards:                                       Units of Unearned Equity Incentive Plan
                                            Number of      Number of                          Number of Stock        Shares,   Awards: Market or
                                             Securities    Securities                          Shares or   That      Units or   Payout Value of
                                            Underlying    Underlying    Option                  Units of   Have Other Rights Unearned Shares,
                 Number of Securities       Unexercised   Unexercised Exercise     Option     Stock That    Not     That Have Units or Other Rights
                Underlying Unexercised      Options (#)    Unearned      Price   Expiration    Have Not Vested Not Vested That Have Not Vested
    Name                Options            Unexercisable    Options       ($)       Date       Vested (#)   ($)        ($)             (#)
     (a)          (#) Exercisable (b)           (c)           (d)         (e)        (f)          (g)       (h)         (i)             (j)
Gil Allon               40,000                      -           -       $0.406   10/23/2012        -          -          -               -
(Chief                 320,000                      -           -       $0.406    4/9/2013         -          -          -               -
Executive
Officer)               90,000                     -           -        $0.681    10/22/2014        -         -         -                -
                       86,667                43,333           -        $ 0.82    12/19/2015        -         -         -                -
                       86,667                43,333 (1)       -        $ 1.05    12/19/2015        -         -         -                -
                       20,000                      -          -        $ 1.83    6/14/2016         -         -         -                -
                      272,500 (2)                  -          -        $ 0.16     1/6/2019         -         -         -                -
                             -              242,141 (3)       -        $ 0.65    11/18/2019        -         -         -                -

Ariel Shenhar         200,000                      -          -        $0.406     4/9/2013         -         -         -                -
(Vice
President and
Chief
Financial
Officer)               75,000                      -          -        $0.681    10/22/2014
                       76,667                38,333 (4)       -        $ 0.82    12/19/2015        -         -         -                -
                       76,667                38,333 (4)       -        $ 1.05    12/19/2015        -         -         -                -
                      265,000                      -          -         $0.16     1/6/2019         -         -         -                -
                             -              318,285           -         $0.65    11/18/2019        -         -         -                -

Noam Allon            150,000                      -          -        $0.406     9/6/2011         -         -         -                -
(Chief                 30,000                      -          -        $0.406     4/9/2013         -         -         -                -
Technology
Officer)               40,000                     -           -        $0.681    10/24/2014        -         -         -                -
                            -               180,000 (7)       -         $0.84    12/23/2019        -         -         -                -


(1)    These options have not vested. They vest equally over three years every six months (1/6 every 6 months) beginning on June 19, 2008.
(2)    These options were issued to Mr. Allon in lieu of $43,600, which comprised 20% of his annual salary for fiscal 2009. The options are
       valued at $2,686, the grant date fair value.
(3)    These opt ions have not vested. They will vest equally over two years every 6 months ( ј every 6 months ) beginning in May 18, 2010.
(4)    These options have not vested. They vest equally over three years every six months (1/6 every 6 months) beginning on June 19, 2008.
(5)    These options were issued to Mr. Shenhar in lieu of $42,400, which comprised 20% of his annual salary for fiscal 2009. The options are
       valued at $2,612, the grant date fair value.
(6)    These options have not vested. They vest equally over two years every 6 months ( ј every 6 months ) beginning in May 18, 2010.
(7)    On December 23, 2009, we granted Noam Allon, Chief Technology Officer, options to purchase 180,000 shares of common stock in
       lieu of $29,642, which comprised of 20% of his 2009 annual fee. The options vest in 4 equal semi-annual installments beginning on
       June 23, 2010, are exercisable at $0.84 per share and expire on December 23, 2019.




                                                                         45
Compensation of Directors

                                                       Director Compensation
                                                                                            Non-Qualified
                Fees Earned                                             Non-equity            Deferred
                 or Paid in           Stock          Option           Incentive Plan        Compensation            All Other
                   Cash              Awards          Awards           Compensation            Earnings            Compensation           Total
  Name               ($)               ($)             ($)                 ($)                   ($)                    ($)               ($)
    (a)              (b)               (c)            (d)                  (e)                   (f)                    (g)               (j)
William
Greer          $ 16,250 (1)                   -           -                            -                     -                    -    $ 16,250

Jonathan
Phillips       $ 16,250 (1)                   -           -                            -                     -                    -    $ 16,250

Uri Ram        $ 20,120 (2)                         $ 425 (2)                                                                          $ 20,545

Uri Geiger     $ 13,493 (3)                                                                                                            $ 13,493

Menachem
Inbar          $ 10,000 (4)                   -           -                            -                     -                    -    $ 10,000

(1) Mr. Greer and Mr. Phillips each received $16,250 for their services as a Director.
(2) Mr. Ram received $19,750 for his services as a Director and $370 for the reimbursement of out of pocket expenses. Mr. Ram also
    received 30,000 options with an exercise price of $0.55, vesting equally over three years every 6 months (1/6 every 6 months) beginning
    in April 29, 2010. ( See Financial Statements for the Year Ended December 31, 2009, Notes to Consolidated Financial Statements, Note
    8, Share-Based Compensation for the assumptions used to calculate the grant date fair value of this stock option award.)
(3) Dr Geiger joined the board in June 2009. During 2009, he earned $10,000 for his services as a Director and $3,493 for the reimbursement
    of out of pocket expenses.
(4) Mr. Inbar joined the board in August 2009. During 2009, he earned $10,000 for his services as a Director.

Director Compensation Arrangements

          Pursuant to a letter agreement dated March 13, 2009 between Mr. Ram and OIS, OIS agreed, in connection with his service as a
director: (i) to pay Mr. Ram, in four equal quarterly installments, an annual retainer in the aggregate amount of $15,000 for attendance at up to
three Board or Committee meetings per quarter and (ii) to pay Mr. Ram a fee of $100 per hour, not to exceed $500 per day, for attendance at
meetings in excess of five Board meetings per quarter. OIS also agreed to the following in connection with his service as Chairman of the
Board: (i) to pay Mr. Ram, in four equal quarterly installments, an annual retainer in the aggregate amount of $24,000 for attendance at up to
five Board or Committee meetings per quarter and (ii) to pay Mr. Ram a fee of $100 per hour, not to exceed $500 per day, for attendance at
meetings in excess of five Board meetings per quarter.

          Pursuant to a letter agreement dated August 31, 2007, between Mr. Greer and OIS, and as amended on October 30, 2009, OIS agreed
to the following in connection with his service as a director: (i) to pay Mr. Greer, in four equal quarterly installments, an annual retainer in the
aggregate amount of $20,000 for attendance at up to three Board or Committee meetings per quarter, (ii) to pay Mr. Greer a fee of $100 per
hour, not to exceed $500 per day, for attendance at meetings in excess of three Board meetings per quarter.

          Pursuant to a letter agreement executed on August 31, 2007 between Mr. Phillips and OIS, and as amended on October 30, 2009, OIS
agreed to the following in connection with his service as a director: (i) to pay Mr. Phillips, in four equal quarterly installments, an annual
retainer in the aggregate amount of $20,000 for attendance at up to three Board or Committee meetings per quarter, (ii) to pay Mr. Phillips a fee
of $100 per hour, not to exceed $500 per day, for attendance at meetings in excess of three Board meetings per quarter.

          Pursuant to the Voting Agreement, AccelMed appointed Uri Geiger and Menachem Inbar to serve on our Board of Directors. Pursuant
to this agreement, we have agreed to pay $20,000 per year to Uri Geiger and Menachem Inbar. For more information on this agreement see
Item 10, Directors, Executive Officers and Corporate Governance section, See also Financial Statements for the year ending December 31,
2009, Notes to Consolidated Financial Statements, Note 6 Related Party Transactions, U.M. AccelMed, Limited Partnership.

         No standard arrangement regarding compensation of the directors has been adopted by the Board and, except as noted above, we have
not paid any director compensation.
46
                                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth as of July 30, 2010, certain information regarding the ownership of our voting securities by each shareholder
known to our management to be (i) the beneficial owner of more than 5% of the our outstanding common stock, (ii) our directors during the
last fiscal year and nominees for director, and (iii) all executive officers and directors as a group. Unless otherwise noted, we believe that the
beneficial owners of the common stock listed below, based on information furnished by such owners, have sole investment and voting power
with respect to such shares. Unless otherwise noted, the address of each beneficial owner named below is our corporate address.

                                                                                Amount and Nature of Beneficial
Name and Address of Beneficial Owner                                                    Ownership (1)                           Percent of Class
Management and the Board

Gil Allon                                                                                    1,079,702 (2)                            3.4%

Ariel Shenhar                                                                                  841,238 (3)                            2.7%

Noam Allon                                                                                     265,000 (4)                              *

William Greer                                                                                    50,000 (5)                             *

Jonathan R. Phillips                                                                             65,000 (6)                             *

Uri Ram                                                                                          15,000 (7)                             *

Eric Maurincomme                                                                                      --                               --

Directors and Officers as a group                                                            2,315,940 (8)                            7.1%
(total of 5 persons)

5% Shareholders

MediVision Medical Imaging Ltd.(9)                                                           9,112,446 (10)                          30.1%
P.O. Box 45, Industrial Park
Yokneam Elit
20692 Israel
U.M. AccelMed, Limited Partnership (11)                                                     16,549,679 (12)                          49.4%
6 Hachoshlim St.
Herzliya Pituach, 46120 Israel
The Tail Wind Advisory & Management Ltd. (13)                                                2,334,429 (14)                           7.2%
77 Long Acre
London, WC2E 9LB
United Kingdom
_________________
* Less than 1% ownership



                                                                       47
(1)    Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Under those rules and for
       purposes of the table above (a) if a person has decision making power over either the voting or the disposition of any shares, that person
       is generally deemed to be a beneficial owner of those shares; (b) if two or more persons have decision making power over either the
       voting or the disposition of any shares, they will be deemed to share beneficial ownership of those shares, in which case the same shares
       will be included in share ownership totals for each of those persons; and (c) if a person held options to purchase shares that were
       exercisable on, or became exercisable within 60 days of July 30, 2010, that person will be deemed to be the beneficial owner of those
       shares and those shares (but not shares that are subject to options held by any other stockholder) will be deemed to be outstanding for
       purposes of computing the percentage of the outstanding shares that are beneficially owned by that person.
(2)    Represents options to purchase 959,702 shares of common stock, indirect beneficial ownership by spouse of stock options to purchase
       60,000 shares and 60,000 shares of common stock.
(3)    Represents options to purchase 811,238 shares of common stock and 30,000 shares of common stock.
(4)    Represents shares subject to stock options.
(5)    Represents shares subject to stock options.
(6)    Represents options to purchase 50,000 shares of common stock and 15,000 shares of common stock.
(7)    Represents shares subject to stock options.
(8)    Represents options to purchase 2,210,940 shares of common stock and 105,000 shares of common stock.
(9)    The members of the Board of Directors of MediVision hold sole voting and dispositive power over the shares of Common Stock
       beneficially owned by MediVision. The members of MediVision’s Board of Directors are Noam Allon, Yigal Berman, Doron Maor,
       Mira Nesher and Amnon Roffe. MediVision’s Board may act upon approval of a majority of the board present and voting on an action,
       assuming a quorum is met. Each of Noam Allon, Yigal Berman, Doron Maor, Mira Nesher and Amnon Roffe expressly disclaims any
       equitable or beneficial ownership of the shares of Common Stock beneficially owned by MediVision.
(10)   Represents shares of common stock.
(11)   Moshe Arkin shares voting and dispositive power over the shares of Common Stock held by AccelMed with M. Arkin (1999) Ltd., A.M.
       AccelMed Management (2009), Ltd. and U.M. AccelMed. Mr. Arkin is the sole director and beneficial owner of 99.9% of the
       outstanding shares of M. Arkin (1999) Ltd., which beneficially owns 80% of A.M. AccelMed Management (2009), Ltd., which is the
       general partner of AccelMed. Each of Mr. Arkin, M. Arkin (1999) Ltd. and A.M. AccelMed Management (2009), Ltd. expressly
       disclaim equitable and beneficial ownership of the shares of Common Stock held by AccelMed.
(12)   Represents 13,338,603 shares of our common stock and warrants to purchase 3,211,076 of our common stock at $1.00 per share,
       respectively.
(13)   David Crook is the CEO and controlling shareholder of Tail Wind Advisory & Management Ltd., a UK corporation authorized and
       regulated by the Financial Services Authority of Great Britain, which is the investment manager for Tail Wind. Mr. Crook may be
       deemed to share voting and dispositive power with Tail Wind over the shares of Common Stock held by Tail Wind. Each of Mr. Crook
       and Tail Wind Advisory & Management Ltd. expressly disclaim equitable and beneficial ownership of the shares of Common Stock
       held by Tail Wind.
(14)   Represents 131,868 shares of common stock, 963,165 of shares issuable upon conversion of Convertible Notes due February 28, 2011,
       and warrants to purchase 1,239,396 of our common stock.




                                                                       48
                                      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions

         AccelMed

         Purchase Agreement

         AccelMed is our largest shareholder with 13,338,603 shares of our common stock or 44%. AccelMed acquired 13,214,317 of these
shares on June 24, 2009 and May 26, 2010, pursuant to a Purchase Agreement described in the ―Management’s Discussion and Analysis of
Financial Condition and Results of Operations‖ section of this prospectus. The remaining 124,286 shares were purchased from MediVision on
January 6, 2010 at a purchase price of $0.70 per share.

         Pursuant to the terms of the Purchase Agreement, we also agreed to prepare and file with the SEC registration statements covering the
resale of the 1 st Installment Shares and the 1 st Installment Warrant Shares within 60 days of the 1 st Installment Closing Date and the 2 nd
Installment Shares and the 2 nd Installment Warrant Shares within 60 days of the 2 nd Installment Closing Date. The 1 st Installment Shares, the
1 st Installment Warrant Shares, the 2 nd Installment Shares and the 2 nd Installment Warrant Shares are collectively referred to as the
―Registrable Securities.‖ Our obligation to keep the registration statement effective will terminate upon the earlier of (i) the date on which all
Registrable Securities have been sold, and (ii) the date on which all Registrable Securities become eligible for resale by AccelMed without any
volume or other restrictions under Rule 144.

          The Purchase Agreement also provides for the inclusion in the earlier of either the proxy statement for (i) our 2010 Annual Meeting of
Shareholders or (ii) a special meeting of our shareholders held prior to the 2010 Annual Meeting of Shareholders, a proposal to amend its
Articles of Incorporation in order to increase the amount of our authorized common stock from 35 million to 100 million. The Purchase
Agreement also sets forth a provision that requires us to increase the size of our Board of Directors to nine. Director and officer insurance will
be provided for each director elected or appointed in accordance with the foregoing nomination procedures in an amount not less than $10
million. In addition, we will pay AccelMed $20,000 per year for each director elected or appointed that was nominated by AccelMed pursuant
to the Voting Agreement (as defined below) who is not our employee.

          The Purchase Agreement also grants AccelMed (i) veto rights, so long as AccelMed owns more than 20% of our common stock on a
fully diluted basis, over certain of our material business decisions, (ii) a pro rata participation right in any of our future equity offerings, so long
as AccelMed owns 15% of the 1 st Installment Shares, and (iii) a most favorite nation right, pursuant to which AccelMed will receive rights on
parity with any other issuance which provides for rights more favorable than those received by AccelMed (e.g., voting, registration, liquidation
preference, etc.), so long as AccelMed owns 20% of our common stock on a fully diluted basis.

         Warrants

         The 1 st Installment Warrant entitles AccelMed to purchase 3,211,076 shares of our common stock at an exercise price of $1.00 per
share. The 1 st Installment Warrant expires on June 24, 2012. The exercise price will be adjusted and the number of shares of our common
stock to be issued upon exercise of the 1 st Installment Warrant will be adjusted upon the occurrence of the payment of a stock dividend or a
stock split. In addition, the 1 st Installment Warrant includes certain anti-dilution provisions which are triggered if we issue or sell any of our
common stock, securities convertible into our common stock, any right to purchase shares of or reprice any of our common stock at an
effective per share selling price less than $1.00 per share. Upon the occurrence of an anti-dilution event specified in the immediately preceding
sentence, the exercise price of the 1 st Installment Warrant will be adjusted pursuant to a weighted-average formula.

         The 2 nd Installment Warrant entitles AccelMed to purchase 1,193,696 shares of our common stock at an exercise price of $1.00 per
share. The exercise price will be adjusted and the number of shares of our common stock to be issued upon exercise of the 2 nd Installment
Warrant will be adjusted upon the occurrence of the payment of a stock dividend or a stock split. In addition, the 2 nd Installment Warrant
includes certain anti-dilution provisions which are triggered if we issue or sell any of our common stock, securities convertible into our
common stock, any right to purchase shares of or reprice our common stock at an effective per share selling price less than $1.00 per share.
Upon the occurrence of an anti-dilution event specified in the immediately preceding sentence, the exercise price of the 2 nd Installment
Warrant will be adjusted pursuant to a weighted-average formula.



                                                                          49
          The 2 nd Installment Warrant may be exercised beginning on the earliest of the following: (i) the date that we consummate a merger
with and into another corporation or the date we consummate a sale, transfer or other disposition of all or substantially all our assets, (ii) the
date that the average closing price per share of our common stock on the OTC Bulletin Board (or wherever our common stock is listed or
quoted for trading on the date in question) for 10 consecutive trading days exceeds $2.00, (iii) the date our Board of Directors offers a
transaction pursuant to which we raise at least $1.5 million in capital raising transaction with persons who are shareholders of MediVision, on
the date thereof, and (iv) March 27, 2012, and expires on June 24, 2012.

         Voting Agreement

         Pursuant to the terms of the Purchase Agreement, on June 24, 2009, we entered into an Agreement (the ―Voting Agreement‖) by and
among (i) AccelMed, (ii) MediVision, (iii) Agfa Gevaert N.V. (―Agfa‖), (iv) Delta Trading and Services (1986) Ltd. (―Delta‖), and (v) Gil
Allon, Noam Allon, Ariel Shenhar and Yuval Shenhar (collectively, the ―Allon/Shenhar Group‖ and together with Agfa and Delta, the
―Principal MV Shareholders‖). MediVision and the Principal MV Shareholders are referred to as the ―MediVision/Principal Shareholders
Group.‖ Under the Voting Agreement, following the 1 st Installment Closing Date, as long as each of AccelMed and the MediVision/Principal
MV Shareholders Group holds between 25% and 50% of the outstanding shares of our common stock, we agreed to use our best efforts and
will take all actions (including, if necessary, amend its bylaws) to cause to be nominated for election to our Board of Directors, and each of
AccelMed and the members of the MediVision/Principal MV Shareholders Group, agreed to vote its shares of our common stock owned,
whether directly or indirectly, and whether now owned or thereafter acquired, in favor of, the following nominees: (1) two ―Independent
Directors‖ as defined under the listing standards of The Nasdaq Capital Market, the identity of one will be designated and named by AccelMed
and the identity of the other by the MediVision/Principal MV Shareholders Group; (2) three persons designated and named by AccelMed; (3)
three persons designated and named by MediVision; and (4) one person designated and named jointly by AccelMed and MediVision who shall
be a reputable individual from our industry.

         Pursuant to the terms of the Voting Agreement, following the 1 st Installment Closing Date, as long as either AccelMed or the
MediVision/Principal MV Shareholders Group holds less than 25% or more than 50% of the outstanding shares of our common stock, we
agreed to use our best efforts and will take all actions (including, if necessary, amend its bylaws) to cause to be nominated for election to our
Board of Directors, and each of AccelMed and the members of the MediVision/Principal MV Shareholders Group, agreed to vote our shares of
common stock, in favor of, the following nominees: (1) two ―Independent Directors‖ as defined under the listing standards of The Nasdaq
Capital Market, the identity of one will be designated and named by AccelMed and the identity of the other by either MediVision/Principal MV
Shareholders Group; (2) six persons designated and named by AccelMed and the MediVision/Principal MV Shareholders Group, with each of
AccelMed and the MediVision/Principal MV Shareholders Group entitled to name the number of persons for election to our Board of Directors
in proportion to their shareholdings in us (i.e., calculated based on the percentages of holdings of each out of their combined aggregate
holdings, multiplied by six, and rounded to the nearest whole number); (3) one person designated and named jointly by AccelMed and
MediVision who shall be a reputable individual from our industry.

          In connection with the foregoing, at the first annual meeting of our shareholders following the execution of the Voting Agreement,
AccelMed shall designate Ariel Shenhar and the MediVision/Principal MV Shareholders Group shall designate Gil Allon to serve as directors
until the next annual meeting, subject to their continued service as our Chief Financial Officer and Chief Executive Officer, respectively. In
addition, AccelMed has appointed Uri Geiger and Menachem Inbar (the ―New Directors‖) to serve on our Board of Directors.

       The Voting Agreement will terminate when AccelMed ceases to own 10% of our common stock on a fully-diluted basis or the
MediVision/Principal MV Shareholder Group ceases to own, in the aggregate, 10% of our common stock on a fully-diluted basis.

         Prior to the consummation of the 1 st Installment, MediVision was our parent company with ownership of 56% of our issued and
outstanding common stock. After the consummation of the 1 st Installment, MediVision owns 35% of our issued and outstanding common
stock.



                                                                       50
         Gil Allon (our Chief Executive Officer), together with Noam Allon, President and Chief Executive Officer of MediVision and Gil
Allon’s brother own 20.31% of MediVision’s ordinary shares. Ariel Shenhar (our Chief Financial Officer), together with Yuval Shenhar, his
brother, own 1.06% of MediVision’s ordinary shares. Agfa and Delta own 15.59% and 42.08% of MediVision’s ordinary shares, respectively.

        Indemnification Agreements

        Pursuant to the terms of the Purchase Agreement, on June 24, 2009, we extended Indemnification Agreements to all of our board
members and to date, we entered into agreements with Uri Geiger, Menachem Inbar, Uri Ram, Gil Allon, Ariel Shenhar, Jonathan Phillips and
William Greer. Under the Indemnification Agreements, we agreed to hold harmless and indemnify each of Messrs. Geiger, Inbar, Ram, Allon,
Shenhar, Phillips and Greer to the fullest extent authorized under the California General Corporations Code and our Articles of Incorporation,
as amended, subject to certain limitations as specified therein.

MediVision

         As of July 30, 2010, MediVision owned 9,112,446 shares of our common stock, or 30.1%. 5,793,452 of these shares are currently
held in escrow pursuant to the Escrow Agreement referenced below.

        Asset Purchase Agreement

         On October 21, 2009, we completed the purchase of substantially all of the assets of MediVision pursuant to an Asset Purchase
Agreement dated June 24, 2009 with MediVision. The Asset Purchase Agreement is described in the ―Management’s Discussion and Analysis
of Financial Condition and Results of Operations‖ section of this prospectus.

        Escrow Agreement

        Pursuant to the terms of the Asset Purchase Agreement, on June 24, 2009, we entered into an Escrow Agreement with MediVision and
Stephen L. Davis, Esq. Under the terms of the Escrow Agreement, MediVision has 5,793,452 shares of our common stock held in
escrow. (For additional details of the Escrow Agreement, see Financial Statements for the year ended December 31, 2009, Notes to
Consolidated Financial Statements, Note 6. Related Party Transactions, Escrow Agreement.)

        Intercompany Transactions

         Up until the completion of the purchase of substantially all of the assets of MediVision, we and MediVision were parties to several
agreements together, pursuant to which MediVision performed the distribution services on our behalf. (For additional details of these services
and the agreements therefor, see Financial Statements for the year ended December 31, 2009, Notes to Consolidated Financial Statements, Note
6. Related Party Transactions, Intercompany Transactions, MediVision Medical Imaging Ltd.)

        Guarantee

          In 2005, we entered into a Secured Debenture (the ―Debenture‖) in favor of United Mizrahi Bank, in an amount of up to $2,000,000
(plus interest, commissions and all expenses), thereby guaranteeing a loan made to MediVision. On October 23, 2009, upon our assumption of
this loan as the primary borrower, we were released as guarantor of this loan to United Mizrahi Bank. (For additional details of these services
and the agreements therefor, see Financial Statements for the year ended December 31, 2009, Notes to Consolidated Financial Statements, Note
6. Related Party Transactions, United Mizrahi Bank Loan)



                                                                      51
        Loans and Advances

         In connection with the MediVision Asset Purchase, management has written off the balance of intercompany indebtedness (For
additional details of these agreements, see Financial Statements for the year ended December 31, 2009, Notes to Consolidated Financial
Statements, Note 6. Related Party Transactions, MediVision Loans and Advances)

        Merger

       On March 20, 2008, we entered into a definitive merger agreement (the ―Merger Agreement‖) with MV Acquisitions Ltd., an Israeli
company and a wholly-owned subsidiary (―Merger Sub‖), and MediVision, pursuant to which Merger Sub will merge with and into
MediVision (the ―Merger‖), with MediVision as the surviving entity. We have capitalized the direct costs associated with the Merger. As of
December 31, 2008, these costs have accumulated to $1,047,047. On March 16, 2009, we entered into a Termination Agreement with
MediVision pursuant to which the Merger Agreement was terminated.

        Relationships

         Gil Allon (our Chief Executive Officer), together with Noam Allon, President and Chief Executive Officer of MediVision, Gil Allon’s
brother and a former director of OIS own 20.31% of MediVision’s ordinary shares. Ariel Shenhar (our Chief Financial Officer), together with
Yuval Shenhar, his brother, own 1.06% of MediVision’s ordinary shares.

The Tail Wind Fund Ltd.

        As of July 30, 2010, Tail Wind beneficially owned 2,334,429 shares of our common stock, or 7.2%.

         In 2007 and 2009, we issued to Tail Wind Fund Ltd. $2,350,000 in principal amount of our 6.5% Convertible Notes Due October 31,
2011 (the ―Notes‖) and warrants to purchase shares of our common stock. As of July 30, 2010, Tail Wind Fund Ltd had a the remaining
principal balance on the notes of $1,025,000 which is convertible into 963,165 shares of our common stock at an adjusted conversion price of
$1.06 per share, (ii) warrants to purchase an aggregate of 950,357 shares of our common stock at an adjusted exercise price of $1.21 per share
and expire on October 29, 2012, and (iii) warrants to purchase aggregate of 1,239,396 shares of our common stock at an exercise price of $1.00
per share and expire on June 24, 2012. Our next principal payment on the Notes will be due February 28, 2011.

        In March 2010, the the Tailwind Fund Ltd converted $150,000 of the principal balance into 131,868 shares of our common stock.

MediStrategy, Ltd.

        We have an ongoing service agreement with MediStrategy Ltd. (―MS‖), an Israeli company owned by Noam Allon, a former director
who served on our Board until December 2004 and brother of Gil Allon, our CEO. (For additional details of this agreements, see Financial
Statements for the year ended December 31, 2009, Notes to Consolidated Financial Statements, Note 6. Related Party Transactions,
MediStrategy, Ltd.)

CCS Pawlowski

         CCS Pawlowski GmbH (―CCS‖), was a German subsidiary of MediVision which owned 63% of CCS’ ownership interests. We
acquired this ownership interest in the MediVision Asset Purchase (for additional details of the MediVision Asset Purchase see ―Management’s
Discussion and Analysis of Financial Condition and Results of Operations‖ section of this prospectus). CCS is our exclusive distributor of
certain of our products in Germany and Austria. During 2009, prior to the MediVision Asset Purchase, we sold products to CCS of
approximately $113,000. After completion of the MediVision Asset Purchase all inter-company amounts were eliminated upon consolidation.

Directors

         Uri Ram, Jonathan Phillips, Eric Maurincomme and William Greer are independent directors as defined by the Nasdaq Marketplace
Rules. Gil Allon, who is not an independent director, is a member of the Compensation, Option and Nomination Committees of our Board of
Directors.



                                                                     52
                                                          SELLING SECURITY HOLDERS

         AccelMed may sell, from time to time under this prospectus, up to an aggregate of 2,368,142 shares of our common stock pursuant to
a private placement transaction completed on June 24, 2009. AccelMed has not held nor had any material relationship with us within the past
three years prior to the private placement on June 24, 2009.

         Tail Wind and Solomon may sell, from time to time under this prospectus, pursuant to the Extension Agreement, 78,778 and 13,409,
respectively shares of our common stock which may be acquired upon exercise of a warrant with an exercise price of $1.00 and expire on June
24, 2012.

         The following table sets forth, to our knowledge, certain information about the selling security holders as of July 30, 2010 . Beneficial
ownership is determined in accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission, and generally includes
voting or investment power with respect to securities. In computing the number of shares beneficially owned by the holder and the percentage
ownership of the holder, shares of common stock issuable upon conversion of the note and upon exercise of the warrant held by the holder that
are currently convertible or are exercisable or convertible or exercisable within 60 days after the date of the table are deemed outstanding.

          As of July 30, 2010, a total of 30,300,928 shares of our common stock were outstanding. The following table sets forth information as
of that date regarding the beneficial ownership of our common stock both before and immediately after the offering. Actual ownership of the
shares is subject to conversion of the convertible notes and exercise of the warrants.

          The shares of common stock being offered under this prospectus may be offered for sale from time to time during the period the
registration statement of which this prospectus is a part remains effective, by or for the account of the selling security holders described below.
The selling securities holders did not have an existing short position on our common stock.


                                          Shares Beneficially Owned                                        Shares Beneficially Owned
                                              Prior to Offering                                              After the Offering (1)
                                                                % of               Shares Being                                  % of
     Name of Beneficial Owner              Number               Class                Offered                Number               Class
U.M. AccelMed, Limited
Partnership (2)                             16,549,679 (3)            49,4 %           2,368,142 (4)          14,181,537 (5)            42.3 %
The Tail Wind Fund Ltd. (6)                  2,334,429 (7)             7.2 % (8)          78,778 (9)           2,255,651 (10)            7.0 %(8)
Solomon Strategic Holdings, Inc.
(11)                                           391,840 (12)            1.3 %(8)           13,409 (13)            378,431 (14)            1.2 %(8)

(1) Assumes all shares being offered by the selling security holders are sold.
(2) Moshe Arkin shares voting and dispositive power over the shares of Common Stock held by AccelMed with M. Arkin (1999) Ltd., A.M.
AccelMed Management (2009), Ltd. and U.M. AccelMed. Mr. Arkin is the sole director and beneficial owner of 99.9% of the outstanding
shares of M. Arkin (1999) Ltd., which beneficially owns 80% of A.M. AccelMed Management (2009), Ltd., which is the general partner of
AccelMed. Each of Mr. Arkin, M. Arkin (1999) Ltd. and A.M. AccelMed Management (2009), Ltd. expressly disclaim equitable and
beneficial ownership of the shares of Common Stock held by AccelMed.
 (3) Represents 13,338,603 shares of our common stock and warrants to purchase 3,211,076 of our common stock.



                                                                        53
(4) Represents shares of common stock being offered.
(5) The shares of common stock beneficially owned after the offering consist of 10,970,461 shares of our common stock and 3,211,076 shares
of our common stock issuable upon exercise of warrants.
(6) David Crook is the CEO and controlling shareholder of Tail Wind Advisory & Management Ltd., a UK corporation authorized and
regulated by the Financial Services Authority of Great Britain, which is the investment manager for Tail Wind. Mr. Crook may be deemed to
share voting and dispositive power with Tail Wind over the shares of Common Stock held by Tail Wind. Each of Mr. Crook and of Tail Wind
Advisory & Management Ltd. expressly disclaim equitable and beneficial ownership of the shares of Common Stock held by Tail Wind.
(7) Represents 131,868 shares of common stock, 963,165 of shares issuable upon conversion of Convertible Notes due February 28, 2011, and
warrants to purchase 1,239,396 of our common stock.
(8) The selling security holder is contractually prohibited from beneficially owning any number greater than 9.99% of our issued and
outstanding shares of common stock.
(9) Shares of common stock to being offered consist of 78,778 shares of our common stock issuable upon conversion of a warrant.
(10) The shares of common stock beneficially owned after the offering consists of 131,868 shares of common stock, 963,165 shares of our
common stock issuable upon conversion of notes and 1,160,618 shares of our common stock issuable upon exercise of warrants.
(11) Andrew P. Mackellar has been authorized by the Board of Directors of Solomon to make voting and disposition decisions with respect to
the shares on behalf of Solomon. By reason of such delegated authority, Mr. Mackellar may be deemed to share voting and dispositive power
with Solomon over the shares of common stock owned by Solomon. Mr. Mackellar expressly disclaims any equitable or beneficial ownership
of the shares being registered hereunder and held by Solomon. Mr. Mackellar does not have any legal right to maintain such delegated
authority.
(12) The shares of common stock beneficially owned prior to the offering consists of 86,912 shares of common stock, 93,967 shares of our
common stock issuable upon conversion of notes and 210,961 shares of our common stock issuable upon exercise of warrants.
(13) Shares of common stock being offered consist of 13,409 shares of our common stock issuable upon conversion of a warrant.
(14) The shares of common stock beneficially owned after the offering consists of 86,912 shares of common stock, 93,967 shares of our
common stock issuable upon conversion of notes and 197,552 shares of our common stock issuable upon exercise of warrants.

         Relationships with the Selling Security Holders

         The following is a description of each selling security holders relationship to us and how each selling security holder acquired the
shares to be sold in this in this offering. None of the selling security holders have held a position as an officer or other material relationship
with us, except as indicated below.

Purchase Agreement with AccelMed

         On June 24, 2009, pursuant to a purchase agreement, we completed a private placement transaction in which we issued and sold to
AccelMed, 9,633,228 shares of our common stock at $0.41522 per share and a warrant to purchase up to 3,211,076 shares of our common
stock (the ―1 st Installment Warrant‖), for an aggregate purchase price of $3,999,909 million before expenses. The 1 st Installment Warrant is
exercisable at $1.00 per share and expires on June 24, 2012. On May 26, 2010, we completed the 2 nd and final installment, whereby we issued
and sold to AccelMed 3,581,089 shares of common stock at $0.55848 per share at and a warrant to purchase up to 1,193,696 shares of our
common stock (the ―2 nd Installment Warrant‖) for an aggregate purchase price of $1,999,967, before expenses. The 2nd Installment Warrant
may be exercised beginning on the earliest of the following: (i) the date that we consummate a merger with and into another corporation or the
date we consummate a sale, transfer or other disposition of all or substantially all of our assets, (ii) the date that the average closing price per
share of our common stock on the OTC Bulletin Board (or wherever the common stock is listed or quoted for trading on the date in question)
for 10 consecutive trading days exceeds $2.00, (iii) the date our Board of Directors offers a transaction pursuant to which we raise at least $1.5
million in a capital raising transaction with persons who are shareholders of MediVision Medical Imaging Ltd. (a large shareholder of the
Company), and (iv) March 23, 2012. The 2nd Installment Warrant expires on June 23, 2012


                                                                        54
         AccelMed and its affiliates did not own any shares of our common stock prior to June 24, 2009, the date we completed the 1 st
Installment. Thus, (i) no shares are registered for resale by AccelMed or affiliates of AccelMed in prior registration statements, (ii) no shares
are registered for resale by AccelMed or affiliates of AccelMed that continue to be held by AccelMed or affiliates of AccelMed and (iii) no
shares have been sold in registered resale transactions by AccelMed or affiliates of AccelMed.

          Shares of common stock outstanding prior to June 24, 2009 held by persons other than AccelMed, AccelMed’s affiliates, and our
affiliates was 7,380,988. Shares of common stock registered for resale on behalf of AccelMed or its affiliates in the current transaction is
2,460,329.

         Currently, AccelMed has designated and named three persons to our board of directors (For additional details, see ―Certain
Relationships and Related Transactions, Related Party Transactions, AccelMed, Voting Agreement‖ below).

Extension Agreement the Tail Wind Fund Ltd. and Solomon Strategic Holdings, Inc.

         On June 24, 2009, we also entered into an Extension Agreement, pursuant to which, among other things, we issued warrants to Tail
Wind and Solomon to purchase an aggregate of 500,000 shares of our common stock (the ―Extension Warrants‖). The Extension Warrants
have an exercise price of $1.00 per share and expire on June 24, 2012.

         Prior to the extension agreement, on October 29, 2007, we entered into a purchase agreement with Tail Wind and Solomon (together,
the ―Holders‖) pursuant to which we issued to the Holders an aggregate of (i) $2,750,000 in principal amount of our 6.5% Convertible Notes
Due April 30, 2010 and (ii) warrants to purchase an aggregate of 616,671 shares of our common stock at an exercise price of $1.87 per
share. Currently, there is (i) an aggregate of $1,025,000 in remaining principle amount of the Notes, which is convertible into 963,165 shares
of our common stock at an adjusted conversion price of $1.06 and (ii) warrants to purchase an aggregate of 950,357 shares of our common
stock at an adjusted exercise price of $1.21, in addition to the warrants issued pursuant to the Extension Agreement as described in the
paragraph immediately above.

         Proceeds From the Private Placement (1 st Installment)

        The net proceeds we received from 1st installment of the AccelMed Private Placement were $3,827,820. We received gross proceeds
of $3,999,972, less $105,107, as noted below , paid to Accelmed as a reimbursement for expenses incurred, $47,045 in options paid to the
placement agent, and $20,000 for our legal and accounting fees.

         Payments Made in Connection with the Private Placement

       The following table sets forth the dollar amount of each payment to be made (including the value of any payments to be made in
common stock) in connection with the sale of the securities that we have made or may be required to make to AccelMed, any affiliate of
AccelMed or any person with whom AccelMed has a contractual relationship.



                                                                       55
                                                            Maximum                                   Maximum                  Maximum
                                                            Possible             Maximum              Possible                 Possible
                                                            Payments             Possible             Payments                 Payments
                                                            under the            Payments              under the               under the
                                          Payments          Purchase             under the            Indemnification          Voting
Payee           Description               Made              Agreement            Warrants             Agreements (1)           Agreement (2)
AccelMed        Reimbursement of          $105,107 (3)               -                    -                    -                        -
                expenses incurred in
                connection with the
                AccelMed Private
                Placement (3)

AccelMed        Principal payments to              -        Unable to estimate           -                    -                        -
                United Mizrahi Bank in                      (4)
                excess of
                EBITDA (4)

AccelMed        Indemnification                    -        Unable to estimate           -            Unable to estimate (6)   Unable to estimate
                                                            (5)                                                                (7)

AccelMed        Management Fee (8)                 -        $100,000 per year            -                    -                        -
                                                            + VAT (8)

AccelMed        Buy-In Obligation (9)              -                 -           Unable to estimate           -                        -
                                                                                 (9)

(1) Pursuant to the Purchase Agreement, each director appointed by AccelMed to our board of directors will enter into an Indemnification
Agreement with us.

(2) The Voting Agreement refers to the agreement dated June 24, 2009, by and among AccelMed, MediVision Medical Imaging Ltd. (―
MediVision ‖), Agfa Gevaert N.V., Delta Trading and Services (1986) Ltd., and Gil Allon, Noam Allon, Ariel Shenhar and Yuval Shenhar.

(3) We paid AccelMed $105,107 as reimbursement for expenses incurred by it in connection with the AccelMed Private Placement, including
financial and legal due diligence and negotiation and other professional services.

(4) As of the date hereof, we have outstanding indebtedness owed to Mizrahi Tefahot Bank Ltd. (― United Mizrahi Bank ‖) in the amount of
$1,500,000. If during the year ended December 31, 2010, the aggregate amount of the principal payments that we make to Mizrahi Tefahot
Bank exceeds our Earnings Before Interest, Taxes and Amortization (― EBITDA ‖) for the year ended December 31, 2010, then within three
business days after we file our audited financial statements for the year ended December 31, 2010 with the Commission, we must issue to
Accelmed, shares of our common stock in an amount equal to the aggregate amount of the principal payments made to United Mizrahi Bank
during the year ended December 31, 2010 minus EBITDA divided by 0.41522. Such shares will be issued without receipt of any additional
consideration from Accelmed. At this time, we are unable to determine if any such payment will be required and if required, the amount of
such payment.

(5) If AccelMed or any of its affiliates incur any expenses or losses in any action or proceeding based on (1) any untrue statement or alleged
untrue statement contained in the registration statement (including amendments and supplements thereto) registering the Securities issued under
the Purchase Agreement, (2) omission or alleged omission of a material fact required to be stated therein or necessary to make the statements in
such registration statement not misleading, (3) a breach of any of our representations, warranties or covenants in the Purchase Agreement, or
(4) any liability, restriction or obligation imposed on us or any of our subsidiaries or any material adverse effect suffered by us or any of our
subsidiaries as a result of or in connection with our purchase of substantially all of MediVision’s assets, we will reimburse AccelMed or its
affiliates, as applicable, for legal and other expenses reasonably incurred in connection with defending or resolving such matters. We are
unable to estimate at this time if any such payments will be payable, or, if payable, the amount of such payments.


                                                                         56
(6) Pursuant to the terms of Indemnification Agreements, any director nominated by AccelMed who becomes involved in a proceeding by
reason of the fact of such director’s status as a director, officer, employee of our company, we agreed to advance to or reimburse such director,
funds for any and all reasonable expenses incurred in connection therewith. We are unable to estimate at this time if any such payments will be
payable, or, if payable, the amount of such payments.

(7) In the event that any suit or action is instituted to enforce any provision in the Voting Agreement, the prevailing party in such dispute will
be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to
the Purchase Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals. We are unable to estimate at this time if any such payments will be payable, or, if
payable, the amount of such payments.

(8) We must pay AccelMed an annual management fee of $20,000 plus VAT (to the extent applicable) per each director nominated by it who is
not one of our employees. AccelMed may nominate up to four directors and one director jointly with MediVision.

(9) If we fail to deliver a certificate of our common stock representing the common stock underlying the 1 st Installment Warrant, which has
been exercised in full or part, within three trading days from the date requested and if on or after such day the holder, of the Warrant purchases
(in an open market transaction or otherwise) shares of our common stock to deliver in satisfaction of a sale by the holder, shares the holder
anticipated receiving from us in connection with the warrant exercise, (such total purchase price, the ― Buy-In Price ‖), then we shall, either (i)
pay to the holder cash in an amount equal to the holder’s total purchase price (including brokerage commissions, if any) or (ii) promptly honor
our obligation to deliver to the holder the shares of our common stock underlying the warrant exercise and pay cash to the holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of common stock to be delivered pursuant to the
warrant exercise, times (B) the closing bid price on the date of exercise.

                                                          PLAN OF DISTRIBUTION

         The selling security holders and any of their donees, pledgees, assignees and other successors-in-interest may, from time to time, sell
any or all of their shares of our common stock being offered under this prospectus on any stock exchange, market or trading facility on which
the shares are traded or in private transactions. These sales, which may include block transactions, may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following methods when selling shares: ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resales by
the broker-dealer for its own account; an exchange distribution in accordance with the rules of the applicable exchange; privately negotiated
transactions; broker-dealers may agree with the selling security holders to sell a specified number of shares at a stipulated price per share; a
combination of any of these methods of sale; or any other method permitted by applicable law.

         The sale price to the public may be: the market price prevailing at the time of sale; a price related to the prevailing market price; at
negotiated prices; or a price the selling security holders determines from time to time.



                                                                        57
         The shares may also be sold under Rule 144 under the Securities Act of 1933, as amended (the ―Securities Act‖), if available, rather
than under this prospectus. The selling security holders have the sole and absolute discretion not to accept any purchase offer or make any sale
of shares if they deem the purchase price to be unsatisfactory at any particular time.

          The selling security holders may pledge their shares to their brokers under the margin provisions of customer agreements. If the
selling security holders default on a margin loan, the broker may, from time-to-time, offer and sell the pledged shares. Broker-dealers engaged
by the selling security holders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or
discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to
be negotiated. The selling security holders do not expect these commissions and discounts to exceed what is customary in the types of
transactions involved.

         The selling security holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be
―underwriters‖ within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by these
broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.

        The selling security holders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. To
our knowledge, no selling security holder has entered into any agreement with a prospective underwriter, and we cannot assure you as to
whether any such agreement will be entered into. If the selling security holders inform us that they entered into such an agreement or
agreements, the relevant details will be set forth in a supplement or revisions to this prospectus.

          The selling security holders and any other persons participating in the sale or distribution of the shares offered under this prospectus
will be subject to applicable provisions of the Exchange Act and the rules and regulations under that act, including Regulation M. These
provisions may restrict activities of, and limit the timing of purchases and sales of any of the shares by, the selling security holder or any other
such person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in
market making and other activities with respect to those securities for a specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.

        Ophthalmic Imaging Systems is required to pay all fees and expenses incident to the registration of the shares and has agreed to
indemnify the selling security holders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

                                                      DESCRIPTION OF SECURITIES

         Our authorized capital stock consists of 100,000,000 shares of common stock, no par value per share, and 20,000,000 shares of
preferred stock, no par value per share. As of July 30, 2010, we had 30,300,928 shares of our common stock outstanding and no shares of
preferred stock outstanding. The following is a summary description of our capital stock.

Common Stock

         The holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available at times and in
amounts as the board of directors may from time to time determine, subordinate to any preferences that may be granted to the holders of
preferred stock. Holders of common stock are entitled to one vote per share on all matters on which the holders of common stock are entitled to
vote.

         The common stock is not entitled to preemptive rights and may not be redeemed or converted. Upon our liquidation, dissolution or
winding up, the assets legally available for distribution to our stockholders are divided among the holders of the common stock in proportion to
the number of shares of common stock held by each of them, after payment of all of our debts and liabilities and fulfillment of the rights of any
outstanding class or series of preferred stock that has priority to distributed assets. The rights of holders of common stock are subordinate to
those of holders of any series of preferred stock.



                                                                        58
         All of the issued and outstanding shares of common stock are duly authorized, validly issued, fully paid, and non-assessable. To the
extent that additional shares of our common stock are issued, the relative interests of existing stockholders may be diluted.

Preferred Stock

          Preferred stock may be issued from time to time in one or more series, and our board of directors, without action by the holders of
common stock, may fix or alter the voting rights, redemption provisions, dividend rights, dividend rates, claims to our assets superior to those
of holders of our common stock, conversion rights and any other rights, preferences, privileges and restrictions of any wholly unissued series of
preferred stock. The board of directors, without shareholder approval, can issue shares of preferred stock with rights that could adversely affect
the rights of the holders of common stock. The issuance of shares of preferred stock could adversely affect the voting power of the holders of
common stock and could have the effect of making it more difficult for a third party to acquire, or could discourage or delay a third party from
acquiring, a majority of our outstanding common stock.

         Preferred stock can be used as an anti-takeover measure. The board of directors has exclusive discretion to issue preferred shares with
rights that may trump those of our common stock. The board of directors could use an issuance of preferred stock with dilutive or voting
preferences to delay, defer or prevent common stock shareholders from initiating a change in control of our company or reduce the rights of
common shareholders to the net assets upon dissolution. Preferred stock issuances may also discourage takeover attempts that may offer
premiums to holders of our common stock.

Warrants Issued on June 24, 2009

          On June 24, 2009, we issued to AccelMed a warrant to purchase 3,211,076 shares of our common stock. This warrant is exercisable at
$1.00 per share and expires on June 24, 2012. The exercise price will be adjusted and the number of shares of our common stock to be issued
upon exercise of the 1 st Installment Warrant will be adjusted upon the occurrence of the payment of a stock dividend or a stock split. In
addition, the 1 st Installment Warrant includes certain anti-dilution provisions which are triggered if we issue or sell any of our common stock,
securities convertible into our common stock, any right to purchase shares of or reprice any of our common stock at an effective per share
selling price less than $1.00 per share. Upon the occurrence of an anti-dilution event specified in the immediately preceding sentence, the
exercise price of the 1 st Installment Warrant will be adjusted pursuant to a weighted-average formula.

          On June 24, 2009, we issued to Tail Wind and Solomon warrants to purchase an aggregate of 500,000 shares of our common
stock. These warrants have an exercise price of $1.00 per share and expire on June 24, 2012. The exercise price of the warrants will be
adjusted and the number of shares of our common stock to be issued upon exercise of the warrants will be adjusted upon the occurrence of,
among other things, the payment of stock dividend or a stock split. In addition, the warrants include certain anti-dilution provisions if we issue
or sell any of our common stock or convertible securities, or any warrants or other rights to subscribe for or to purchase or any options for the
purchase of our common stock or directly or indirectly effectively reduces the conversion, exercise or exchange price for any convertible
securities that are currently outstanding, at or to an effective per share selling price which is less than the greater of (i) the closing price on the
trading day next preceding such issue or sale or, in the case of issuances to holders of our common stock, the date fixed for the determination of
stockholders entitled to receive such warrants, rights, or options, or (ii) the then applicable exercise price. Upon the occurrence of an
anti-dilution event specified in the immediately preceding sentence the exercise price of the warrants will be adjusted pursuant to a
weighted-average formula. We may not effect any exercise of the warrants and each holder of these warrants is not permitted to exercise the
warrants into shares of our common stock if such exercise would give such holder a beneficial ownership of more than 9.99% of the
outstanding shares of our common stock. This 9.99% limitation may be waived by each holder upon not less than 61 days prior notice to us.



                                                                          59
                                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                                        ACCOUNTING AND FINANCIAL DISCLOSURE

         None of the principal accountant’s reports on the financial statements for either of the past two years contains an adverse opinion or
disclaimer of opinion, and none was modified as to uncertainty, audit scope or accounting principles. There were no disagreements with
Perry-Smith LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

                                           DISCLOSURE OF COMMISSION POSITION ON
                                       INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

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

                                                   TRANSFER AGENT AND REGISTRAR

        The transfer agent and registrar for our common stock is Computershare Trust Company, Inc., 350 Indiana Street, Suite 800, Golden,
Colorado 80401. Their telephone number is (303) 262-0600.

                                                 INTEREST OF EXPERTS AND COUNSEL

        The consolidated financial statements appearing in this Prospectus and Registration Statement have been audited by Perry-Smith,
LLP, an independent registered public accounting firm, as stated in their report appearing elsewhere herein, and are included in reliance upon
such report and upon the authority of such firm as experts in accounting and auditing.

        The validity of the shares of common stock offered under this prospectus was passed upon by Troutman Sanders LLP, The Chrysler
Building, 405 Lexington Avenue, New York, New York 10174.



                                                                        60
                                             WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock
to be sold in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits, schedules and
amendments to the registration statement. For further information about us and our common stock, you should refer to the registration
statement and the exhibits and schedules to the registration statement. The statements contained in this prospectus regarding the contents of any
agreement or any other document, in each instance, are not necessarily complete and we refer you to the copy of the agreement or document
filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference. You can request copies of
the registration statement by writing to the Securities and Exchange Commission and paying a fee for the copying cost. You may read and copy
the registration statement of which this prospectus is part at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington,
DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet website that contains reports, proxy and information statements and other information about issuers that file electronically
with the SEC. The address of that website is http://www.sec.gov.

         We are subject to the information reporting requirements of the Exchange Act. Under the Exchange Act, we file periodic reports,
proxy statements and other information with the SEC. This registration statement and future filings will be available for inspection and copying
at the SEC’s Public Reference Room and the website of the SEC referred to above. These documents are also publicly available, free of charge,
on our website, http://www.oisi.com.

         This prospectus includes statistical data that were obtained from industry publications. These industry publications generally indicate
that the authors of these publications have obtained information from sources believed to be reliable but do not guarantee the accuracy and
completeness of their information. While we believe these industry publications to be reliable, we have not independently verified their data.



                                                                         61
                                               OPHTHALMIC IMAGING SYSTEMS

                                              INDEX TO FINANCIAL STATEMENTS



Ophthalmic Imaging Systems :                                                                                                   Page


June 30, 2010
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                      F-1
Unaudited Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2010              F-2
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months ended June 30, 2010             F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 and 2009                      F-4
Notes to Unaudited Condensed Consolidated Financial Statements                                                                 F-5

December 31, 2009
Report of Independent Registered Public Accounting Firm                                                                        F-10
Consolidated Balance Sheets as of December 31, 2009 and 2008                                                                   F-11
Consolidated Statements of Operations for the Years Ended December 31, 2009 and 2008                                           F-13
Consolidated Statement of Comprehensive Loss for the Year Ended December 21, 2009 and 2008                                     F-14
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2009 and 2008                                 F-15
Consolidated Statements of Cash Flow for the Years Ended December 31, 2009 and 2008                                            F-16
Notes to Consolidated Financial Statements                                                                                     F-17

MediVision Medical Imaging, Ltd. :

September 30, 2009
Unaudited Consolidated Balance Sheets as of September 30, 2009 and 2008, and December 31, 2008                                 F-44
Unaudited Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-46
Unaudited Consolidated Statement of Changes in Equity for the Nine Month period ending September 30, 2009, and 2008            F-47
Unaudited Consolidated Statements of Cash Flows for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-49
Notes to Unaudited Consolidated Financial Statements                                                                           F-51

December 31, 2008
Report of Independent Registered Public Accounting Firm                                                                        F-59
Consolidated Balance Sheets as of December 31, 2008                                                                            F-60
Consolidated Statement of Operations for the Year Ended December 31, 2008                                                      F-61
Consolidated Statement of Changes in Equity for the Year Ended December 31, 2008                                               F-62
Consolidated Statement of Cash Flows for the Year Ended December 31, 2008                                                      F-63
Notes to Consolidated Financial Statements                                                                                     F-64

Pro Forma Financial Statements :

September 30, 2009
Unaudited Pro Forma Combined Balance Sheets as of September 30, 2009                                                           F-103
Unaudited Pro Forma Combined Statements of Operations for the Nine Months ended September 30, 2009                             F-104
Notes to Unaudited Pro Forma Combined Financial Statements                                                                     F-106

December 31, 2008
Pro Forma Combined Statement of Operations for the Year Ended December 31, 2008                                                F-105
Notes to Unaudited Combined Pro Forma Financial Statements                                                                     F-106




                                                                  62
                                                  OPHTHALMIC IMAGING SYSTEMS

                                                                  2,460,329

                                                                   Shares

                                                               Common Stock




                                                               PROSPECTUS

You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide
you with information that is different. This prospectus is not an offer to sell common stock and is not soliciting an offer to buy common stock
in any state where the offer or sale is not permitted.

                                                              _________, 2010
                                                      Ophthalmic Imaging Systems
                                                  Condensed Consolidated Balance Sheets
                                                              (Unaudited)




                                                                                                                             December 31,
Assets                                                                                               June 30, 2010               2009
Current assets:
Cash and cash equivalents                                                                           $     6,173,124      $        5,406,239
Accounts receivable, net                                                                                  3,192,328               2,710,987
Inventories, net                                                                                          1,345,782                 991,325
Prepaid expenses and other current assets                                                                   431,990                 179,451
Total current assets                                                                                     11,143,224               9,288,002

Restricted cash                                                                                             158,221                158,213
Furniture and equipment, net of accumulated depreciation of $1,159,042 and $1,076,084
respectively                                                                                                456,449                481,394
Capitalized imaging software, net of accumulated amortization of $252,354 and $168,236,
respectively                                                                                                252,357                336,475
Capitalized software development, net of accumulated amortization of $575,418 and $383,612,
respectively                                                                                                575,413                767,220
AcerMed asset purchase, net of accumulated amortization of $285,036 and $190,024, respectively              285,041                380,053
Goodwill                                                                                                    807,000                807,000
Customer relationship intangible assets and other intangible assets, net of accumulated amortization
            of $44,041 and $11,636, respectively                                                            647,959                 680,364
Prepaid financing                                                                                                 -                  22,195
Licensing rights intangible asset, net of accumulated amortization of $16,519 and $0, respectively           82,593                  99,112
Other assets                                                                                                  9,634                  17,349
 Total assets                                                                                        $   14,417,891      $       13,037,377


Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                                                    $      1,377,928     $          867,672
Accounts payable – related party                                                                                   -                 41,847
Accrued liabilities                                                                                        1,499,868              1,115,902
Deferred extended warranty revenue-current portion                                                         1,425,479              1,632,491
Customer deposits                                                                                            471,024                561,245
Notes payable- current portion                                                                             1,168,800                 34,048
Total current liabilities                                                                                  5,943,099              4,253,205

Deferred extended warranty revenue, less current portion                                                     262,081                247,231
Line of credit                                                                                               150,000                150,000
Notes payable, less current portion                                                                        1,660,337              2,946,179
Total liabilities                                                                                          8,015,517              7,596,615

Commitments and contingencies

Equity
Ophthalmic Imaging Systems’ stockholders' equity:

Common stock, no par value, 100,000,000 shares authorized;
  30,300,928 and 26,500,059 issued and outstanding at June 30, 2010 and December 31, 2009,
 respectively                                                                                             21,717,047             20,089,592
        Additional paid-in-capital                                                                         1,203,300                420,610
       Accumulated deficit                                                                               (16,870,231 )          (15,536,170 )
Cumulative translation adjustment                                     (98,657 )        2,241
Total Ophthalmic Imaging Systems’ stockholders’ equity              5,951,459      4,976,273
Noncontrolling interest                                               450,915        464,489
            Total equity                                            6,402,374      5,440,762
            Total liabilities and stockholders' equity         $   14,417,891 $   13,037,377




                                                         F-1
                                                         Ophthalmic Imaging Systems
                                                Condensed Consolidated Statements of Operations
                                                                 (Unaudited)



                                                                      Three months ended June 30,             Six months ended June 30,
                                                                        2010              2009                  2010             2009
Sales - products                                                    $    3,750,391 $       1,695,603        $   6,869,516 $       3,020,626
   Cost of sales - products                                              1,221,225           779,565            2,357,134         1,469,895
   Cost of sales – amortization                                            185,468           185,468              370,936           370,936

   Gross profit - products                                               2,343,698            730,570            4,141,446          1,179,795

Sales – products to related
   parties                                                                        -     $     122,125                     -          241,205
   Cost of sales – products to
   related parties                                                                -             77,087                    -          142,569
   Gross profit – products to
   related parties                                                                -             45,038                    -            98,636

Sales - service                                                          1,009,737           1,080,888           2,023,927          2,046,316
   Cost of sales - service                                                 507,255             371,090           1,052,631            700,274

   Gross profit - service                                                  502,482            709,798             971,296           1,346,042

Total net sales                                                          4,760,128           2,898,616           8,893,443          5,308,147
Cost of sales                                                            1,913,948           1,413,210           3,780,701          2,683,674
Gross profit                                                             2,846,180           1,485,406           5,112,742          2,624,473
Operating expenses:
 Sales and marketing                                                     1,776,435             868,080           3,321,029          1,772,236
 General and administrative                                                585,023             659,884           1,101,902          1,170,907
 Impairment related to the debt of MediVision                                    -           4,436,187                   -          4,436,187
 Research and development                                                  862,499             596,442           1,706,697          1,121,318
 Research and development – related parties                                      -              33,116                   -            294,014
 Total operating expenses                                                3,223,957           6,593,709           6,129,628          8,794,662
Loss from operations                                                      (377,777 )        (5,108,303 )        (1,016,886 )       (6,170,189 )
Other income – settlement                                                        -           1,200,000                   -          1,200,000
Interest and other expense, net                                            (91,302 )           (95,741 )          (322,224 )         (139,651 )
Loss from continuing operations before taxes                              (469,079 )        (4,004,044 )        (1,339,110 )       (5,109,840 )
Income taxes                                                               (21,409 )              (500 )            (8,533 )           (2,653 )

Net loss                                                                  (490,488 )        (4,004,544 )        (1,347,643 )       (5,112,493 )
Less: noncontrolling interest’s share                                        2,351                   -              13,575                  -
Net loss attributable to Ophthalmic Imaging Systems                 $     (488,137 )    $   (4,004,544 )    $   (1,334,068 )   $   (5,112,493 )

Shares used in the calculation of basic and diluted net loss per
share                                                                   28,097,181          17,501,989          27,307,900         17,184,410

Basic and diluted net loss per share (1)                            $         (0.02 )   $         (0.23 )   $        (0.05 )   $        (0.30 )


(1) The amount of anti-dilutive shares for the three months ended June 30, 2010 and 2009 were 1,965,459 and 503,318, respectively. The
amount of anti-dilutive shares for the six months ended June 30, 2010 and 2009 were 1,815,585 and 392,421, respectively.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




                                                    F-2
                                                   Ophthalmic Imaging Systems
                                      Condensed Consolidated Statements of Comprehensive Loss
                                                            (Unaudited)




                                                                            (Unaudited)                           (Unaudited)

                                                                    Three months ended June 30,            Six months ended June 30,
                                                                      2010              2009                 2010             2009
Net loss attributable to Ophthalmic Imaging Systems               $    (488,137 ) $ (4,004,544 )         $ (1,334,060 ) $ (5,112,493 )
Other comprehensive loss
    Foreign currency translation                                         (78,868 )                 -            (98,657 )                -
Comprehensive net loss                                            $     (567,005 )   $    (4,004,544 )   $   (1,432,717 )   $   (5,112,493 )




               The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




                                                                  F-3
                                                     Ophthalmic Imaging Systems
                                            Condensed Consolidated Statements of Cash Flows
                                                             (Unaudited)

                                                                                                           Six months ended June 30,
                                                                                                            2010               2009
Operating activities:
Net loss                                                                                               $    (1,347,643 )   $   (5,112,493 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
 Depreciation and amortization                                                                                 147,555           105,933
 Loss on disposal of equipment                                                                                   1,541            16,369
 Stock based compensation expense                                                                               19,127            16,711
 Amortization of AcerMed software license                                                                       95,012            95,012
 Amortization of imaging software                                                                               84,118            84,118
 Amortization of R&D                                                                                           191,807           191,806
 Amortization of licensing rights intangible asset                                                              16,519                 -
 Amortization of prepaid financing related to note payable                                                      22,195            33,292
 Discount related to note payable                                                                              142,405            57,835
 Amortization of customer relationship intangibles                                                              32,405                 -
 Impairment of debt from MediVision                                                                                  -         3,152,042
 Net (increase) decrease in accounts receivable, net                                                          (506,476 )         674,645
 Provision for bad debt                                                                                         16,764            54,271
 Net (increase) decrease in inventories                                                                       (374,336 )         560,000
 Net (increase) decrease in prepaid and other assets                                                          (252,539 )         405,491
 Net decrease in other assets                                                                                    3,247            60,742
 Net (decrease) increase in accounts payable – related parties                                                 (41,847 )          13,144
 Net increase (decrease) in other liabilities other than short-term borrowings                                 605,740          (331,389 )
Net cash (used in) provided by operating activities                                                         (1,144,406 )          77,529
Investing activities:
Acquisition of furniture and equipment                                                                       (124,151 )           (41,151 )

Financing activities:
Principal payments on notes and leases payable                                                                (13,590 )         (714,434 )
Lease payable                                                                                                  26,410                  -
Notes payable - Abraxas                                                                                       109,759                  -
Payments for financing fees                                                                                   (10,960 )          (40,000 )
Proceeds from equity investment                                                                             1,999,967          3,999,972
Net cash provided by financing activities                                                                   2,111,586          3,245,538

Effect of exchange rate changes on cash and cash equivalents                                                   (76,144 )                 -

Net increase in cash and equivalents                                                                          766,885          3,281,916
Cash and equivalents, beginning of the period                                                               5,406,239          2,224,625
Cash and equivalents, end of the period                                                                $    6,173,124      $   5,506,541


Non-cash financing for the six months ended June 30, 2010:
- $250,000 of our convertible notes payable was converted into shares of our common stock.



                 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


                                                                       F-4
                                           Notes to Condensed Consolidated Financial Statements

                                        Three and Six Month Periods ended June 30, 2010 and 2009

                                                                (Unaudited)

Note 1.    Basis of Presentation

           The accompanying unaudited condensed consolidated balance sheet as of June 30, 2010 , condensed consolidated statements of
           operations for the three and six months ended June 30, 2010 and 2009, and the comprehensive loss, and cash flows for the six
           months ended June 30, 2010 and 2009 have been prepared in accordance with generally accepted accounting principles in the
           United States of America (―GAAP‖) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of
           Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete
           financial statements. It is suggested that these condensed financial statements be read in conjunction with the audited financial
           statements and notes thereto included in the Annual Report of Ophthalmic Imaging Systems’ (the ―Company‖) for the year ended
           December 31, 2009 on Form 10-K. In the opinion of management, the accompanying condensed consolidated financial statements
           include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our financial position
           and results of operations for the periods presented. The results of operations for the period ended June 30, 2010 are not necessarily
           indicative of the operating results expected for the full year. Certain reclassifications have been made to prior period amounts to
           conform to classifications adopted in the current period.

Note 2.    Inventories
           Inventories, which consist primarily of purchased system parts, subassemblies and assembled systems, are stated at the lower of
           cost (determined using the first-in, first-out method) or market.

           Inventories consist of the following:



                                                                                                                                 As of
                                                                                                       As of                   December
                                                                                                    June 30, 2010               31, 2009
 Raw materials                                                                                    $        355,641         $          240,953
 Work-in-process                                                                                           475,311                    392,440
 Finished goods                                                                                            514,830                    357,932

                                                                                                  $       1,345,782        $          991,325




Note 3.    Loss Per Share

           Basic loss per share which excludes dilution, is computed by dividing loss available to common stockholders by the
           weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution
           that could occur if securities or other agreements to issue common stock, such as stock options, warrants or convertible debt,
           result in the issuance of common stock, which shares in the earnings of the Company. The treasury stock method is applied to
           determine the dilutive effect of convertible or exercisable securities in computing diluted earnings per share. The Company
           currently is in a loss position and does not calculate diluted earnings per share.




                                                                     F-5
Note 4.   Related Party Transactions

          U.M. AccelMed, Limited Partnership

          As of June 30, 2010, U.M. AccelMed, Limited Partnership, an Israeli limited partnership (―AccelMed‖) is our largest shareholder
          with 13,338,603 shares of our common stock or 44%. On June 24, 2009 AccelMed acquired 9,633,228 shares and a warrant to
          purchase up to 3,211,076 shares of our common stock for an aggregate purchase price of $3,999,972. This 1 st installment warrant
          has an exercise price of $1.00 per share and expires on June 23, 2012. On May 26, 2010 the 2 nd and final installment was
          completed, under which we issued to AccelMed 3,581,089 shares and a warrant to purchase up to 1,193,696 shares for an
          aggregate purchase price of $1,999,967. The 2 nd installment warrant has an exercise price of $1.00 per share and expires on June
          23, 2012. The remaining 124,286 shares of common stock were purchased from MediVision Medical Imaging Ltd. on January 6,
          2010 at a purchase price of $0.70 per share.

          MediVision Medical Imaging Ltd.

          As of June 30, 2010, MediVision Medical Imaging Ltd., an Israeli corporation (―MediVision‖), is our second largest shareholder
          with 9,112,446 shares of our common stock, or 30.1%.

           On October 21, 2009 we purchased substantially all the assets of MediVision (the ―MediVision Asset Purchase‖). At June 30,
          2010, the carrying value of the assets acquired from MediVision were as follows: intangible assets related to customer
          relationships were $448,959, intangible assets related to the Electro-optical Unit were $199,000, and goodwill was $807,000.
          During the three and six months ended June 30, 2010, the Company recognized revenue of $304,583 and $587,408 and net losses
          of $85,402 and $171,412, related to the business operations purchased in connection with the MediVision Asset Purchase. At June
          30, 2010 the noncontrolling interest related to the business operations purchased from MediVision was $450,915.


          Escrow Agreement

           Pursuant to the terms of the MediVision Asset Purchase Agreement (the ―APA‖) an Escrow Agreement (the ―Escrow
          Agreement‖) between us, MediVision and Stephen L. Davis, Esq. dated June 24, 2009, MediVision deposited 5,793,452 shares
          (the ―Escrow Shares‖) of our common stock into escrow. If MediVision failed to make certain payments under the APA, the
          Escrow Shares will be distributed to us or sold and the proceeds thereof distributed to us. The agreement will terminate upon the
          later of (i) October 21, 2011 or (ii) the satisfaction and discharge of the $1,800,000 claim made by the Office of the Chief
          Scientist of the Israeli Ministry of Industry, Trade & Labor to MediVision. On ___ 2010 MediVision satisfied the $1,800,000
          claim made by the Office of Chief Scientist of the Israeli Ministry of Industry, Trade & Labor.

          Relationships

          Gil Allon (our Chief Executive Officer), together with Noam Allon, President and Chief Executive Officer of MediVision, Gil
          Allon’s brother and a former director of OIS own 20.31% of MediVision’s ordinary shares. Ariel Shenhar (our Chief Financial
          Officer), together with Yuval Shenhar, his brother, own 1.06% of MediVision’s ordinary shares.

          CCS Pawlowski GmbH

          CCS Pawlowski GmbH, a German corporation (―CCS‖), was formerly a subsidiary of MediVision which owned 63% of CCS’
          ownership interests. We acquired this ownership interest in connection with the MediVision Asset Purchase. After completion of
          the MediVision Asset Purchase all inter-company sales were eliminated upon consolidation.


          MediStrategy, Ltd.

          Effective January 1, 2010, OIS Global entered an agreement with MediStrategy Ltd., an Israeli company owned by Noam Allon
          ("MS"), for Mr. Allon's consulting services. Under the agreement, MS will be compensated approximately $18,000 monthly
          effective January 1, 2010 through December 31, 2010.




                                                                  F-6
Note 5.       Share-based Compensation

              At June 30, 2010, we have four active stock-based compensation plans (the ―Plans‖). Options granted under these plans generally
              have a term of ten years from the date of grant unless otherwise specified in the option agreement. The plans generally expire ten
              years from the inception of the plans. The majority of options granted under these agreements have a vesting period of three to
              four years. Incentive stock options under these plans are granted at fair market value on the date of grant and non-qualified stock
              options granted can not be less than 85% of the fair market value on the date of grant.

              A summary of the changes in stock options outstanding under our equity-based compensation plans during the three months
              ended June 30, 2010 is presented below:

                                                                                     Weighted
                                                                     Weighted        Average
                                                                     Average        Remaining         Aggregate
                                                                     Exercise       Contractual        Intrinsic
                                                      Shares          Price        Term (Years)          Value
          Outstanding at January 1, 2010               3,584,926      $0.60            6.65            $537,739
          Granted                                        208,964      $0.91            9.54             $18,807
          Exercised                                            --        --             --                  --
          Forfeited/Expired                                    --        --             --                  --
          Outstanding at June 30, 2010                 3,793,890      $0.62            6.86           $1,441,678
          Exercisable at June 30, 2010                 2,727,460      $0.56            4.07           $1,200,082


              We use the Black-Scholes-Merton option valuation model to determine the fair value of stock-based compensation. The
              Black-Scholes-Merton model incorporates various assumptions including the expected term of awards, volatility of stock price,
              risk-free rates of return and dividend yield. The expected term of an award is generally no less than the option vesting period and
              is based on our historical experience. Expected volatility is based upon the historical volatility of our stock price. The risk-free
              interest rate is approximated using rates available on U.S. Treasury securities with a remaining term equal to the option’s expected
              life. We use a dividend yield of zero in the Black-Scholes-Merton option valuation model as we do not anticipate paying cash
              dividends in the foreseeable future.

              As of June 30, 2010, we had $41,254 of unrecognized expenses related to non-vested stock-based compensation, which is
              expected to be recognized through 2013. The total fair value of options vested and the incremental expense for stock-based
              compensation during the three and six months ended June 30, 2010 was $ 9,836 and $18,795, respectively. The total fair value of
              options vested and the incremental expense for stock-based compensation during the three and six months ended June 30, 2009
              was $7,651 and $16,711, respectively.

              In calculating compensation related to stock option grants for the three and six months ended June 30, 2010, the fair value of each
              stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted
              average assumptions: dividend yield none; expected volatility of 47.96%, risk-free interest rate of 3.69%, and expected term of 10
              years. The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical
              volatility of our share price. The expected term is estimated based on a review of historical and future expectations of employee
              exercise behavior.

              In connection with the 1 st installment of the AccelMed private placement, we also issued to the placement agent, an option to
              purchase 123,500 shares of our common stock at an exercise price of $0.01 per share. This option expires on June 23, 2012. We
              recorded the fair value of the options using the Black-Scholes-Merton option valuation model, as a reduction to our common
              stock and an increase in additional paid-in-capital in the amount of $47,045.

              In connection with the 2 nd installment of the AccelMed private placement, we issued to the placement agent, an option to
              purchase 36,464 shares of our common stock at an exercise price of $0.01 per share. This option expires on May 26, 2013. We
              recorded the fair value of the options using the Black-Scholes-Merton option valuation model, as a reduction to our common
              stock and an increase in additional paid-in-capital in the amount of $18,491.

              Abraxas Medical Solutions (―Abraxas‖)

              As of June 30, 2010, we had $999 of unrecognized expenses related to non-vested stock-based compensation, which is expected
              to be recognized through 2011. The total fair value of options vested and the incremental expense for stock-based compensation
during the three and six months ended June 30, 2010 was $166 and $332, respectively.




                                                       F-7
Note 6.   Convertible Notes

          In 2007 and 2009, we issued to The Tail Wind Fund Ltd. and Solomon Strategic Holdings, Inc. (the ―Holders‖) an aggregate
          of $2,750,000 in principal amount of our 6.5% Convertible Notes Due October 31, 2011 (the ―Notes‖) and warrants to purchase
          shares of our common stock. As of June 30, 2010 the remaining principal balance on the notes was $1,125,000 which is
          convertible into 1,057,132 shares of our common stock at an adjusted conversion price of $1.06 per share. The Holders also held,
          as of June 30, 2010, warrants to purchase an aggregate of 950,357 shares of our common stock at an exercise price of $1.21 per
          share and expire on October 29, 2012 and warrants to purchase aggregate of 500,000 shares of our common stock at an exercise
          price of $1.00 per share and expire on June 24, 2012. Our next principal payment on the notes will be due February 28, 2011.

          We computed the intrinsic value of the effective conversion price based on the proceeds received for or allocated to the
          convertible instrument for the embedded conversion option. Thus, we first allocated the proceeds to the convertible instrument
          (the notes) and any other detachable instruments included in the exchange (such as detachable warrants) on a relative fair value
          basis. We then calculated the effective conversion used to measure the intrinsic value, if any, of the embedded conversion option
          based on the Black-Scholes-Merton option valuation model. We adjust for the changes in the Black-Scholes-Merton option
          valuation model at each reporting period.

          The impact of this adjustment to our 2010 financial statements to date is an increase to interest expense of $178,639 an increase to
          the discount on the Notes of $9,606 and an increase to additional paid-in-capital of $152,011 .

          As of June 30, 2010, the following weighted average assumptions were used: dividend yield none, expected volatility of 51.96%,
          risk-free interest rate of 1.54%, and expected term of 2.33 years. As of June 30, 2010, there was $283,182 of additional
          paid-in-capital and $46,605 of discount related to the warrants.

Note 7.   Warranty Obligations

          We generally offer a one-year warranty to our customers. Our warranty requires us to repair or replace defective products during
          the warranty period. At the time product revenue is recognized, we record a liability for estimated costs that may be incurred
          under our warranties. The costs are estimated based on historical experience and any specific warranty issues that have been
          identified. The amount of warranty liability accrued reflects our best estimate of the expected future cost of honoring our
          obligations under the warranty plans. We periodically assess the adequacy of our recorded warranty liability and adjust the
          balance as necessary.

          The following provides a reconciliation of changes in our warranty reserve:

                                                                                        Three Months Ended             Six Months Ended
                                                                                              June 30,                      June 30,
                                                                                         2010         2009             2010         2009
          Warranty balance at beginning of period                                        $132,950       $77,250          $90,000      $67,000
          Reductions for warranty services provided                                       (52,350)     (36,925)         (84,200)     (59,425)
          Changes for accruals in current period                                            82,000       43,100          156,800       75,850
          Warranty balance at end of period                                              $162,600       $83,425        $162,600       $83,425




                                                                   F-8
Note 8.   Segment Reporting

          Our business consists of two operating segments: OIS and Abraxas, our wholly-owned subsidiary. Our management reviews
          Abraxas’ results of operations separately from that of OIS. Our operating results for Abraxas exclude income taxes. The provision
          for income taxes is calculated on a consolidated basis, and accordingly, is not presented by segment. It is excluded from the
          measure of segment profitability as reviewed by our management. CCS does not meet the materiality requirements for segment
          reporting and accordingly, CCS’ financial information is reported as Other in the following table.

          We evaluate our reporting segments in accordance with FASB Accounting Standards Codification Topic 280, Segment Reporting
          (―Topic 280‖). Our Chief Financial Officer (―CFO‖) has been determined to be the Chief Operating Decision Maker as defined by
          Topic 280. The CFO allocates resources to Abraxas based on its business prospects, competitive factors, net sales and operating
          results.

          All significant intercompany balances and transactions have been eliminated in consolidation.

          The following presents our financial information by segment for the three and six months ended June 30, 2010 and 2009:



                                                    Three months ended                    Six months ended
                                                 June 30,         June 30,            June 30,          June 30,
                  Statement of Income:             2010             2009                2010              2009
                  Net sales:
                      OIS                $        3,680,200   $     2,418,331     $     6,895,925     $   4,699,800
                      Abraxas                       827,996           480,285           1,594,561           608,347
                      Other                         251,932                 -             402,957                 -
                                   Total $        4,760,128   $     2,898,616     $     8,893,443     $   5,308,147

                  Gross profit:
                      OIS                    $    2,398,516   $     1,358,684     $     4,311,130     $   2,637,399
                      Abraxas                       340,563           126,722             611,205           (12,926 )
                      Other                         107,101                 -             190,407                 -
                                     Total $      2,846,180   $     1,485,406     $     5,112,742     $   2,624,473

                  Operating Loss:
                     OIS                     $       62,123 $      (4,709,443 )   $      (100,037 )   $   (5,055,769 )
                     Abraxas                       (443,952 )        (398,860 )          (901,294 )       (1,114,420 )
                     Other                            4,052                 -             (15,555 )                -
                                     Total $       (377,777 ) $    (5,108,303 )   $    (1,016,886 )   $   (6,170,189 )


                  Net loss (consolidated):   $     (490,488 ) $    (4,004,544 )   $    (1,347,643 )   $   (5,112,493 )




                                                                  F-9
F-10
                                   OPHTHALMIC IMAGING SYSTEMS
                                   CONSOLIDATED BALANCE SHEETS



                                                                          December 31,
                                                                       2009            2008
                                 ASSETS

Current assets:
Cash and cash equivalents                                          $    5,406,239   $    2,224,625
Accounts receivable, net of allowance for doubtful
accounts of $434,949 and $210,146 as of
December 31, 2009 and 2008, respectively                                2,710,987        1,698,093
Receivables from related parties                                                -          500,365
Notes receivable from related party                                             -        2,878,234
Inventories                                                               991,325        1,206,733
Prepaid expenses and other current assets                                 179,451          233,418
         Total current assets                                           9,288,002        8,741,468

Restricted cash                                                           158,213          158,031
Furniture and equipment, net                                              481,394          409,280
Licensing agreement                                                             -          273,808
Prepaid products                                                                -          560,000
Capitalized imaging software                                              336,475          504,711
Capitalized software development                                          767,220        1,150,831
AcerMed asset purchase                                                    380,053          570,077
Goodwill                                                                  807,000                -
Customer relationship intangible assets                                   481,364                -
Other intangible assets                                                   199,000                -
Prepaid financing                                                          22,195           88,780
Other assets                                                              116,461          167,723
         Total assets                                              $   13,037,377   $   12,624,709



                                                     (Continued)



                                                        F-11
                                    OPHTHALMIC IMAGING SYSTEMS
                                    CONSOLIDATED BALANCE SHEETS
                                             (Continued)



                                                                                            December 31,
                                                                                     2009                  2008
         LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable                                                            $           867,672    $          831,980
Accounts payable related party                                                           41,847                     --
Accrued liabilities                                                                   1,115,902             1,072,551
Deferred extended warranty revenue – current portion                                  1,632,491             1,522,308
Customer deposits                                                                       561,245               101,678
Notes payable - current portion                                                          34,048             1,611,063
         Total current liabilities                                                    4,253,205             5,139,580

Deferred extended warranty revenue, less current portion                                247,231               388,516
Line of credit                                                                          150,000               150,000
Notes payable, less current portion                                                   2,946,179               500,159
         Total liabilities                                                            7,596,615             6,178,255

Commitments and contingencies

Ophthalmic Imaging Systems stockholders’ equity:
Common stock, no par value, 100,000,000 shares authorized; 26,500,059
   and 16,866,831 shares issued and outstanding at December 31, 2009
   and 2008, respectively                                                         20,089,592            16,504,773
Additional paid in capital                                                           420,610                   966
Accumulated deficit                                                              (15,536,170 )         (10,059,285 )
Cumulative translation adjustment                                                      2,241                     -
        Total Ophthalmic Imaging Systems’ stockholders’ equity                     4,976,273             6,446,454

Noncontrolling Interest                                                                 464,489                     -
        Total liabilities and stockholders’ equity                          $        13,037,377    $       12,624,709



                                     The accompanying notes are an integral
                                  part of these consolidated financial statements.



                                                       F-12
                                                 OPHTHALMIC IMAGING SYSTEMS
                                           CONSOLIDATED STATEMENT OF OPERATIONS
                                            For the Years Ended December 31, 2009 and 2008

                                                                                             2009                2008

             Sales – products                                                         $      9,530,555      $    7,990,300
                 Cost of sales – products                                                    3,799,236           3,811,212
                 Cost of sales – amortization                                                  741,871                   -
                 Gross profit – products                                                     4,989,448           4,179,088

             Sales – products to related parties                                               338,492             822,980
                 Cost of sales – products to related parties                                   201,093             444,186
                 Gross profit –products to related parties                                     137,399             378,794

             Sales – service                                                                 3,700,253           3,677,837
                 Cost of sales – service                                                     1,500,079           1,513,085
                 Gross profit – service                                                      2,200,174           2,164,752

             Net revenues                                                                   13,569,300          12,491,117
             Cost of sales                                                                   6,242,279           5,768,483
             Gross profit                                                                    7,327,021           6,722,634

             Operating expenses:
                Sales and marketing                                                          4,124,480           4,034,816
                General and administrative                                                   2,255,389           2,070,212
                Impairment related to the debt of MediVision                                 4,436,187                   -
                Research and development                                                     2,559,478             332,123
                Research and development-related parties                                       294,014           1,887,537

                    Total operating expenses                                                13,669,548           8,324,688

                    Loss from operations                                                    (6,342,527 )        (1,602,054 )
             Other income (expense):
                 Interest expense                                                             (215,729 )          (145,255 )
                 Other expense                                                                (186,592 )          (173,890 )
                 Interest income                                                                63,239             234,675
                 Other income-legal settlement                                               1,200,000                   -

                    Total other income (expense)                                               860,918             (84,470 )

                    Net loss before provision for income tax expense                       (5,481,609)          (1,686,524 )

             Provision for income tax expense                                                    (3,787 )       (1,299,000 )

                    Net loss                                                                (5,485,396 )        (2,985,524 )

             Less: Noncontrolling interest’s share                                               8,511                    -

             Net loss attributable to Ophthalmic Imaging Systems                      $     (5,476,885 )    $   (2,985,524 )

             Basic loss per share                                                     $           (0.25 )   $         (0.18 )

             Shares used in the calculation of basic loss per share                         21,842,234          16,866,831

The amount of anti-dilutive shares for the twelve months ended December 31, 2009 and 2008 are 520,748 and 69,167, respectively.
   The accompanying notes are an integral
part of these consolidated financial statements.



                     F-13
                                   OPHTHALMIC IMAGING SYSTEMS
                            CONSOLIDATED STATEMENT OF OPERATIONS
                         As of and For the Years Ended December 31, 2009 and 2008




                                                                                     2009               2008

Net loss attributable for Ophthalmic Imaging Systems                          $     (5,476,885 )   $   (2,985,524 )

Other comprehensive income
Foreign currency translation                                                             2,241                   -

Comprehensive net loss                                                        $     (5,474,644 )   $   (2,985,524 )




                                    The accompanying notes are an integral
                                 part of these consolidated financial statements.




                                                       F-14
                                               OPHTHALMIC IMAGING SYSTEMS
                                    CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
                                          For the Years Ended December 31, 2009 and 2008


                                       Ophthalmic Imaging Systems’ Shareholders’ Equity
                                                           Additional                                                                              Total
                                 Common Stock                Paid in      Accumulated                Cumulative         Non-Controlling        Stockholders’
                             Shares         Amount          Capital          Deficit                 Translation           Interest               Equity
Balance, January 1, 2008     16,866,831 $ 16,474,720 $ 191,104 $              (7,073,761 )                      —                      —     $      9,592,063
Stock based
     compensation                   —            30,053              —                    —                   —                       —               30,053
Additional paid in capital
     – convertible note &
     warrants                        —                —        (190,138 )                 —                   —                       —             (190,138 )
Net loss                             —                —              —            (2,985,524 )                —                       —           (2,985,524 )

Balance, December 31,
    2008                     16,866,831       16,504,773            966          (10,059,285 )                —                       —            6,446,454


Stock based
     compensation                    —            32,220             —                    —                   —                       —               32,220
Stock issuance, net of
     $158,899 issuance
     cost and $288,473
     warrant fair market
     value                    9,633,228        3,552,599       288,473                    —                   —                       —            3,841,072
Additional paid in capital
     – convertible note &
     warrants                        —                —        131,171                    —                    —                      —              131,171
Noncontrolling interest              —                —             —                     —                    —    $            473,000             473,000
Cumulative translation               —                —             —                     —      $          2,241                     —                2,241
Net loss                             —                —             —             (5,476,885 )                 —                  (8,511 )        (5,485,396 )
Balance, December 31,
     2009                    26,500,059   $   20,089,592   $   420,610      $    (15,536,170 )   $          2,241   $            464,489     $     5,440,762




                                                     The accompanying notes are an integral
                                                       part of these financial statements.




                                                                          F-15
                                   OPHTHALMIC IMAGING SYSTEMS
                             CONSOLIDATED STATEMENT OF CASH FLOWS
                              For the Years Ended December 31, 2009 and 2008

                                                                                   2009               2008
Cash flows from operating activities:
  Net loss                                                                    $   (5,485,396 )   $   (2,985,524 )

Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                    237,224            187,796
    Loss (gain) on disposal of asset                                                     207             (2,114 )
    Stock based compensation expense                                                  32,220             30,053
    Discount related to note payable                                                 131,171           (23,817)
    Change in accounts receivable                                                 (1,043,376 )          832,268
    Provision for bad debt                                                           224,803              5,482
    Change in accounts receivable – related parties                                        -          (103,059 )
    Write-off of MediVision assets                                                 3,152,042                  -
    Change in related party receivable                                               500,365                  -
    Change in prepaid products                                                       560,000                  -
    Change in inventories                                                            307,939          (460,391 )
    Change in prepaid expenses and other current assets                               53,967            274,314
    Amortization of prepaid financing related to note payable                         66,585             59,585
    Amortization of Symphony Web software                                            168,236                  -
    AcerMed software license amortization                                            573,635                  -
    Change in other assets                                                            49,317             10,187
    Change in accounts payable                                                       (13,968 )          105,407
    Change in accounts payable – related parties                                      41,847                  -
    Change in accrued liabilities                                                    (51,501 )        (364,762 )
    Change in deferred extended warranty revenue                                     (31,102 )          306,509
    Change in customer deposits                                                      463,782             46,244
    Change in deferred tax asset                                                           -         1,342,000
             Net cash used in operating activities                                   (62,003 )       (739,822)

Cash flows from investing activities:
    AcerMed asset purchase                                                                 -           (479,262 )
    Advance to related parties                                                             -         (1,731,362 )
    Development of imaging software                                                        -           (424,244 )
    Software development capitalization                                                    -         (1,150,831 )
    Other capitalized software investments                                                 -            (88,418 )
    Licensing rights                                                                       -            (24,112 )
    Patents                                                                                -             59,483
    APA acquisition, net of cash acquired                                         (1,235,523 )
    Acquisition of furniture and equipment                                          (132,951 )         (178,125 )
             Net cash used in investing activities                                (1,368,474 )       (4,016,871 )

Cash flows from financing activities:
    Principal payments on notes payable                                            (732,984 )          (648,966 )
    Proceeds from note payable, United Mizrahi Bank                               1,500,000                   -
    Proceeds from sale of stock, net of expenses                                  3,999,971                   -
    Stock issuance costs (payment of due diligence)                                (158,899 )                 -
             Net cash provided by (used in) financing activities                  4,608,088           (648,966)

Effect of exchange rate changes on cash and cash equivalents                           4,003                   -

Net increase (decrease) in cash and cash equivalents                              3,181,614          (5,405,659 )
Cash and cash equivalents, beginning of the year                                  2,224,625           7,630,284
Cash and cash equivalents, end of the year                                    $   5,406,239      $    2,224,625


Supplemental schedule of cash flow information:
Cash paid for taxes                                                   $     12,405   $     5,619
Cash paid for interest                                                $     19,987   $   120,225

                            The accompanying notes are an integral
                         part of these consolidated financial statements.



                                              F-16
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Ophthalmic Imaging Systems (the ―Company,‖ ―OIS,‖ ―we,‖ ―us‖ or ―our‖) was incorporated under the laws of the State of California
     on July 14, 1986. We are headquartered in Sacramento, California and are engaged in the business of designing, developing,
     manufacturing and marketing digital imaging systems, image enhancement and analysis software and informatics solutions for use by
     practitioners in the ocular health field. Our products are used for a variety of standard diagnostic test procedures performed in most
     eye care practices.

     Principals of Consolidation

     In January 2008, the Company, through Abraxas Medical Solutions, Inc., a wholly-owned subsidiary (―Abraxas‖), purchased
     substantially all of the assets of AcerMed, Inc., a leading software developer for Electronic Medical Records (EMR) and Practice
     Management (PM) software.

     On October 21, 2009, the Company completed its Asset Purchase transaction with MediVision to purchase substantially all the assets
     of MediVision, which was completed on October 21, 2009. Such assets include the European operations which consisted of
     MediVision’s business as conducted by CCS Pawlowski GmbH (―CCS‖) and its branch office in Belgium (the ―OIS Europe‖).
     Accordingly, the Company began consolidating the results of operations of CCS and OIS Europe as of October 21, 2009.

     The consolidated financial statements include the accounts of OIS, Abraxas, the 63% investment in CCS, OIS Europe, and OIS
     Global. All significant intercompany balances and transactions have been eliminated in consolidation.

     Foreign currencies

     The consolidated financial statements are presented in the reporting currency of Ophthalmic Imaging Systems, U.S. Dollars (―USD‖).
     The functional currency for the Company’s wholly-owned subsidiary, OIS Europe and its 63% investment in CCS, is the European
     Union Euro (€). Accordingly, the balance sheet of OIS Europe and CCS is translated into USD using the exchange rate in effect at
     the balance sheet date. Revenues and expenses are translated using the average exchange rates in effect during the period. Translation
     differences are recorded directly in shareholders’ equity as ―Foreign currency translation adjustment.‖ Gains or losses on transactions
     denominated in a currency other than the subsidiaries’ functional currency which arise as a result of changes in foreign exchange rates
     are recorded in the statement of operations. The statement of cash flows reflects the reporting currency equivalent of foreign currency
     cash flows using the exchange rates in effect at the time of the cash flow.

     Segment Reporting

     Our business consists of two operating segments: OIS and Abraxas, our wholly-owned subsidiary. Our management reviews
     Abraxas’ results of operation separately from that of OIS. Our operating results for Abraxas exclude income taxes. The provision for
     income taxes is calculated on a consolidated basis, and accordingly, is not presented by segment. It is excluded from the measure of
     segment profitability as reviewed by our management. CCS does not meet the materiality requirements for segment reporting, and
     accordingly, CCS’ financial information is reported as Other in the following table.




                                                                 F-17
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      We evaluate our reporting segments in accordance with FASB Accounting Standards Codification Topic 280, Segment Reporting
      (―Topic 280‖). Our Chief Financial Officer (―CFO‖) has been determined as the Chief Operating Decision Maker as defined by Topic
      280. The CFO allocates resources to Abraxas based on its business prospects, competitive factors, net sales and operating results.

      All significant intercompany balances and transactions have been eliminated in consolidation.

      The following presents our financial information by segment for the years ended December 31, 2009 and 2008:


     2009                                                         OIS               Abraxas               Other            Total
     Statement of Operations:

     Net revenues                                           $    11,666,981     $     1,752,474       $    149,845     $   13,569,300

     Gross profit                                                 6,812,957            401,459             112,605          7,327,021

     Operating loss                                              (4,445,823 )        (1,879,061 )          (17,643 )       (6,342,527 )

     Net loss (Consolidated)                                                                                               (5,485,396 )

     Balance Sheet :

     Assets                                                      10,848,803           1,592,057            596,517         13,037,377

     Liabilities                                                  6,960,164            511,580             124,871          7,596,615

     Stockholders’ equity                                   $     7,343,181     $    (2,361,507 )     $    459,088     $    5,440,762

     2008
     Statement of Operations:

     Net revenues                                           $    12,192,867     $      298,250                    -    $   12,491,117

     Gross profit                                                 6,872,733           (150,099 )                  -         6,722,634

     Operating loss                                                (848,012 )         (754,042 )                  -        (1,602,054 )

     Net loss (Consolidated)                                                                                               (2,985,524 )

     Balance Sheet:

     Assets                                                      10,720,591           1,904,118                   -        12,624,709

     Liabilities                                                  5,992,986            185,269                    -         6,178,255

     Stockholders’ equity                                   $     7,231,300     $     (784,846 )                  -    $    6,446,454




                                                                  F-18
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Use of Estimates

     The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted
     in the United States of America, which require management to make estimates and assumptions. These estimates and assumptions
     affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and
     expenses during the reporting periods. Actual results could differ from those estimates.

     Change in Rebate Estimates

     Our rebate program provides customers with an incentive to purchase system upgrades. When purchasing an upgrade, we provide the
     customer with a discount upon receipt of the old system. Typically, customers pay for the upgrade net of the discount and the old
     system is returned to us.

     The quote/purchase order the customer signs includes a line item for the rebate discount, which is then calculated into the net total.
     The quote specifically states that the old system must be received within 30 days from the completion of the installation of the upgrade
     for the customer to receive the discount. We then bill the customer for the full amount. At this point we record the gross sale amount
     and reserve for the rebate portion of the sale. If a customer pays the full amount and the old system has not been returned yet, we
     assume that the customer will return the old system and record the rebate portion of the payment in a deposit liability account. If the
     customer pays the net amount and the old system has not been returned, we continue to bill the customer for the rebate portion until
     the old system is returned or the rest of the amount due is paid.

     When 30 days have elapsed from the date the upgrade has been installed and the old system has not been received, we contact the
     customer and ask what the customer intends to do with the old system. If the customer intends to return the system, we continue to
     record the reserve. If the customer disposed of the system or intends to keep the system or contact cannot be made, we bill the
     customer for the full price of the upgrade system and stop reserving for the rebate credit. Until then, we continue to reserve for the
     rebate until we receive payment for the full price of the upgrade or the old system. These arrangements are not pervasive with our
     customers. If the old system is not returned, we stop reserving for the rebate portion. If the old system in not returned and we have
     received the full invoice amount, we remove the rebate portion of the payment out of the deposit liability account and apply it to the
     sale. At this point we stop reserving for the rebate.

     If the old system is returned, we remove the rebate portion from the reserve account and reduce the accounts receivable.

     Cash and Cash Equivalents

     For purposes of the statement of cash flows, the Company considers highly liquid investments with original maturities of three months
     or less as cash equivalents.

     At December 31, 2009, the Company had deposits with carrying amounts of $5,406,239 including bank balances of $5,421,704.
     Federally insured balances totaled $926,354 and uninsured balances totaled $4,495,350 at December 31, 2009.




                                                                  F-19
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Concentrations of Credit Risk and Export Sales

     Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash
     investments and trade receivables. The Company places its temporary cash investments with high quality financial institutions.
     Concentrations of credit risk with respect to trade receivables are limited due to the Company’s policy of requiring deposits from
     customers, the number of customers we have and their geographic dispersion. The Company maintains reserves for potential credit
     losses and such losses have historically been within management’s expectations. No single customer comprised 10% or more of net
     sales during the years ended December 31, 2009 or 2008.

     Revenues from sales to customers located outside of the United States accounted for approximately 9% and 7% of net sales during the
     years ended December 31, 2009 and 2008, respectively.

     Inventories

     Inventories, which consist primarily of purchased system parts, subassemblies and assembled systems, are stated at the lower of cost
     (determined using the first-in, first-out method) or market.

     Allowance for Doubtful Accounts

     The Company generally offers customer terms of 50% deposit paid up-front, remaining 50%, less installation portion, net 15 days
     after shipment of product, and the installation portion after installation is complete. The allowance for doubtful accounts balance is
     estimated based on historical experience and any specific customer/installation issues that have been identified. The Company
     periodically assesses the adequacy of its recorded allowance for doubtful accounts, and adjusts the balance as necessary.

     Changes in the allowance for doubtful accounts were as follows:

                        Allowance at January 1, 2008                                            $    204,664
                        Provision                                                                     69,177
                        Bad debt                                                                     (63,695 )

                        Allowance at December 31, 2008                                               210,146
                        Provision                                                                    425,598
                        Bad debt                                                                    (200,795 )

                        Allowance at December 31, 2009                                          $    434,949


     Furniture and Equipment

     Furniture and equipment are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful lives of the
     assets. The estimated useful lives generally range from three to seven years. The Company evaluates furniture and equipment for
     financial impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully
     recoverable.




                                                                 F-20
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Software Capitalization

     In 2008, we capitalized our EMR and PM software that we acquired from AcerMed through the bankruptcy court. This software was
     purchased with the intention that it would be sold, leased or marketed upon modification by our research and development team to our
     customers. The amount that we capitalized for this software was $570,077. During the first three months of 2009, we began to sell
     this software and we began to amortize this asset using the straight-line method of amortization over the economic life of the asset,
     which we concluded to be three years. Amortization expense related to these assets was $190,024 for the year ended December 31,
     2009.

     We also capitalized the development costs incurred to prepare this software for sale. Development costs were capitalized once
     technological feasibility was established. We believe that the software was technologically feasible when we began to capitalize the
     costs because we had worked with a model/prototype that had been in the market before our acquisition. The amount of development
     that we capitalized in connection with this software is $1,150,831. During the first three months of 2009, we began to sell this
     software, and we began to amortize this asset using the straight-line method of amortization over the economic life of the asset, which
     we concluded to be three years. Amortization expense related to this asset was $383,612 for the year ended December 31, 2009.

     In 2008, we also capitalized $504,711 of costs associated with the development of a web-based software once technological feasibility
     was established. During the first three months of 2009, we began to sell this software and we began to amortize this asset using the
     straight-line method of amortization over the economic life of the asset, which we concluded to be three years. Amortization expense
     related to this asset was $168,236 for the year ended December 31, 2009.

     Revenue Recognition

     Our revenue recognition policies comply with applicable accounting rules and regulations including FASB Accounting Standards
     Codification Topic 985 , Software, and Topic 605, Revenue , and Subtopic 25, Multiple-Element Arrangements . Under Topic
     605, Subtopic 25, the multiple components of our revenue are considered separate units of accounting in that revenue recognition
     occurs at different points of time for (1) product shipment, (2) installation and training services, and (3) service contracts based on
     performance or over the contract term as we incur expenses related to the contract revenue.

     Revenue for products is recognized when title passes to the customer, which is upon shipment, provided there are no conditions to
     acceptance, including specific acceptance rights. If we make an arrangement that includes specific acceptance rights, revenue is
     recognized when the specific acceptance rights are met. In addition, consideration received from our customer agreements are reliably
     measurable because the amount of the consideration is fixed and no specific refund rights are included in the arrangement and, thus,
     such consideration is reliably measurable. We defer 100% of the revenue from sales shipped during the period that we believe may be
     uncollectible.

     Installation revenue is recognized when the installation is complete. Separate amounts are charged and assigned in the customer quote,
     sales order and invoice, for installation and training services. These amounts are determined based on fair value, which is calculated in
     accordance with industry and competitor pricing of similar services and adjustments according to market acceptance. There is no price
     reduction in the product price if the customer chooses not to have us complete the installation.

     Extended product service contracts are offered to our customers and are generally entered into prior to the expiration of our one year
     product warranty. The revenue generated from these transactions is recognized over the contract period, normally one to four years.




                                                                  F-21
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     We do not have a general policy for cancellation, termination, or refunds associated with the sale of its products and services. All
     items are on one quote/purchase order with payment terms specified for the whole order.

     Warranty Reserve

     Our warranty reserve contains two components, a general product reserve recorded on a per product basis and specific reserves
     recorded as we become aware of system performance issues. The product reserve is calculated based on a fixed dollar amount per
     product shipped each quarter. Specific reserves usually arise from the introduction of new products. When a new product is
     introduced, we reserve for specific problems arising from potential issues, if any. As issues are resolved, we reduce the specific
     reserve. These types of issues can cause our warranty reserve to fluctuate outside of sales fluctuations.

     We estimate the cost of the various warranty services by taking into account the estimated cost of servicing routine warranty claims in
     the first year, including parts, labor and travel costs for service technicians. We analyze the gross profit margin of our service
     department, the price of our extended warranty contracts, factor in the hardware costs of the various systems, and use a percentage to
     calculate the cost per system to use for the first year manufacturer’s warranty.

     Shipping and Handling Costs

     Shipping and handling costs are included with cost of sales.

     Advertising Costs

     Advertising expenditures totaled $114,301 and $58,485, for the years ended December 31, 2009 and 2008, respectively.

     Income Taxes

     Deferred taxes are calculated using the liability method, whereby deferred tax assets are recognized for deductible temporary
     differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary
     differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
     Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some
     portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in
     tax laws and rates on the date of enactment.

     We calculate a tax provision quarterly and determine the amount of our deferred tax asset that will more-likely-than-not be used in the
     future. In doing so, we determine the amount of our unlimited and capped NOL amounts we will more likely than not be able to use,
     and the deferred tax asset amount related to the temporary differences of our balance sheet accounts.

     FASB Accounting Standards Codification Topic No. 740, Taxes , provides the accounting for uncertainty in income taxes
     recognized in a company’s financial statements. Topic No. 740 also prescribes a recognition threshold and measurement standard
     for the financial statement recognition and measurement of an income tax position taken or expected to be taken in a tax return. In
     addition, Topic No. 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
     disclosure and transition. We apply Topic No. 740 to all of our tax positions.




                                                                    F-22
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     We do not currently allocate our taxes between us and our subsidiary, Abraxas, due to the immaterial impact of Abraxas on our tax
     provision.

     Fair Value of Financial Instruments

     At December 31, 2009 and 2008, the Company’s financial instruments included cash, cash equivalents, receivables, accounts payable,
     accrued liabilities and borrowings. The fair value of these financial instruments approximated their carrying value because of the
     short-term nature or variable rate terms of these instruments.

     Loss Per Share

     Basic earnings (loss) per share which excludes dilution, is computed by dividing income (loss) available to common stockholders by
     the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution
     that could occur if securities or other contracts to issue common stock, such as stock options, result in the issuance of common stock,
     which shares in the earnings of the Company. The treasury stock method is applied to determine the dilutive effect of stock options in
     computing diluted earnings per share. The Company currently is in a loss position and does not calculate diluted earnings per share.

     Stock-based Compensation

     The Company uses a Black-Scholes-Merton option valuation model to determine the fair value of stock-based compensation. The
     Black-Scholes-Merton model incorporates various assumptions including the expected term of awards, volatility of stock price,
     risk-free rates of return and dividend yield. The expected term of an award is generally no less than the option vesting period and is
     based on the Company’s historical experience. Expected volatility is based upon the historical volatility of the Company’s stock price.
     The risk-free interest rate is approximated using rates available on U.S. Treasury securities with a remaining term equal to the option’s
     expected life. The Company uses a dividend yield of zero in the Black-Scholes-Merton option valuation model as it does not
     anticipate paying cash dividends in the foreseeable future.




                                                                  F-23
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Convertible Debt Securities and Detachable Warrants

     The Company entered into a Purchase Agreement with certain accredited investors pursuant to which we issued to the purchasers,
     convertible notes and warrants (See Note 5. Notes Payable).

     The Company computed the intrinsic value of the effective conversion price based on the proceeds received for or allocated to the
     convertible instrument, if any, of the embedded conversion option. Thus, the Company first allocated the proceeds received in this
     financing transaction that includes a convertible instrument to the convertible instrument and any other detachable instruments
     included in the exchange (such as detachable warrants) on a relative fair value basis. Then, the Company calculated the effective
     conversion used to measure the intrinsic value, if any, of the embedded conversion option based on the Black-Scholes-Merton option
     valuation model. The Company adjusts for the changes in the Black-Scholes-Merton option valuation model at each reporting period.
     (Assumptions used are displayed in table below.)

                                                                                      2009           2008
                        Dividend Yield                                                None           None
                        Expected Volatility                                           51.67          58.53
                        Risk Free Interest Rate                                        3.69           3.53
                        Expected terms (years)                                         3.00           3.83


     Impact of New Financial Accounting Statements

      FASB Accounting Standards Update No. 2010-8, Technical Corrections to Various Topics.

     In February 2010, the FASB issued Accounting Update No. 2010-8, Technical Corrections to Various Topics, to eliminate
     inconsistencies and to clarify guidance on various Codification Topics. Except for certain amendments to Topic 815 and the
     nullification of paragraph 852-740-45-2, Update No. 2010-08 will become effective for the first reporting period beginning after
     issuance. Management is currently evaluating the potential impact of Accounting Standards Update No. 2010-08 on our consolidated
     financial results.

     FASB Accounting Standards Update No. 2010-06, Fair Value Measurement and Disclosures.

     In January 2010, the FASB issued Accounting Update No. 2010-06, Fair Value Measurement and Disclosures , to improve
     disclosures about Fair Value Measurements. The amendments in this Update will require new disclosures related to the transfer in and
     out of Level 1 and 2, and require that a reporting company present Level 3 activity on a gross basis rather than one net number. In
     addition, the amendments in this Update clarify existing disclosures related to the level of disaggregation and disclosures about inputs
     and valuation techniques. Update No. 2010-06 will begin to become effective for reporting periods beginning after December 15,
     2009. Management is currently evaluating the potential impact of Accounting Standards Update No. 2010-06 on our consolidated
     financial results.

     FASB Accounting Standards Update No. 2010-04,        Accounting for Various Topics, Technical Corrections to SEC Paragraphs.

     In January 2010, the FASB issued Accounting Update No. 2010-4, Accounting for Various Topics, Technical Corrections to SEC
     Paragraphs , to update SEC staff announcements for codification references. The adoption of Accounting Standards Update No.
     2010-04 will not have a material impact on the consolidated financial statements.




                                                                  F-24
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     FASB Accounting Standards Update No. 2010-01 , Accounting for Distributions to Shareholders with Components of Stock and Cash.

     In January 2010, the FASB issued Accounting Update No. 2010-01 , Accounting for Distributions to Shareholders with Components
     of Stock and Cash , to clarify the accounting for a distribution to shareholders that offers the ability to elect to receive the entire
     distribution in cash or shares. Accounting Standards Update No. 2010-06 will be effective for reporting periods beginning after
     December 15, 2009. Management is currently evaluating the potential impact of Accounting Standards Update No. 2010-01 on its
     consolidated financial results.

     FASB Accounting Standards Update No. 2009-14 , Certain Revenue Arrangements That Include Software Elements, a Consensus of
     the FASB Emerging Issues Task Force.

     In October 2009, the FASB issued Accounting Standards Update No. 2009-14, Certain Revenue Arrangements That Include Software
     Elements, a Consensus of the FASB Emerging Issues Task Force, to amend guidance used to allocate and measure revenues by an
     enterprise that sells or leases tangible products in an arrangement that contains software that is more than incidental to the tangible
     product as a whole. The amendments in the Update require that hardware components of a tangible product containing software
     elements always be excluded from the software revenue guidance. The Update provides additional guidance on how to determine
     which software, if any, related to the tangible products also would be excluded from the scope of the software revenue guidance.
     Update No. 2009-14 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years
     beginning on or after June 15, 2010. Early adoption is permitted. Management is currently evaluating the potential impact of
     Accounting Standards Update No. 2009-14 on our consolidated financial results.

     FASB Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging
     Issues Task Force.

     In October 2009, the FASB issued Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements , a
     Consensus of the FASB Emerging Issues Task Force, to amend guidance which establishes a selling price hierarchy for determining
     the selling price of a deliverable in a multiple-deliverable revenue arrangement. The amendments in this Update also will replace the
     term fair value in the revenue allocation guidance with selling price to clarify that the allocation of revenues is based on entity-specific
     assumptions rather than assumptions of marketplace participation. In addition, the amendment revises certain disclosure
     requirements. Update No. 2009-13 will become effective prospectively for revenue arrangements entered into or materially modified
     in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. Management is currently evaluating the potential
     impact of Accounting Standards Update No. 2009-14 on our consolidated financial results.

     FASB Accounting Standards Update No. 2009-01, Generally           Accepted Accounting Principles.

     In October 2009, the FASB issued Accounting Standards Update No. 2009-01, Generally Accepted Accounting Principles, to amend
     the FASB Accounting Standards Codification for the issuance of the FASB Statement No. 168, the FASB Accounting Standards
     Codification and the Hierarchy of Generally Accepted Accounting Principles . The FASB Accounting Standards Codification will
     become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB. Rules and
     interpretive releases of the Security and Exchange Commission (SEC) under authority of federal securities laws are also sources of
     authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing
     non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the
     Codification will become nonauthoritative. The adoption of Update No. 2009-01 did not have a material impact on the consolidated
     financial statements.




                                                                   F-25
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     FASB Accounting Standards Codification Topic 855 , Subsequent Events.

     On June 30, 2009, we adopted Topic 855, Subsequent Events, which is generally based on Financial Accounting Standard 165 which
     establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial
     statements are issued or are available to be issued. Specifically, Topic 855 sets forth the period after the balance sheet date during
     which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure
     in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance
     sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the
     balance sheet date. The adoption of Topic 855 did not have a material impact on the consolidated financial statements.

     FASB Accounting Standards Codification Topic 810, Consolidation, Subtopic 10 Overall, Section 65, Transition Related to FASB
     Statement No. 160 Noncontrolling Interest in Consolidated Financial Statements – an amendment to ARB No.51.

     Topic 810, Consolidation , is based on Statement of Financial Accounting Standard No. 160, Noncontrolling Interest in Consolidated
     Financial Statements – an amendment of ARB 51, which we adopted on January 1, 2009. Topic 810 establishes accounting and
     reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Topic defines a
     noncontrolling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or
     indirectly, to a parent. Topic 810 requires, among other items, that a noncontrolling interest be included in the consolidated statement
     of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of
     both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent
     and noncontrolling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained
     noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income
     based on such fair value. The adoption of Topic 810 has had a material impact on our consolidated financial statements as related to
     the APA which closed on October 21, 2009. (For additional details, see Note 6. Related Party Transactions, MediVision Medical
     Imaging Ltd., MediVision Asset Purchase.)

     FASB Accounting Standards Codification Topic 810 , Consolidation.

     Topic 810 Consolidation, is generally based on Statement of Financial Accounting Standards No. 167, Amendments to FASB
     Interpretation No. 46(R), which was issued in June 2009, which among other things requires an enterprise to perform an analysis to
     determine whether the enterprise’s variable interest(s) give it a controlling financial interest in a variable interest entity; to require
     ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to eliminate the quantitative
     approach previously required for determining the primary beneficiary of a variable interest entity; to add an additional reconsideration
     event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that
     holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct
     the activities of the entity that most significantly impact the entity’s economic performance; and to require enhanced disclosures that
     will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest
     entity. Topic 810, Consolidation , became effective on January 1, 2010. Management is currently evaluating the potential impact of
     this Topic on our consolidated Financial Statements.

     FASB Accounting Standards Codification Topic 350 , Intangibles -- Goodwill and Other.

     Topic 350, Intangibles – Goodwill and Other, is generally based on Financial Staff Position (―FSP‖) 142-3, Determination of the
     Useful Life of Intangible Asset, which was issued by the FASB in April 2008, which among other things, amends the factors that
     should be considered in developing renewal or extension




                                                                   F-26
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     assumptions used to determine the useful life of a recognized intangible asset under Topic 350. The intent of the Topic is to improve
     the consistency between the useful life of a recognized intangible asset under Topic 350 and the period of expected cash flows used to
     measure the fair value of the asset, under Topic 805, Business Combinations, which is generally based on SFAS 141R, Business
     Combinations , and other GAAP principles. The provisions of Topic 350 are effective for fiscal years beginning after December 15,
     2008. Topic 350 is effective for our fiscal year beginning January 1, 2009. The adoption of Topic 350 did not have a material impact
     on the consolidated financial statements.

     FASB Accounting Standards Codification Topic 805, Business Combinations.

     Topic 805, Business Combinations, is generally based on Financial Accounting Standards No. 141 (revised 2007), Business
     Combinations, which was issued by the FASB in December 2007, which among other things, establishes principles and requirements
     regarding the method in which the acquirer in a business combination (i) recognizes and measures in its financial statements the
     identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired business, (ii) recognizes and
     measures the goodwill acquired in the business combination or a gain from a bargain purchase, (iii) determines what information to
     disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination and (iv)
     requires costs incurred to effect an acquisition to be recognized separately from the acquisition. Topic 805 is effective for all business
     combinations for which the acquisition date is on or after January 1, 2009. Earlier adoption is prohibited. This standard changes the
     accounting treatment for business combinations on a prospective basis. The adoption of Topic 805 has had a material impact on the
     financial position and results of operations as disclosed below.

     On March 20, 2008, we entered into a definitive merger agreement (the ―Merger Agreement‖) with MV Acquisitions Ltd., an Israeli
     company and a wholly-owned subsidiary (―Merger Sub‖), and MediVision, pursuant to which the Merger Sub would have merged
     with and into MediVision, with MediVision as the surviving entity. On March 16, 2009, we entered into a Termination Agreement
     with MediVision pursuant to which the Merger Agreement was terminated.

     We capitalized $519,820 and $527,327 in 2008 and 2007, respectively, for a total of $1,047,047 of costs related to the proposed
     merger with MediVision. In accordance with FASB Topic 805, Business Combinations , we must expense these costs. To comply
     with Topic 805 we have retroactively calculated our consolidated balance sheet as of December 31, 2008 and our consolidated
     statement of operations and consolidated cash flow statements for the year ended December 31, 2008. Our consolidated balance sheet
     as of December 31, 2008 and consolidated statement of operations and consolidated cash flow statement for the year ended December
     31, 2008 report merger-related costs as expenses for comparative purposes. Beginning in 2009, we have expensed, within general and
     administrative expenses in our consolidated statement of operations, any new merger-related costs. The pro forma impact of this
     adjustment to our 2008 consolidated financial statements as of and for the year ended December 31, 2008 is $519,720, respectively, as
     shown below:


                                                                                                FY 2008
                                                                                                Revised
                         Statement of Operations:                          FY 2008            For Topic 805
                         Net revenues                                  $    12,491,117       $    12,491,117
                         Cost of sales                                       5,768,483              5,768,483
                         Gross profit                                  $     6,722,634       $      6,722,634
                         Total operating expenses                            7,804,968              8,324,688
                         Net loss                                      $    (2,465,805 )     $     (2,985,524 )
                         Basic loss per share                          $         (0.15 )     $          (0.18 )
                         Balance Sheet:
                         Total Assets                                  $     13,671,756      $      12,624,709
                         Total Liabilities                             $      6,178,256      $       6,178,255
                         Total Stockholders’ Equity                    $      7,493,500      $       6,446,454
                         Total Liabilities and Stockholders’ Equity    $     13,671,756      $      12,624,709
F-27
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)



2.   INVENTORIES

     Inventories as of December 31, 2009 and 2008 consist of the following:

                                                                                   2009               2008
                           Raw materials                                       $     240,953      $     413,603
                           Work-in-process                                           392,440            267,552
                           Finished goods                                            357,932            525,578
                                                                               $     991,325      $   1,206,733


3.   FURNITURE AND EQUIPMENT

     Furniture and equipment as of December 31, 2009 and 2008 consist of the following:

                                                                                   2009                2008
                           Research and manufacturing equipment        $             196,655      $     180,819
                           Office furniture and equipment                          1,050,106            930,897
                           Automobiles                                               182,662             41,436
                           Demonstration equipment                                   128,055             19,368
                                                                                   1,557,478          1,172,520
                           Less: accumulated depreciation
                           and amortization                                        (1,076,084 )       (763,240 )
                                                                       $              481,394     $    409,280


     Depreciation expense was $225,588 and $187,706 for fiscal years ended 2009 and 2008, respectively.

4.   ACCRUED LIABILITIES, PRODUCT WARRANTY AND DEFERRED REVENUE

     Accrued Liabilities

     Accrued liabilities as of December 31, 2009 and 2008 consist of the following:

                                                                                   2009               2008
                           Accrued compensation                            $          548,910     $     671,100
                           Accrued warranty expenses                                   98,599            67,000
                           Other accrued liabilities                                  468,393           334,451
                                                                           $        1,115,902     $   1,072,551


     Accrued Warranty Expenses

     Product warranty reserve changes as of December 31, 2009 and 2008 consist of the following:

                                                                                   2009               2008
                           Warranty balance at beginning of the year       $          67,000      $    122,250
                           Reductions for warranty services provided                (237,650 )        (189,250 )
                           Changes for accruals in current period                    269,249           134,000
                           Warranty balance at end of the year             $          98,599      $     67,000
F-28
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)

4.    ACCRUED LIABILITIES, PRODUCT WARRANTY AND DEFERRED REVENUE (CONTINUED)


     Deferred Extended Warranty Revenue

     In addition to the Company’s one-year warranty, the Company offers an extended warranty for an additional charge. The Company
     records the sale of the extended warranty as deferred revenue and amortizes the revenue over the term of the agreement, generally one
     to four years. At December 31, 2009 and 2008, deferred extended warranty revenue was $1,879,722 and $1,910,824, respectively.

5.   NOTES PAYABLE

     Notes payable at December 31, 2009 and 2008 consist of the following:

                                                                         2009                 2008
                                Convertible note                    $      1,338,001      $     2,062,308
                                United Mizrahi Bank Loan                   1,500,000
                                Other                                        142,226              48,914
                                Total                                      2,980,227           2,111,222

                                Less: current portion                        34,048            1,611,063
                                Long-term portion                   $     2,946,179       $      500,159



     Convertible note

     On October 29, 2007, we issued to The Tail Wind Fund Ltd. and Solomon Strategic Holdings, Inc. (together with The Tail Wind Fund
     Ltd., the ―Holders‖) (i) an aggregate of $2,750,000 in principal amount of our 6.5% Convertible Notes Due April 30, 2010 (the
     ―Notes‖), which are convertible into 1,676,829 shares of our common stock, no par value, and (ii) warrants to purchase an aggregate
     of 616,671 shares of our common stock at an exercise price of $1.87 per share. The warrants expire on December 10, 2012.

     Pursuant to an Extension Agreement, dated June 24, 2009, between us and the Holders with respect to the Notes, the Holders agreed to
     extend the principal payments due thereon for 18 months, such that the next principal payment with respect to the Notes will be due
     December 31, 2010, and extend the maturity date of the Notes to October 31, 2011. As consideration for these extensions and
     waivers, we issued warrants (the ―New Warrants‖) to purchase an aggregate of 500,000 shares of our common stock. These New
     Warrants have an exercise price of $1.00 per share and expire on June 24, 2012.

     Pursuant to certain anti-dilution provisions in the Notes and Warrants, which were triggered as a result of the sale of securities under
     the Purchase Agreement, with AccelMed the conversion and exercise prices changed from $1.64 to $1.1375 per share for the Notes
     and $1.87 to $1.2970 per share for the Warrants. Based on these changes, the Holders may receive up to an additional 431,700 and
     272,421 shares of common stock under the Notes and Warrants, respectively.

     The Company computed the intrinsic value of the effective conversion price based on the proceeds received for or allocated to the
     convertible instrument, if any, of the embedded conversion option. Thus, the Company first allocated the proceeds received in this
     financing transaction that includes a convertible instrument to the convertible instrument and any other detachable instruments
     included in the exchange (such as detachable warrants) on a relative fair value basis. The Company then calculated the effective
     conversion used to measure the intrinsic value, if any, of the embedded conversion option based on the Black-Scholes-Merton option
     valuation model. The Company adjusts for the changes in the Black-Scholes-Merton option valuation model at each reporting period.




                                                                  F-29
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)

5.   NOTES PAYABLE (CONTINUED)

     The impact of this adjustment to our 2009 financial statements to date is an increase to interest expense of $195,407, an increase to the
     discount on the Notes of $36,807 and an increase to additional paid-in-capital of $131,171.

     As of December 31, 2009, the following weighted average assumptions were used: dividend yield none, expected volatility of 51.67%,
     risk-free interest rate of 3.69%, and expected term of 3 years. As of December 31, 2009, there was $132,137 of additional
     paid-in-capital and $36,999 of discount related to the warrants. During 2009, the Company paid $75,224 of interest due on the note
     and $687,500 of principal. The remaining principal balance due on the note is $1,375,000 or $1,338,001 net of the discount of
     $36,999. During 2008, the Company paid $89,375 of interest due on the note. There were no conversions or principal payments made
     during 2008. The remaining principal balance due on the note as of December 31, 2008 was $2,098,640, or $2,098,448 net of the
     discount.

     On March 18, 2010, the Holders converted $150,000 of the principal balance on the Convertible Note into 131,868 shares of our
     common stock. Additionally, on March 24, 2010 the Holders converted $100,000 of the principal balance on the Convertible Note
     into 87,912 shares of our common stock.

     United Mizrahi Bank Loan

     The United Mizrahi Bank Loan was executed in connection with the close of the MediVision Asset Purchase. (For more details on the
     United Mizrahi Bank Loan, see item Note 6. Related Party Transaction, MediVision Medial Imaging Ltd., United Mizrahi Bank Loan,
     below.)

6.   RELATED PARTY TRANSACTIONS

     U.M. AccelMed, Limited Partnership

     As of December 31, 2009, U.M. AccelMed, Limited Partnership, an Israeli limited partnership is our largest shareholder with
     9,633,228 shares of our common stock or 36.4%. AccelMed acquired these shares on June 24, 2009 pursuant to a Purchase
     Agreement (as described below). As of March 12, 2010, AccelMed owns 9,757,514 shares of our common stock, or 36.8%.

     On June 24, 2009, we entered into a Purchase Agreement with AccelMed. Pursuant to the terms of the Purchase Agreement, we
     authorized the issuance and sale of up to an aggregate of 13,214,317 shares of our common stock and warrants to purchase up to an
     aggregate of 4,404,772 shares of our common stock in two installments. On the date of the Purchase Agreement, we completed the 1 st
     installment, under which issued to AccelMed 9,633,228 shares and a warrant to purchase up to 3,211,076 shares for an aggregate
     purchase price of $3,999,972. The 1st Installment Warrant entitles AccelMed to purchase 3,211,076 shares of our common stock at an
     exercise price of $1.00 per share and expires on June 24, 2012.

     On this date, we also issued to the placement agent, an option to purchase 123,500 shares of our common stock at an exercise price of
     $0.01 per share. This option expires on June 24, 2012. We recorded the fair value of the options using the Black-Scholes-Merton
     option valuation model, as a reduction to our common stock and an increase in additional paid-in-capital in the amount of $47,045.

     For the 2 nd installment, we agreed to issue 3,581,089 shares of common stock and a warrant to purchase up to an aggregate of
     1,193,696 shares of common stock, for an aggregate purchase price of $1,999,967. Subject to certain conditions, including, without
     limitation, the achievement of certain financial milestones, the completion of the 2 nd Installment will occur within 14 days of the date
     of our filing with the SEC our Form 10-Q for the quarter ended March 31, 2010 or on a later date as may be agreed to in writing by the
     parties. If certain conditions are not met, the 2 nd installment is optional.




                                                                  F-30
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)

6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     Pursuant to the terms of the Purchase Agreement, on June 24, 2009, the Company entered into an Agreement (the ― Voting Agreement
     ‖) by and among (i) AccelMed, (ii) MediVision Medical Imaging Ltd. (― MediVision ‖), (iii) Agfa Gevaert N.V. (― Agfa ‖), (iv) Delta
     Trading and Services (1986) Ltd. (― Delta ‖), and (v) Gil Allon, Noam Allon, Ariel Shenhar and Yuval Shenhar (collectively, the ―
     Allon/Shenhar Group ‖ and together with Agfa and Delta, the ― Principal MV Shareholders ‖). MediVision and the Principal MV
     Shareholders are referred to as the ― MediVision/Principal Shareholders Group .‖ Under the Voting Agreement, following the 1 st
     Installment Closing Date, as long as each of AccelMed and the MediVision/Principal MV Shareholders Group holds between 25%
     and 50% of the outstanding shares of common stock, the Company agreed to use its best efforts and will take all actions (including, if
     necessary, amend its bylaws) to cause to be nominated for election to the Company’s Board of Directors, and each of AccelMed and
     the members of the MediVision/Principal MV Shareholders Group, agreed to vote its shares of common stock owned, whether directly
     or indirectly, and whether now owned or thereafter acquired, in favor of, the following nominees: (1) two ―Independent Directors‖ as
     defined under the listing standards of The Nasdaq Capital Market, the identity of one will be designated and named by AccelMed and
     the identity of the other by the MediVision/Principal MV Shareholders Group; (2) three persons designated and named by AccelMed;
     (3) three persons designated and named by MediVision; and (4) one person designated and named jointly by AccelMed and
     MediVision who shall be a reputable individual from the Company’s industry.

     Pursuant to the terms of the Voting Agreement, following the 1st Installment Closing Date, as long as either AccelMed or the
     MediVision/Principal MV Shareholders Group holds less than 25% or more than 50% of the outstanding shares of common stock, the
     Company agreed to use its best efforts and will take all actions (including, if necessary, amend its bylaws) to cause to be nominated
     for election to the Company’s Board of Directors, and each of AccelMed and the members of the MediVision/Principal MV
     Shareholders Group, agreed to vote its shares of common stock, in favor of, the following nominees: (1) two ―Independent Directors‖
     as defined under the listing standards of The Nasdaq Capital Market, the identity of one will be designated and named by AccelMed
     and the identity of the other by either MediVision/Principal MV Shareholders Group; (2) six persons designated and named by
     AccelMed and the MediVision/Principal MV Shareholders Group, with each of AccelMed and the MediVision/Principal MV
     Shareholders Group entitled to name the number of persons for election to the Company’s Board of Directors in proportion to their
     shareholdings in the Company (i.e., calculated based on the percentages of holdings of each out of their combined aggregate holdings,
     multiplied by six, and rounded to the nearest whole number); (3) one person designated and named jointly by AccelMed and
     MediVision who shall be a reputable individual from the Company’s industry.

     In connection with the foregoing, at the first annual meeting of the Company’s shareholders following the execution of the Voting
     Agreement, AccelMed shall designate Ariel Shenhar and the MediVision/Principal MV Shareholders Group shall designate Gil Allon
     to serve as directors until the next annual meeting, subject to their continued service as the Company’s Chief Financial Officer and
     Chief Executive Officer, respectively. In addition, AccelMed has appointed Uri Geiger and Moshe Arkin (the ― New Directors ‖) to
     serve on the Company’s Board of Directors.

     The Voting Agreement will terminate when AccelMed ceases to own 10% of the common stock on a fully-diluted basis or the
     MediVision/Principal MV Shareholder Group ceases to own, in the aggregate, 10% of the common stock on a fully-diluted basis.




                                                                 F-31
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)

6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     MediVision is a significant shareholder of the Company owning 34.9% of the issued and outstanding common stock as of March 12,
     2010.

     Gil Allon (the Company’s Chief Executive Officer), together with Noam Allon, President and Chief Executive Officer of MediVision
     and Gil Allon’s brother own 20.31% of MediVision’s ordinary shares. Ariel Shenhar (the Company’s Chief Financial Officer),
     together with Yuval Shenhar, his brother, own 1.06% of MediVision’s ordinary shares. Agfa and Delta own 15.59% and 42.08% of
     MediVision’s ordinary shares, respectively.

     MediVision Medical Imaging Ltd.

     As of December 31, 2009, MediVision Medical Imaging Ltd., an Israeli corporation (―MediVision‖), is our second largest shareholder
     with 9,380,843 shares of our common stock, or 35.4%. As of March 12, 2010, MediVision owns 9,256,557 shares of our common
     stock, or 34.9%.

     MediVision Asset Purchase

     On June 24, 2009, we entered into an Asset Purchase Agreement (―APA‖) with MediVision to purchase substantially all the assets of
     MediVision, which was completed on October 21, 2009 (the ―MediVision Asset Purchase‖). Such assets included the European
     operations which consisted of MediVision’s business as conducted by CCS Pawlowski GmbH (―CCS‖), its branch office in Belgium
     (the ―Belgium Activities‖), certain agreements under which MediVision contracted with third parties for distribution and other
     services (the ―Purchased Agreements‖), and rights to intellectual property which resulted from MediVision’s research and
     development (―R&D‖) activities performed in Israel.

     As payment for such assets, we agreed to assume a bank loan outstanding with Mizrahi Tefahot Bank Ltd. (the ―United Mizrahi
     Bank‖) in the amount of $1,500,000, to which we were previously a guarantor (For more details of the guaranty, see ―Note 6. Related
     Party Transactions, United Mizrahi Bank Loan‖ below.), liabilities associated with the acquired assets on and after October 21, 2009,
     the closing date, and certain taxes, and extinguishment of all intercompany indebtedness owed to us with a principal amount of
     $4,178,622.

     In addition, in early 2009, we hired all of MediVision’s research and development staff and moved them to our offices in the United
     States and Israel.

     During 2009, we had recorded intercompany accounts and notes receivable due from MediVision of $450,000 and $3,168,622,
     respectively, prepaid product advances to MediVision of $560,000, which were in anticipation of the completion of the Electro-optical
     Unit, and $273,808 of exclusivity rights paid to MediVision to sell the Electro-optical Unit in the U.S. All such amounts were
     extinguished upon completion of the MediVision Asset Purchase. At June 30, 2009, management determined the intercompany
     indebtedness owed to us by MediVision was impaired and recorded an allowance for doubtful accounts for the outstanding balance
     equal to $4,436,187. In connection with the MediVision Asset Purchase, management wrote off the balance of intercompany
     indebtedness owed to us by MediVision, thus, eliminating the allowance for doubtful accounts. Following the completion of the
     MediVision Asset Purchase, management extinguished          an additional $16,243 of intercompany notes receivable due from
     MediVision.




                                                                F-32
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)

6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     The purchase price of the MediVision Asset Purchase was allocated to the assets acquired, liabilities assumed and noncontrolling
     interest in CCS using the relative fair values as determined by management at the acquisition date. Goodwill was computed as
     follows:

          Fair Value of Assets Acquired:
          Net financial assets                                                         $       163,000
          Tangible assets                                                                      311,000
          Intangible assets                                                                    692,000
          Total Assets                                                                                          1,166,000

          Fair Value of Liabilities Assumed and Noncontrolling Interest
          Debt to United Mizrahi Bank                                                       (1,500,000 )
          Noncontrolling interest in CCS                                                      (473,000 )
          Total Liabilities and Noncontrolling Interest                                                         (1,973,000 )

          Goodwill Resulting from the Business Combination:                                                $      807,000


     In connection with the MediVision Asset Purchase, we recorded (1) financial assets of approximately $163,000 which represents cash,
     (2) tangible assets of approximately $311,000 which are primarily comprised of net accounts receivable, inventory and fixed assets,
     and (3) intangible assets of approximately $692,000 which are attributable to customer relationships and the Purchased Agreements
     related to the European operations of approximately $493,000 and intellectual property related to the Electro-optical Unit of
     approximately $199,000 which resulted from MediVision’s R&D activities performed in Israel. The intangible assets related to
     customer relationships and Purchased Agreements were valued on the date of acquisition at fair value and will be amortized over an
     estimated useful life of 8.2 years and will result in additional amortization expense of approximately $60,000 annually. During the
     year ended December 31, 2009, the Company recognized $8,693 of amortization expense related to customer relationships and
     Purchased Agreements. The intangible asset for the intellectual property related to the Electro-optical Unit which was valued on the
     date of the acquisition at fair value, will be amortized over its estimated useful life upon completion of the product and once sales
     commence. The Company will test these assets for recoverability on an ongoing basis.

     The fair value of the noncontrolling interest in CCS of $473,000 was estimated by applying the income approach. This fair value
     measurement is based on significant inputs that are not observable in the market. Key assumptions include (1) a discount rate of 17%
     and (2) a terminal year long-term sustainable growth rate of 3%.

     Goodwill reflects the replacement cost of an assembled workforce associated with personal reputations, relationships and business
     specific knowledge and the value of expected synergies and the noncontrolling interest holders. The fair value of goodwill exceeds its
     carrying amount at December 31, 2009. The Company will test goodwill for impairment on an annual bases and between annual test
     periods if an event occurs or circumstances change that would reduce its carrying value. In connection with the MediVision Asset
     Purchase, we recorded $52,500 as an expense for attorney and accounting services related to the MediVision Asset Purchase incurred
     during the year ended December 31, 2009.

     During the year ended December 31, 2009, the Company recognized revenue and net losses related to the business operations
     purchased in connection with the MediVision Asset Purchase of $188,683 and $121,333, respectively.




                                                                 F-33
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)


6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     The following unaudited pro forma information, prepared in accordance with Generally Accepted Accounting Principals, presents the
     results of operations for the twelve month periods ending December 31, 2009 and 2008 presented as though our acquisition of certain
     assets of MediVision had occurred on January 1, 2008. This summary of unaudited pro forma results of operation is presented for
     informational purposes only and does not purport to be indicative of the results of future operations of the Company or the results that
     would have actually been attained had the acquisition taken place at the beginning of 2008:

                                                                    Twelve Months           Twelve Months
                                                                        ended                   ended
                                                                     December 31,            December 31,
                                                                         2009                    2008
                        Total Revenue                               $    14,027,917        $      13,706,948

                        Net loss                                          (5,757,728 )             (3,099,608 )

                        Denominator for basic net loss per
                        share                                             21,842,234              16,866,831

                        Net loss per share—Basic (1)                $           (0.26 )    $            (0.18 )

     (1) The amount of anti-dilutive shares for the twelve months ended December 31, 2009 and 2008 are 520,748 and 69,167 respectively.

     Escrow Agreement

     Pursuant to the terms of the APA and an Escrow Agreement (the ―Escrow Agreement‖) between us, MediVision and Stephen L.
     Davis, Esq. dated June 24, 2009, MediVision deposited 5,793,452 shares (the ―Escrow Shares‖) of our common stock into escrow. If
     MediVision fails to make certain payments under the APA, the Escrow Shares will be distributed to us or sold and the proceeds
     thereof distributed to us. The agreement will terminate upon the later of (i) October 21, 2011 or (ii) the satisfaction and discharge of
     the $1,800,000 claim made by the Office of the Chief Scientist of the Israeli Ministry of Industry, Trade & Labor to MediVision.

     United Mizrahi Bank Loan

     In 2005, we entered into a Secured Debenture (the ―Debenture‖) in favor of United Mizrahi Bank Ltd., in an amount of up to
     $2,000,000 (plus interest, commissions and all expenses). Under the terms of the Debenture, we guaranteed the payment of all of the
     debts and liabilities of MediVision to United Mizrahi Bank up to $2,000,000. The Debenture is secured by a first lien on all of our
     assets. On June 24, 2009, pursuant to the Purchase Agreement, we agreed, that upon consummation of the APA, to assume
     MediVision’s loan under the Debenture. On October 23, 2009, we entered into a Secured Debenture (the ―Secured Debenture‖) with
     United Mizrahi Bank. Under the Secured Debenture we agreed to assume MediVision’s loan under the Debenture in an amount of up
     to $1,500,000 (the ―Loan Amount‖). We also agreed to secure the Loan Amount by granting United Mizrahi Bank a security interest
     in all or substantially all of our assets. Under the Secured Debenture, United Mizrahi Bank may require the immediate payment of the
     entire Loan Amount upon certain events, which include among other things, our failure to make a payment on a due date or a breach
     or failure to perform its obligations pursuant to the Secured Debenture. Upon failure to make a payment, we must pay, within seven
     days, the amount demanded by United Mizrahi Bank.




                                                                  F-34
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)


6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     The Loan Amount accrues interest at a rate equal to LIBOR plus 4.75%. In addition, principal payments are required to be made in 18
     equal monthly installments beginning January 31, 2011. However, if we do not receive at least $1,000,000 upon consummation of a
     second installment with AccelMed, by June 30, 2010, we may elect to: (i) make principal payments of $60,000 per month beginning
     July 31, 2010 and ending December 31, 2010, with the remaining principal payments made in 18 equal monthly installments; under
     this option, we must maintain a cash balance of at least $1,000,000 (decreasing based on the loan balance), 50% of which must be on
     deposit at United Mizrahi Bank or (ii) make principal payments in 18 equal monthly installments beginning January 31, 2011; under
     this option, we must maintain a cash balance of at least $1,500,000 (decreasing based on the loan balance), 50% of which must be on
     deposit at United Mizrahi Bank. As part of its agreement with United Mizrahi Bank, we agreed to deposit $750,000 cash in a bank
     account at United Mizrahi Bank with such balance to be maintained until June 30, 2010. After June 30, 2010, we must maintain a
     balance of at least $375,000 in such bank account, as long as the loan remains outstanding. As the balance of the deposit is not legally
     restricted or held as a compensating balance against borrowings, it is not reported as restricted cash on the balance sheet at December
     31, 2009. We are also subject to a debt covenant, whereby our cash plus accounts receivable must be at least 150% of the principal
     and interest outstanding under the loan.

     The Purchase Agreement includes a covenant which deters the early payment of principal to United Mizrahi Bank in 2010. If during
     the year ended December 31, 2010, the aggregate amount of the principal payments that we make to United Mizrahi Bank exceeds our
     Earnings Before Interest, Taxes and Amortization (―EBITDA‖) for the year ended December 31, 2010, then within three business
     days after we file our audited financial statements for the year ended December 31, 2010 with the Commission, we must issue to
     AccelMed, shares of our common stock in an amount equal to the aggregate amount of the principal payments made to United Mizrahi
     Bank during the year ended December 31, 2010 minus EBITDA divided by 0.41522. Such shares will be issued without receipt of
     any additional consideration from AccelMed. At this time, we are unable to determine if any such payment will be required and if
     required, the amount of such payment.

     Warrant to United Mizrahi Bank

     On October 23, 2009, in connection with the assumption of the United Mizrahi loan, we issued to United Mizrahi Bank a warrant
     (the ―Warrant‖) to purchase 350,000 shares of our common stock at an exercise price of $1.00 which will expire upon the earlier of
     October 23, 2012 or twelve months following the completion of (1) a primary public offering of our common stock (a ―Public
     Offering‖) or (2) (a) the sale of all or substantially all of our assets or (b) the merger or consolidation of the Company with or into
     another entity, pursuant to which 50% of the Company’s outstanding common stock is held by person(s) who prior to the transaction
     held, in aggregate, less than 5% (together, a ―Liquidity Event,‖ and together with a Public Offering, an ―Exit Event‖); provided
     however, if the underwriter in a Public Offering or the purchasing person(s) in a Liquidity Event require that all our outstanding
     warrants and options, including the Warrant be exercised prior to or part of the Public Offering or Liquidity Event, as applicable, then
     the Warrant will terminate, subject to certain notice requirements, upon completion of such transaction.

     The exercise price of the Warrant is $1.00, subject to the happening of certain events, including, but not limited to, the payment of a
     stock dividend or a stock split. The Warrant also includes certain anti-dilution provisions if we issue or sell any equity securities or
     securities convertible into equity, options or rights to purchase equity securities at a per share selling price less than the exercise price,
     then the exercise price will be adjusted pursuant to a weighted-average formula.

     Upon or immediately prior to an Exit Transaction, United Mizrahi may elect to waive all or any portion of the rights under the
     Warrant for $225,000 (the ―Alternative Payment‖). If only a portion of the Warrant is waived or if the Warrant was partially exercised
     prior to the Exit Event, the Alternative Payment will be reduced proportionately. In connection with the issuance of the Warrant to
     United Mizrahi Bank, we recorded the fair value of the Warrant using the Black-Scholes-Merton valuation model as permanent equity
     as the Warrant was issued in relation to the Purchase Agreement. The total value of these options is approximately $40,138.




                                                                    F-35
                                           OPHTHALMIC IMAGING SYSTEMS
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (Continued)


6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     MediVision Loans and Advances

     In connection with the MediVision Asset Purchase, management has written off the balance of intercompany indebtedness which was
     comprised of accounts receivable and notes receivable from MediVision of $450,000 and $3,168,622, respectively, $560,000 in
     prepaid assets for funds advanced to MediVision in anticipation of the completion of the Electro-optical Unit and $273,808 that we
     paid to MediVision for exclusivity rights to sell the Electro-optical Unit in the U.S. As of June 30, 2009, based upon revised estimates
     and the timing of the shifting of our focus from the Electro-optical Unit to other products through the end of 2010, management
     decided to impair the aggregate balance of intercompany indebtedness and thus, recorded an allowance for doubtful accounts equal to
     $4,436,187 offsetting each account and thus, recording an impairment expense for the same amount. Following the completion of the
     MediVision Asset Purchase, management extinguished an additional $16,243 of intercompany notes receivable due from MediVision.

     As of December 31, 2009, OIS owed MediVision $41,847 related to the settlement of its business relationships with MediVision.

     Intercompany Transactions

     Until October 21, 2009, upon completion of the MediVision Asset Purchase, we were parties to several agreements with MediVision,
     pursuant to which MediVision performed the following services:

     Distributed our WinStation and Symphony Products in Europe, Africa, Israel and India. Products were sold to MediVision at a
     volume driven discount according to the price list, set forth below. The volume discount table is applicable to all of our distributors,
     including MediVision. Below is the volume discount table for our distributors for 2009.

                                            Annual amounts purchased             Discount
                                                $ 0 - $ 199,999                     0%
                                                $ 200,000 - $ 299,999             10 %
                                                $ 300,000 - $ 399,999             20 %
                                                $ 400,000 - $ 499,999             30 %
                                                $ 500,000 and above               40 %

     In 2009, until the completion of the MediVision Asset Purchase, and for the year ended December 31, 2008, MediVision purchased
     products of approximately $225,000 and $597,000, respectively. Sales derived from product shipments to MediVision are made at
     transfer pricing which is based on similar volume discounts that are available to other resellers or distributors of our products.

     Performed Research and Development. Prior to July 2009, MediVision performed research and development services. MediVision
     billed us, on a monthly basis, at cost plus 12%. These research and development services include direct labor, consultants’ fees, travel
     expenses and the applicable portion of general and administrative expenses. During the years ended December 31, 2009 and 2008, we
     paid approximately $294,000 and $1,888,000, respectively, to MediVision for research and development services, respectively.

     Relationships

     Gil Allon (our Chief Executive Officer), together with Noam Allon, President and Chief Executive Officer of MediVision, Gil Allon’s
     brother and a former director of OIS own 20.31% of MediVision’s ordinary shares. Ariel Shenhar (our Chief Financial Officer),
     together with Yuval Shenhar, his brother, own 1.06% of MediVision’s ordinary shares.




                                                                  F-36
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)


6.   RELATED PARTY TRANSACTIONS (CONTINUED)

     CCS Pawlowski GmbH

     CCS Pawlowski GmbH, a German corporation (―CCS‖), was a subsidiary of MediVision which owned 63% of CCS’ ownership
     interests. We acquired this ownership interest in the MediVision Asset Purchase. (For additional details of the MediVision Asset
     Purchase, see ―Note. 6. Related Party Transactions, MediVision Asset Purchase‖ above.)

     During the years ending December 31, 2009 and 2008, CCS was our exclusive distributor of certain of our products in Germany and
     Austria. Products were sold to CCS at a volume driven discount according to the price list, set forth below. The volume discount table
     is applicable to all of our distributors, including CCS. Below is the volume discount table for our distributors for 2009.

                                           Annual amounts purchased              Discount
                                               $ 0 - $ 199,999                      0%
                                               $ 200,000 - $ 299,999              10 %
                                               $ 300,000 - $ 399,999              20 %
                                               $ 400,000 - $ 499,999              30 %
                                               $ 500,000 and above                40 %


     During 2009, prior to the MediVision APA, we sold products to CCS of approximately $113,000 compared to products sold to CCS in
     2008 of $226,000. At December 31, 2008, we had $50,365 of amounts due from CCS. After completion of the MediVision Asset
     Purchase all inter-company amounts were eliminated upon consolidation.

     MediStrategy, Ltd.

     In January 2004, we entered into a services agreement with MediStrategy Ltd. (―MS‖), an Israeli company owned by Noam Allon, the
     Company’s Business Development Officer. Under the terms of the agreement, MS provides business services to us primarily in the
     field in ophthalmology, which includes forming business relationships, identifying potential mergers and acquisitions, identifying and
     analyzing new complementary lines of business and finding potential business opportunities. All services provided by MS are
     performed solely by Noam Allon. In 2008 in consideration for the services provided, we agreed to pay MS a monthly sum of $4,000.
     In addition, MS is to be paid an annual performance bonus of up to $10,000 upon achievement of goals specified under the terms of
     the services agreement as determined by MS, Noam Allon, and our Chairman of the Board. During 2008, MS earned fees of
     $48,000. As of January 1, 2009, we agreed to pay MS a monthly sum of $1,600. During the year ending December 31, 2009, MS
     earned fees of $19,200. All fees were approved by the compensation committee. The agreement between OIS and MS was terminated
     effective January 1, 2010. As of January 1, 2010, OIS Global signed an agreement with MS for Noam Allon’s consulting services.
     Under the terms of the agreement, MS is to be compensated $13,272 monthly for Noam Allon’s services effective October 1, 2009
     through December 31, 2009 and approximately $18,000 monthly effective January 1, 2010 through December 31, 2010.

7.   LINE OF CREDIT

     The Company maintains a $150,000 line of credit agreement with Wells Fargo Bank. The line is secured by a pledged deposit with the
     bank totaling $158,213 at December 31, 2009. Advances on the line bear interest at prime (3.25 % at December 31, 2009) with
     interest due monthly. The line matures on May 10, 2011.




                                                                 F-37
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)


8.   SHARE-BASED COMPENSATION

     OIS

     At December 31, 2009, we have four active stock-based compensation plans (the ―Plans‖). Options granted under these plans
     generally have a term of ten years from the date of grant unless otherwise specified in the option agreement. The plans generally
     expire ten years from the inception of the plans. Options granted under these agreements have a vesting period of up to four years.
     Incentive stock options under these plans are granted at fair market value on the date of grant and non-qualified stock options granted
     cannot be less than 85% of the fair market value on the date of grant.

     A summary of the Company’s plans as of December 31, 2009 is presented below:

                                     Options                                                   Range of         Available
                                    Authorized                            Options              Exercise        for Future
                Plan Name            Per Plan       Plan Expiration      Outstanding            Prices           Grants

                                                                                                $ 0.10 -
           2000 Option Plan             1,500,000    September 2010            1,223,836         $2.83              11,163
                                                                                                $ 0.16 -
           2003 Option Plan               750,000     October 2013               577,831         $1.96                2,833
                                                                                                $ 0.16 -
           2005 Option Plan               750,000    December 2015               750,000         $1.05                    --
                                                                                                $ 0.55 -
           2009 Option Plan               750,000     January 2019               729,759         $0.65              20,241
           Individual Option
           Agreement                      123,500       June 2012                123,500        $ 0.10                    --
           Individual Option
           Agreement                      180,000    December 2019               180,000        $ 0.84                   --
           Total                                                               3,584,926                            34,237


     In calculating compensation recorded related to stock option grants for the year ended December 31, 2009, the fair value of each stock
     option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average
     assumptions.:

                                                                            2009                    2008
                        Dividend yield                                      None                    None
                        Expected volatility                                 50.23                   58.76
                        Risk-free interest rate                              3.69                    4.52
                        Expected term (years)                                 10                      8

     The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical volatility of
     our share price. The expected term is estimated based on a review of historical and future expectations of employee exercise behavior.




                                                                 F-38
                                         OPHTHALMIC IMAGING SYSTEMS
                                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  (Continued)


8.   SHARE-BASED COMPENSATION (CONTINUED)

     A summary of the changes in stock options outstanding under our equity-based compensation plans during the fiscal year ended
     December 31, 2009 is presented below:

                                                                                        Weighted
                                                                        Weighted         Average
                                                                        Average         Remaining         Aggregate
                                                                        Exercise       Contractual         Intrinsic
                                                         Options         Price         Term (Years)         Value

          Outstanding at January 1, 2008                  2,358,686       $    0.73              6.59

          Granted                                                  -               -                 -                 -
          Exercised                                                -               -                 -                 -

          Forfeited/expired                                 (86,686 )     $    0.95                  -                 -

          Outstanding at January 1, 2009                  2,272,000       $    0.72              5.64                  -

          Granted                                         1,659,759       $    0.46              9.43      $   481,330
          Exercised                                               -               -                 -                -

          Forfeited/expired                                (346,833 )     $    0.64                  -                 -

          Outstanding at December 31, 2009                3,584,926       $    0.60              6.01      $   537,739


          Exercisable at December 31, 2009                2,366,500       $    0.54              3.85      $   496,965



     Options issued to non-employees reflected in the table above include 668,000 options outstanding on January 1, 2009. None of these
     shares were exercised in 2009. 333,500 options were granted to non-employees in 2009. 284,000 options lapsed during the year ended
     December 31, 2009, resulting in 717,500 options outstanding and 467,500 exercisable at December 31, 2009 for non-employees.




                                                               F-39
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)


8.   SHARE-BASED COMPENSATION (CONTINUED)

     The weighted-average grant-date fair value of OIS options granted during 2009 was $0.46. There were no OIS options granted in
     2008. There were no OIS options exercised in 2009 or 2008.

     We recorded an incremental expense of $32,220 and $30,053 for stock-based compensation during the years ended December 31,
     2009 and 2008, respectively. As of December 31, 2009, we had 48,046 of unrecognized expense related to non-vested stock-based
     compensation, which is expected to be recognized through 2012. The total fair value of options vested during the years ended
     December 31, 2009 and 2008 was $32,220 and $30,053, respectively.

     A summary of the status of nonvested shares at December 31, 2009 and changes during the year then ended, is presented below:

                                                                                                      Weighted
                                                                                                       Average
                                                                                                     Grant Date
                                                                                  Shares              Fair Value
                 Non-vested shares at January 1, 2009                                498,625        $         1.04
                    Granted                                                        1,659,759                  0.67
                    Vested                                                          (929,666 )                1.08
                    Forfeited/Expired                                                (10,292 )                1.95
                 Non-vested shares at December 31, 2009                            1,218,426        $         0.62


     Non-vested shares relating to non-employees reflected in the table above include 80,625 and 250,000 shares outstanding at January 1,
     2009 and December 31, 2009, respectively.

     There was no cash received from warrant and stock option exercises for the year ended December 31, 2009 and 2008.

     Abraxas

     On December 9, 2009 we granted Abraxas employees options to purchase a total of 10,000 shares of Abraxas common stock. The
     options are exercisable at $5.00 per share, expire on December 9, 2019, and begin vesting quarterly over three years as follows: 34%,
     33%, and 33%.




                                                                F-40
                                          OPHTHALMIC IMAGING SYSTEMS
                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (Continued)


9.   INCOME TAXES

     The income tax expense for the years ended December 31, 2009 and 2008 consisted of the following:

                                                            Federal                     State                       Total
          2009
          Current                                   $                   -      $             3,787        $                  3,787
          Deferred                                             (1,974,000 )               (280,000 )                    (2,254,000 )
          Change in valuation allowance                         1,974,000                  280,000                       2,254,000
              Total income tax expense              $                   -      $             3,787        $                  3,787


                                                             Federal                     State                      Total
          2008
          Current                                       $          (43,000 )       $                -      $              (43,000 )
          Deferred                                                (503,000 )                  (81,000 )                  (584,000 )
          Change in valuation allowance                          1,845,000                     81,000                   1,926,000
              Total income tax expense                  $        1,299,000         $                -      $            1,299,000


     In 2009, we determined that we will not more-likely-than-not be able to use any of our deferred tax asset in the future. We analyzed
     our operating results from 2008, 2009, and projected operating results for 2010, combined with the downward turn in the economy in
     2008, and determined that it is not more-likely-than-not that we will be able to use our deferred tax asset in the future.

     The Company’s effective tax rate for the years ended December 31, 2009 and 2008 was 0% and (112%). The reconciliation of the
     statutory rate to the effective rate is as follows:

                                                                                       2009               2008
                                                                                                                    )
                        Statutory rate                                                     34 %                 (34 %
                        State income taxes, net of Federal benefit                          6                    (6 )
                        Other                                                              20                   (11 )
                        Change in valuation allowance                                     (60 )                 (61 )
                                                                                                                    )
                        Total                                                                  0%              (112 %




                                                                 F-41
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)


9.    INCOME TAXES (CONTINUED)

      The significant components of the Company’s deferred tax assets and liabilities are as follows:

                                                                                      December 31,
                                                                          2009                            2008
                  Deferred tax assets:
                  Net operating loss carry forwards             $            3,773,000          $            1,823,000
                  Inventory reserves                                           197,000                         176,000
                  Payroll related accruals                                     165,000                         136,000
                  Warranty accrual                                              39,000                          29,000
                  Accounts receivable reserve                                  281,000                         280,000
                  Uniform capitalization                                        19,000                          26,000
                  Research and Development tax credit                          230,000                               -
                  Deferred revenue                                             823,000                         819,000
                           Total deferred tax assets                         5,527,000                       3,289,000
                  Valuation allowance                                       (5,506,000 )                    (3,252,000 )
                           Net deferred tax assets                              21,000                          37,000
                  Deferred tax liabilities:
                  Depreciation                                                   (21,000 )                     (37,000 )
                           Net deferred tax assets              $                      -        $                    -



      At December 31, 2009 and 2008, management reviewed recent operating results and projected future operating results, as well as the
      current conditions in the global economy and medical industry. On each of these dates, management determined whether it was
      more-likely-than-not that a portion of the deferred tax assets attributable to net operating losses would be realized. For a description of
      our analysis in determining our deferred tax asset, see ―Note 1. Summary of Significant Accounting Policies, Income Taxes.‖

      We re-evaluate our estimates and assumptions we use in our financial statements on an ongoing and quarterly basis. We adjust these
      estimates and assumptions as needed and as circumstances change. If circumstances change in the future, we will adjust our estimates
      and assumptions accordingly. At the present time, we cannot determine whether our assumptions and estimates will change in the
      future. Based on historical knowledge, however, it is reasonably likely that there will be some changes in some of our estimates and
      assumptions. The Company did not identify any material uncertain tax positions as of and for the years ended December 31, 2009 and
      2008.

10.   COMMITMENTS AND CONTINGENCIES

      The Company has no significant commitments and contingencies other than as disclosed in these financial statements and notes
      thereto.

      Operating Leases

      The Company leases its corporate headquarters and manufacturing facility under a cancelable operating lease that expires in June
      2012. The lease agreement provides for minimum lease payments of $143,109 for the twelve months ended December 31, 2010 and
      2011 and $71,555 for the six months ended June 30, 2012. Abraxas leases a facility for their office under a cancelable operating lease
      that expires in May 2011. The lease agreement provides for minimum lease payments of $131,167 for the twelve months ending
      December 31, 2010, and $55,324 for the five months ended May 31, 2011.

      Rental expense charged to operations for all operating leases was approximately $192,000 and $230,000 during the years ended
      December 31, 2009 and 2008, respectively.
F-42
                                            OPHTHALMIC IMAGING SYSTEMS
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     (Continued)


11.   WARRANTS

      Warrant activity for the years ended December 31, 2009 and 2008 is summarized as follows:

                                                                             2009                            2008
                                                                                    Weighted                     Weighted
                                                                                    Average                       Average
                                                                                    Exercise                      Exercise
                                                                  Warrants           Price           Warrants      Price
           Outstanding at beginning of year                          929,671            $1.79         929,671         $1.79
             Granted                                               4,333,497             1.02                -             -
             Exercised                                                     -                 -               -             -
           Lapsed                                                  (313,000)             1.64
           Outstanding at end of year                              4,950,168            $1.05           929,671           $1.79
           Currently exercisable                                   4,950,168            $1.05           929,671           $1.79




      There were 4,950,168 warrants outstanding and exercisable as of December 31, 2009 with a weighted average remaining contractual
      life of 2.59 years and a weighted average exercise price of $1.05. There is no intrinsic value of warrants outstanding at December 31,
      2009. There were an aggregate of 929,671 warrants outstanding and exercisable as of December 31, 2008 with a weighted average
      remaining contractual life of 2.72 years, a weighted average exercise price of $1.79. There is no intrinsic value of warrants outstanding
      at December 31, 2008.

12.   OTHER INCOME - SETTLEMENT

      On May 3, 2009, we entered into a Confidential Settlement and Mutual Release Agreement (the ―Settlement Agreement‖) by and
      between us, Steven Verdooner, OPKO Health, Inc. and The Frost Group, LLC (collectively ―Defendants‖). Mr. Verdooner was
      formerly our president. Pursuant to the Settlement Agreement described further under ―Legal Proceedings‖ below, we received a cash
      settlement of $1,200,000 on May 13, 2009.




                                                                   F-43
                                                MEDIVISION MEDICAL IMAGING LTD.

                                                  CONSOLIDATED BALANCE SHEET


                                                                                                 US dollars (thousands)
                                                                                               September 30,            December 31,
                                                                                           2009            2008             2008
                                                                                                Unaudited                 Audited

                                     ASSETS
Current assets
   Cash and cash equivalents                                                                      74            3,934          2,785
   Restricted cash                                                                                 -              171            158
   Accounts receivable:
     Trade, net                                                                                  313            2,456          2,343
     Other accounts receivable                                                                   151              713            428
   Inventories                                                                                    63            1,600          1,576
   Assets and disposal group classified as held for sale                                       3,979                -              -
     Total current assets                                                                      4,580            8,874          7,290

Non-current assets
   Property and equipment, net                                                                    29                548         600

      Investment in affiliated company                                                         4,238                  -            -

      Deferred tax assets                                                                          -            1,210              - (*)

      Goodwill and other intangible assets                                                         -            7,823          8,080


        Total assets                                                                           8,847          18,455          15,970



(*)        Restated – see Note 2C.

                            The accompanying notes are an integral part of the consolidated financial statements.


                                                                    F-44
                                                MEDIVISION MEDICAL IMAGING LTD.


                                                   CONSOLIDATED BALANCE SHEET



                                                                                                  US dollars (thousands)
                                                                                            September 30,             December 31,
                                                                                          2009            2008            2008
                                                                                               Unaudited                 Audited

                            LIABILITIES AND EQUITY
Current liabilities
   Short-term bank credit and other current liabilities                                       2,643            3,043         3,664
   Trade payables                                                                               632            1,221         1,409
   Other accounts payable                                                                     5,065            4,527         4,305
   Liabilities included in disposal group held for sale                                         249                -             -
     Total current liabilities                                                                8,589            8,791         9,378

Long-term liabilities
 Long-term loans, net of current maturities                                                       -            1,898         1,034
 Long-term employee benefits                                                                     61              137            64
     Total long-term liabilities                                                                 61            2,035         1,098

        Total liabilities                                                                     8,650          10,826         10,476


Equity
   Equity attributable to owners of the parent:
   Ordinary shares                                                                              215              215           215
   Additional paid-in capital                                                                 9,302            9,295         9,302
   Capital reserve                                                                             (311 )           (311 )        (311 )
   Foreign currency translation differences                                                     118              120            67
                                                                                                                     )             )
      Accumulated deficit                                                                    (9,299 )         (5,617 (*)    (6,826 (*)
                                                                                                 25            3,702 (*)     2,447 (*)
      Minority interest                                                                         172            3,927 (*)     3,047 (*)
      Total equity                                                                              197            7,629 (*)     5,494 (*)


        Total liabilities and equity                                                          8,847          18,455         15,970


(*)        Restated – see Note 2C.




                            The accompanying notes are an integral part of the consolidated financial statements.


                                                                    F-45
                                                MEDIVISION MEDICAL IMAGING LTD.


                                    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS




                                                                      US dollars (thousands except per share data)
                                                                                                                              Year ended
                                                     Nine month period ended                Three month period ended           December
                                                          September 30,                           September 30,                  31,
                                                         2009          2008                     2009           2008              2008
                                                            Unaudited                               Unaudited                   Audited

Sales                                                      6,376           10,837                  388          3,559              14,410
Cost of sales                                              3,447            5,083                  284          1,613               6,630
Gross profit                                               2,929            5,754                  104          1,946               7,780

Operating expenses:
Research and development expenses                          1,344            2,025                    -            707               2,859
Selling and marketing expenses                             2,251            3,550                  257          1,155               4,832
General and administrative expenses                        1,463            1,985                   28            572               2,319
Other expenses (income), net                                (420 )            331 (*)               16            178 (*)             520 (*)
Total operating expenses                                   4,638            7,891                  301          2,612              10,530


Operating loss                                             (1,709 )         (2,137 )               (197 )        (666 )            (2,750 )
Financial income                                               68              213 (**)              (2 )          53 (**)            261 (**)
                                                                                   )                                  )                   )
Financial expenses                                           (487 )           (630 (**)             (56 )        (222 (**)           (792 (**)
Loss before taxes on income                                (2,128 )         (2,554 )               (255 )        (835 )            (3,281 )
Income tax expense                                             (3 )            (38 )                  -            10              (1,341 ) (*)
                                                           (2,131 )         (2,592 )               (255 )        (825 )            (4,622 ) (*)
Share in losses of affiliated company                        (660 )              -                   32             -                   -
                                                           (2,791 )         (2,592 )               (223 )        (825 )            (4,622 )
Other comprehensive loss:
Loss for the period                                        (2,791 )         (2,592 ) (*)           (223 )        (825 )            (4,622 )
Exchange differences on translating foreign
    operations                                                 75                (4 ) (*)            49          (101 )              (103 )

Total comprehensive loss for the period                    (2,716 )         (2,596 ) (*)           (174 )        (926 )            (4,725 ) (*)


Attributable to:
     Owners of the parent                                  (2,422 )         (2,137 ) (*)           (186 )        (729 ) (*)        (3,399 )
     Minority interest                                       (294 )           (459 ) (*)             12          (197 ) (*)        (1,326 )
                                                           (2,716 )         (2,596 ) (*)           (174 )        (926 ) (*)        (4,725 )


Basic loss per share (in Dollars)                           (0.48 )          (0.30 ) (*)          (0.29 )       (0.07 ) (*)         (0.43 )


(*)       Restated – see Note 2C.
(**)      Reclassified.




                            The accompanying notes are an integral part of the consolidated financial statements.
F-46
                                                            MEDIVISION MEDICAL IMAGING LTD.


                                           CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


                                                                                   US dollars (thousands)
                                                             Attributable to owners of the parent
                                                                               Foreign                                   Total
                                           Additional                         currency                               attributable
                             Share          paid-in           Capital        translation       Accumulated           to owners of           Minority            Total
                             Capital        capital           reserve        differences          deficit             the parent            interests           equity

Balance at January 1,                                                                                       )
    2008 (audited)               165             8,775             (311 )            132             (3,492 (*)              5,269 (*)           4,454 (*)        9,723
Total comprehensive loss                                                                                         )                      )                   )           )
    for the year                       -                -             -               (65 )          (3,334 (*)              (3,399 (*)         (1,326 (*)       (4,725 (*)
Convertible loan
    converted into
    shares                        50               576                -                 -                    -                  626                     -           626
Warrants, equity
    component of
    convertible loans
    issued by subsidiary
    and exercise of
    options into
    common stock of a
    subsidiary                         -          (105 )              -                 -                    -                 (105 )              (98 )           (203 )
Cost of share-based
    payment                            -            56                -                 -                    -                   56                 17               73
    Balance at
         December 31,                                                                                       )
         2008 (audited)          215             9,302             (311 )             67             (6,826 (*)              2,447 (*)           3,047 (*)        5,494 (*)
Total comprehensive loss
    for the period                     -                -             -               51             (2,473 )                (2,422 )             (294 )         (2,716 )
Change in minority
    interest due to loss
    of control in
    subsidiary                         -                -             -                 -                    -                      -           (2,565 )         (2,565 )
Dividend paid to
    minority interest of a
    subsidiary                         -                -             -                 -                    -                      -              (16 )            (16 )

    Balance at
        September 30,
        2009
        (unaudited)              215             9,302             (311 )            118             (9,299 )                    25                172              197


Balance at January 1,                                                                                       )
2008 (audited)                   165             8,775             (311 )            132             (3,492 (*)              5,269 (*)           4,454 (*)        9,723
Total comprehensive loss                                                                                         )                                                      )
    for the period                     -                -             -               (12 )          (2,125 (*)              (2,137 )             (459 )         (2,596 (*)
Convertible loan
    converted into
    shares                        50               576                -                 -                    -                  626                     -           626
Warrants, equity
    component of
    convertible loans
    issued by subsidiary
    and exercise of
    options into
    common stock of a
    subsidiary                         -          (100 )              -                 -                    -                 (100 )              (81 )           (181 )
Cost of share-based
    payment                            -            44                -                 -                    -                   44                 13               57
    Balance at
         September 30,                                                                                      )
         2008                    215             9,295             (311 )            120             (5,617 (*)              3,702 (*)           3,927 (*)        7,629
      (unaudited)


(*)     Restated – see Note 2C.


                    The accompanying capital notes are an integral part of the consolidated financial statements.


                                                                F-47
                                                              MEDIVISION MEDICAL IMAGING LTD.


                                           CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (cont.)

                                                                                US dollars (thousands)
                                                   Attributable to owners of the parent

                                                                                Foreign                                    Total
                                             Additional                        currency                                attributable
                             Share            paid-in           Capital       translation        Accumulated           to owners of           Minority            Total
                             Capital          capital           reserve       differences           deficit             the parent            interests           equity

Balance at July 1, 2009
    (unaudited)                  215               9,302            (311 )               80            (9,075 )                  211                 176             387
Total comprehensive loss
    for the period                     -                  -               -              38              (224 )                 (186 )                12            (174 )
Dividend paid to
    minority interest of a
    subsidiary                         -                  -               -                 -                  -                      -              (16 )           (16 )
    Balance at
         September 30,
         2009
         (unaudited)             215               9,302            (311 )             118             (9,299 )                   25                 172             197


Balance at July 1, 2008                                                                                       )
    (unaudited)                  215               9,281            (311 )             214             (4,982 (*)              4,417 (*)           4,117 (*)       8,534
Total comprehensive loss                                                                                           )                      )                   )          )
    for the period                     -                  -               -              (94 )           (635 (*)               (729 (*)            (197 (*)        (926 (*)
Cost of share-based
    payment                            -              14                  -                 -                  -                  14                      7           21
    Balance at
         September 30,
         2008                                                                                                 )
         (unaudited)             215               9,295            (311 )             120             (5,617 (*)              3,702 (*)           3,927 (*)       7,629




(*)        Restated – see Note 2C.

                              The accompanying notes are an integral part of the consolidated financial statements.




                                                                                  F-48
                                                    MEDIVISION MEDICAL IMAGING LTD.


                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                   US dollars (thousands)
                                                                                                                        Year ended
                                                         Nine month period ended         Three month period ended        December
                                                              September 30,                   September 30,                 31,
                                                          2009           2008             2009           2008              2008
                                                              Unaudited                        Unaudited                 Audited
Cash Flows from Operating Activities:
                                                                                  )                               )                 )
Net loss for the period                                     (2,791 )       (2,592 (*)           (223 )       (825 (*)        (4,622 (*)
Adjustments for:
Depreciation and amortization                                  791            174                  6           51               242
Loss of disposal of assets                                      16              -                  -            -                10
Deferred taxes, net                                              -            132                  -          (76 )           1,341 (*)
Cost of share-based payment                                      -             57                  -           21                73
Financial costs and interest                                     -             10                  -           34               (37 )
Capital loss from loss of control in a subsidiary              564              -                  -            -                 -
Share in losses of affiliated company                          660              -                (32 )          -                 -
Loss on the sale and issuance of shares of a
    subsidiary                                                  16              -                 16            -                 -
Other                                                          208            (37 )               44            9                14
                                                              (536 )       (2,256 )             (189 )       (786 )          (2,979 )
Changes in Operating Assets and Liabilities:
Decrease (increase) in trade receivables                       485          1,019                269          220             1,125
Decrease (increase) in other accounts receivable
    and prepaid expenses                                       (18 )          (11 )               10          159               274
Decrease (increase) in inventories                             599           (402 )              107         (143 )            (420 )
Increase (decrease) in trade payables                         (253 )         (508 )              (59 )        305              (312 )
Increase (decrease) in other accounts payable and
    accrued expenses                                          (487 )          214               (210 )        202              (109 )
  Net cash provided by (used in) operating
       activities                                             (210 )       (1,944 )              (72 )        (43 )          (2,421 )
Cash Flows from Investing Activities:
Purchase of property and equipment                             (72 )         (115 )               (7 )        (24 )            (184 )
Proceeds from the disposals of property and
    equipment                                                   15              -                  -            -                 8
Additions to intangible assets                                 (89 )       (1,816 )                -         (587 )          (2,110 )
Company no longer consolidated (Appendix A)                 (1,333 )            -                  -            -                 -
  Net cash used in investing activities                     (1,479 )       (1,931 )               (7 )       (611 )          (2,286 )
Cash Flows from Financing Activities:
Receipt of convertible loan from shareholder                   416            437                  -          400               400
Receipt of loans                                             2,416              -                948            -               476
Repayment of loans                                          (4,139 )         (718 )           (1,095 )       (528 )          (1,311 )
Dividend paid to minority interest of a subsidiary             (16 )            -                (16 )          -                 -
  Net cash used in financing activities                     (1,323 )         (281 )             (163 )       (128 )            (435 )
Decrease in cash and cash equivalents                       (3,012 )       (4,156 )             (242 )       (782 )          (5,142 )
Net foreign exchange differences                                10            (12 )               11          (32 )             (65 )
Cash and cash equivalents at beginning of the
    period                                                   2,130          7,805               (641 )      4,451             7,992
    Cash and cash equivalents at the end of the
         period                                               (872 )        3,637               (872 )      3,637             2,785
    Included in disposal group                                (271 )            -                 44            -                 -
    Cash and cash equivalents at the end of the
         period                                             (1,143 )        3,637               (828 )      3,637             2,785


(*)       Restated – see Note 2C.
The accompanying notes are an integral part of the consolidated financial statements.


                                        F-49
                                               MEDIVISION MEDICAL IMAGING LTD.


                                         CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)



APPENDIX A – COMPANY NO LONGER CONSOLIDATED:

                                                                                  US dollars (thousands)
                                                                                                                         Year ended
                                                             Nine month period               Three month period          December
                                                            ended September 30,              ended September 30,            31,
                                                            2009           2008              2009           2008            2008
                                                                 Unaudited                        Unaudited               Audited
Working capital (excluding cash and cash equivalents),
    net                                                        2,675                -                -               -            -
Inventories                                                      825                -                -               -            -
Investment in an affiliated company                           (4,913 )              -                -               -            -
Property and equipment, net                                      328                -                -               -            -
Goodwill and other intangible assets                           4,278                -                -               -            -
Long-term bank loans                                          (1,397 )              -                -               -            -
Minority shareholders in subsidiary                           (2,565 )              -                -               -            -
Capital loss from loss of control in a subsidiary               (564 )              -                -               -            -
                                                              (1,333 )              -                -               -            -


APPENDIX B – SUPPLEMENTARY INFORMATION:

                                                                                   US dollars (thousands)
                                                                                                                         Year ended
                                                          Nine month period ended            Three month period          December
                                                               September 30,                 ended September 30,             31,
                                                            2009           2008              2009           2008            2008
                                                                 Unaudited                        Unaudited               Audited

Cash paid during the year for interest                           143              226              16              150          269


Income taxes paid                                                  8              134                -              56            6


Supplemental schedule of non-cash activities:
Repayment of notes payable and interest through
   conversion into shares                                           -             626                -               -          626


Purchase of property and equipment with a financial
    loan                                                            -               -                -               -           63


Transfer of inventory into property and equipment                   -               -                -               -           34



                           The accompanying notes are an integral part of the consolidated financial statements.



                                                                   F-50
                                          MEDIVISION MEDICAL IMAGING LTD.

                        NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS




NOTE
     GENERAL
1 -

    A.   MediVision Medical Imaging Ltd. (the "Company"), an Israeli corporation located in Haifa, was incorporated and commenced
         business operations in June 1993. The Company (together with its subsidiaries – the "Group") is primarily engaged in the
         business of designing, developing, manufacturing and marketing digital imaging systems, image enhancements and analysis
         software and related products and services for use by practitioners in the ocular healthcare field.

         The Company's shares are traded on the EURO.NM market in Belgium.

    B.   At the beginning of 2009, the Company started the implementation of downsizing plan that according to managements'
         intention is planned to include among other layoffs of employees and significant reduction of expenses and overheads. After
         the completion of the APA agreement described in Note 1F below, the Company's main activity will be holding OIS shares.

         See also Notes 1G, regarding an Escrow Agreement with respect to part of the Company's holdings in OIS.

         The main shareholders are evaluating alternative sources of capital to meet cash requirements, including issuance of debt,
         issuance of equity securities and entering into other financing agreements with its shareholders.

    C.   On May 3, 2009, Ophthalmic Imaging Systems, a subsidiary (hereinafter: "OIS") entered into a Confidential Settlement and
         Mutual Release Agreement (the "Settlement Agreement") by and between OIS, Steven Verdooner, OPKO Health, Inc.
         ("OPKO") and The Frost Group, LLC (collectively "Defendants"), relating to the case entitled Ophthalmic Imaging Systems v.
         Steven Verdooner, et al., Case No. 07AS02149 in the Superior Court of California for the County of Sacramento. Mr.
         Verdooner was formerly the OIS president.

         Pursuant to the Settlement Agreement, OIS agreed to dismiss, with prejudice, the lawsuit between the OIS and the Defendants,
         whereby OIS alleged claims of breach of fiduciary duty, breach of implied contract, intentional interference with contractual
         relations, intentional interference with prospective economic advantage, violation of section 502 of the Penal Code of
         California, aiding and abetting breach of fiduciary duty, and aiding and abetting interference with contractual relations. OIS
         also agreed to release the Defendants from any claims that could have been brought in the foregoing lawsuit, whether known or
         unknown. The Defendants agreed to pay and paid OIS US$1,200,000 on May 13, 2009.

         OIS and the Defendants entered into the Settlement Agreement to avoid the expense and uncertainty of litigation and without
         making any admission of liability or concession of wrongdoing.

    D.   On June 24, 2009, OIS entered into a Purchase Agreement with AccelMed. Pursuant to the terms of the Purchase Agreement,
         OIS authorized the issuance and sale of up to an aggregate of 13,214,317 shares of OIS common stock and warrants to purchase
         up to an aggregate of 4,404,772 shares of OIS common stock in two installments. On the date of the Purchase Agreement, OIS
         completed the first installment (the ―1st Installment‖), under which issued to AccelMed 9,633,228 shares and a warrant to
         purchase up to 3,211,076 shares for an aggregate purchase price of $3,999,972. The 1st Installment Warrant entitles AccelMed
         to purchase 3,211,076 shares of OIS's common stock at an exercise price of $1.00 per share. The 1st Installment Warrant
         expires on June 24, 2012. In addition, in connection with the transaction, OIS also issued to the placement agent, an option to
         purchase 123,500 shares of OIS's common stock at an exercise price of $0.01 per share. This option expires on June 24,
         2012. As result of the completion of the first 1st Installment, the Company's percentage held in OIS decreased from 56% to
         35.4%. As a result of this, the Company recorded a loss of approximately US$ 564 thousand.




                                                               F-51
                                             MEDIVISION MEDICAL IMAGING LTD.

                      NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)




NOTE
     GENERAL (cont.)
1 -

      E.   During the second quarter of 2009, the Company recorded a provision for decline in asset value with respect to its remaining
           investment in OIS in an amount of US$ 692 thousand.

      F.   On June 24, 2009, the Company entered into an Asset Purchase Agreement (―APA‖) with OIS to purchase substantially all the
           assets of the Company, which was completed on October 21, 2009 (the ―Company Asset Purchase‖). Such assets included the
           European operations which consisted of the Company's business as conducted by CCS Pawlowski GmbH (―CCS‖), the branch
           office in Belgium (the ―Belgium Activities‖), certain agreements under which the Company contracted with third parties for
           distribution and other services (the ―Purchased Agreements‖), and rights to intellectual property which resulted from the
           Company’s research and development (―R&D‖) activities performed in Israel. The Company’s R&D staff was acquired by us in
           early 2009 when OIS hired all of the Company’s R&D personnel and moved them to OIS' offices in the United States and
           Israel. As payment for such assets, OIS agreed to assume a bank loan outstanding with Mizrahi Tefahot Bank Ltd. (the ―United
           Mizrahi Bank‖) in the amount of $1,500,000, to which OIS were previously a guarantor, liabilities associated with the acquired
           assets on and after October 21, 2009, the closing date, and certain taxes, and extinguishment of all intercompany indebtedness
           owed to OIS with a principal amount of $4,178,622. At June 30, 2009, OIS' management determined the intercompany
           indebtedness owed to OIS by the Company was impaired and recorded an allowance for doubtful accounts for the outstanding
           balance. As of September 30, 2009, these amounts were still determined to be impaired. In connection with the Company Asset
           Purchase, OIS' management wrote off the balance of intercompany indebtedness owed to OIS by the Company, thus,
           eliminating the allowance for doubtful accounts.

           See Note 7 below, regarding, the assets and liabilities that were sold as a result of the APA agreement.

      G.   Pursuant to the terms of the APA and an Escrow Agreement (the ―Escrow Agreement‖) between the Company, OIS and
           Stephen L. Davis, Esq. dated June 24, 2009, the Company deposited 5,793,452 shares (the ―Escrow Shares‖) of OIS' common
           stock into escrow. If the Company fails to make certain payments under the APA, the Escrow Shares will be distributed to OIS
           or sold and the proceeds thereof distributed to OIS. The agreement will terminate upon the later of (i) October 21, 2011 or (ii)
           the satisfaction and discharge of the $1,800,000 claim made by the Office of the Chief Scientist of the Israeli Ministry of
           Industry, Trade & Labor to the Company.

           As mentioned above, at the date of the signing of this report, the Company received an approval from the Office of the Chief
           Scientist of the Israeli Ministry of Industry, Trade & Labor.

      H.   Below are data on the representative exchange rates of the US dollar, and the changes therein during the reported periods:



                Exchange rate of US$ 1:

                                                                                               NIS
                September 30, 2009                                                              3.758
                September 30, 2008                                                              3.421
                December 31, 2008                                                               3.802


                Rate of increase (decrease) in the period:
                                                                                                %
                Nine months ended September 30, 2009                                             (1.16 )
                Nine months ended September 30, 2008                                            (11.05 )
                Three months ended September 30, 2009                                            (4.11 )
                Three months ended September 30, 2008                                             2.06
                For the year ended December 31, 2008                                             (1.14 )
F-52
                                            MEDIVISION MEDICAL IMAGING LTD.

                     NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)



NOTE
     SIGNIFICANT ACCOUNTING POLICIES
2 -

     A. Basis of preparation

         These condensed interim consolidated financial statements are for the nine months ended September 30, 2009. They have been
         prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required in annual
         financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the
         Group for the year ended December 31, 2008

     B. Significant accounting policies

         These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance
         with the accounting policies adopted in the last annual financial statements for the year to December 31, 2008 except for the
         adoption of:

         •   IAS 1 Presentation of Financial Statements (Revised 2007)

         •   IAS 23 Borrowing Costs (Revised 2007)

         •   IFRIC 13 Customer Loyalty Programmes ii

         The adoption of IAS 1 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to
         the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and
         recognition of the Group's assets, liabilities, income and expenses is unchanged. However, some items that were recognized
         directly in equity are now recognized in other comprehensive income, for example revaluation of property, plant and equipment.
         IAS 1 affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'.

         IAS 23 Borrowing Costs (Revised 2007) requires the capitalization of borrowing costs to the extent they are directly attributable
         to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their
         intended use or sale. The appreciation of the standard did not have a material effect on the financial statements.

         The Group has adopted IFRIC 13 Customer Loyalty Programmes, which clarifies that when goods or services are sold together
         with a customer loyalty incentive, the arrangement is a multiple-element arrangement and the consideration receivable from the
         customer is allocated between the components of the arrangement using fair values. The adoption of IFRIC 13 does not have a
         significant effect on the results of the current or prior periods presented.

         The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed
         consolidated interim financial statements.

         The following new interpretations have been issued, but are not effective for the financial year beginning January 1, 2009 and
         have not been early adopted:

             IFRIC 17, "Distribution of non-cash assets to owners", effective for annual periods beginning on or after July 1, 2009. This
         •
             is not currently applicable to the group, as it has not made any non-cash distributions.

             IFRIC 18, "Transfers of assets from customers", effective for transfers of assets received on or after July 1, 2009. This is not
         •
             relevant to the group, as it has not received any assets from customers.




                                                                 F-53
                                              MEDIVISION MEDICAL IMAGING LTD.

                      NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)




NOTE
     SIGNIFICANT ACCOUNTING POLICIES (cont.)
2 -

      B. Significant accounting policies

          •   IFRS 9 - "Financial Instruments", was published on November 12, 2009. The standard represents the first phase of the
              current project to replace IAS 39, Financial Instruments: Recognition and Measurement (IAS 39) and it replaces the
              provisions of IAS 39, with respect to the classification and measurement of financial assets.

              The standard reduces the number of categories of financial assets and according to its provisions, all financial assets must be
              measured at either amortised cost or fair value. An entity shall apply IFRS 9 for annual periods beginning on or after
              January 1, 2013. Early adoption is permitted. To facilitate early adoption, an entity that applies IFRS 9 before financial
              reporting periods beginning before January 1, 2012 is not required to restate comparatives. Management has not yet
              determined the impact of IFRS 9, if any, on the financial statements.

          •   IAS 24 - "Related Party Disclosures (Revised)", was published on November 4, 2009. The main change compared to the
              previous version is the introduction of an exemption from IAS 24's disclosures for transactions with a) a government that has
              control, joint control or significant influence over the reporting entity and b) 'government-related entities' (entities controlled,
              jointly controlled or significantly influenced by that same government). The standard includes also an amended definition of
              "related party" to clarify the intended meaning and remove some inconsistencies.

              The revised Standard is to be applied retrospectively for annual periods beginning on or after January 1, 2011. Earlier
              application, of either the whole Standard or of the partial exemption for government-related entities, is permitted.

          •   IFRIC 13 Customer Loyalty Programmes ii

          Other pronouncements which have been issued but are not effective for the financial year beginning January 1, 2009 and have
          not been early adopted are described in the consolidated financial statements of the group for the year ended December 31, 2008.

          Management is of the opinion that the standard, when adopted, will not have material impact on the financial statements.

      C. Restatement

          The Company restated its financial statements for the year ended December 31, 2008 and for the nine and three month periods
          ended September 30, 2008, in order to retroactively reflect the effect of changes in the accounting treatment of the following
          issues:

         A.   The financial statements for the year ended December 31, 2008 were restated in order to retroactively reflect the cancellation
              of deferred tax assets recognized in the past, in the financial statements of a subsidiary operating in the United States and as a
              result in the consolidated financial statements of the Company in respect of tax losses not yet utilized by the
              subsidiary. Such treatment was applied since the subsidiary does not expect to have taxable income in the foreseeable future,
              against which such deferred taxes could be utilized.

         B.   The financial statements for the year ended December 31, 2008 and for the nine and three month periods ended
              September 30, 2008 were restated in order to retroactively reflect the recognition of costs involved in the change of the
              Company's capital structure as an expense. Prior to this correction, the Company presented the aforementioned costs as a
              direct off-set to the equity attributable to owners of the parent.




                                                                    F-54
                                            MEDIVISION MEDICAL IMAGING LTD.

                      NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)


NOTE
2-   SIGNIFICANT ACCOUNTING POLICIES (cont.)

      C. Restatement (cont.)

         The impact of the restatement on the financial statements is as follows:

         1.   Balance sheets

                                                            US dollars (thousands)
                                                              December 31, 2008
                                                                      Effect
                                                     Before            of the                After
                                                  restatement      restatement            restatement

                      Deferred tax assets                  1,502              (1,502 )                -
                      Accumulated deficit                 (6,454 )              (372 )           (6,826 )
                      Minority interest                    4,177              (1,130 )            3,047

                                                          US dollars (thousands)
                                                            September 30, 2008
                                                                     Effect
                                                  Before              of the                After
                                               restatement        restatement            restatement

                      Accumulated deficit              (6,018 )                401             (5,617 )
                      Minority interest                 4,328                 (401 )            3,927

         2.   Statements of loss

                                                          US dollars (thousands)
                                                            December 31, 2008
                                                                   Effect
                                                  Before            of the                  After
                                               restatement      restatement              restatement

                      Other expenses                        -                (520 )              (520 )
                      Income tax expense                  161              (1,502 )            (1,341 )
                      Loss for the period              (2,600 )            (2,022 )            (4,622 )

                                                          US dollars (thousands)
                                                          Nine month period ended
                                                            September 30, 2008
                                                                    Effect
                                                   Before            of the          After
                                                restatement      restatement      restatement

                      Other expenses                        48                (379 )             (331 )
                      Loss for the period               (2,213 )              (379 )           (2,592 )

                                                           US dollars (thousands)
                                                          Three month period ended
                                                             September 30, 2008
                                                                     Effect
                                                   Before             of the         After
                                                restatement       restatement     restatement
Other expenses          (1 )          (177 )   (178 )
Loss for the period   (648 )          (177 )   (825 )



                               F-55
                                               MEDIVISION MEDICAL IMAGING LTD.

                       NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)


NOTE 2
       SIGNIFICANT ACCOUNTING POLICIES (cont.)
 -

       D.    Non-current assets and liabilities classified as held for sale

             When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within 12 months is
             highly probable, the asset or disposal group is classified as 'held for sale' and presented separately in the statement of financial
             position.

             Liabilities are classified as 'held for sale' and presented as such in the statement of financial position if they are directly
             associated with a disposal group.

             Assets classified as 'held for sale' are measured at the lower of their carrying amounts immediately prior to their classification
             as held for sale and their fair value less costs to sell. However, some 'held for sale' assets such as financial assets or deferred
             tax assets, continues to be measured in accordance with the Group's accounting policy for those assets. No assets classified as
             'held for sale' are subject to depreciation or amortization, subsequent to their classification as 'held for sale'.

             See Note 1F and Note 7 regarding, non-current assets and liabilities classified as held for sale, at the reporting period.

NOTE 3 CASH AND CASH EQUIVALENTS (For the purpose of the cash flow
 -     statements)

       Cash and cash equivalents comprise of the following:

                                                                                    US dollars (thousands)
                                                                               September 30,          December 31,
                                                                              2009       2008             2008
                                                                                 Unaudited              Audited

                  Cash and cash equivalents                                        74          3,934                    2,785
                  Short-term bank credit                                       (1,217 )         (297 )                   (655 )
                                                                               (1,143 )        3,637                    2,130


NOTE
     SEGMENT REPORTING
4-

      As of January 2008, with the commencing operation of Abraxas by Ophthalmic Imaging Systems (hereinafter: "OIS"), the Company
      began operating through two different core activities, as follows:

      1.                                   Electronic record and practice management software;

      2.                                   Ophthalmic application.

                                                                    US dollars (thousands)
                                                                   Nine month period ended
                                                                September 30, 2009 (Unaudited)
                                                 Electronic record
                                                   and practice
                                                   management              Ophthalmic
                                                     software              application                       Total

                  Revenue from external
                  customers                                 608                    5,768                     6,376


                  Operating loss                         (1,114 )                   (595 )                   (1,709 )
Loss for the
period         (1,114 )          (1,677 )   (2,791 )



                          F-56
                                            MEDIVISION MEDICAL IMAGING LTD.

                       NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)



NOTE
     SEGMENT REPORTING (cont.)
4-

     2.                                Ophthalmic application (cont.).

                                                                US dollars (thousands)
                                                               Three month period ended
                                                            September 30, 2009 (Unaudited)
                                              Electronic record
                                                and practice
                                                management              Ophthalmic
                                                  software              application                   Total

                 Revenue from
                 external customers                            -                  388                   388


                 Operating loss                                -               (197 )                  (197 )


                       Loss for the
                       period                                  -               (223 )                  (223 )



                                                               US dollars (thousands)
                                                            Year ended December 31, 2008
                                            Electronic record
                                              and practice
                                              management             Ophthalmic
                                                software              application                   Total

                 Revenue from
                 external customers                    298               14,112                   14,410


                 Operating loss                       (754 )             (1,996 )   (*)            (2,750 )   (*)



                       Loss for the
                       period                         (754 )             (3,868 )   (*)            (4,622 )   (*)



                 (*)     Restated – see Note 2C.


NOTE 5
       CONVERTIBLE LOAN AGREEMENT
 -

      During August 2008 in respect of the Term Sheet signed between certain majority shareholders (the "Shareholders"), in connection
      with a convertible loan provided by the Shareholders to the Company, the Shareholders granted the company an additional loan in
      the amount of $400,000.

      During the reported period, a new Convertible Loan Agreement was signed with the Shareholders at an aggregate amount of up to
      additional $800,000. The loan agreement shall cover also the principal amount of the above mentioned $400,000 provided to the
      Company during August 2008 and will apply the terms and conditions as detailed in the Convertible Loan Agreement. The loan
      shall bear interest at an annual rate of 12% and shall be repaid within 12 months from the date of the grant. Loan and any interest
      due thereon may be converted in a whole or in part into ordinary shares of the Company, at a conversion price equal to the lower
between (1) the Company’s average share price on the Belgium EuroNext Stock Exchange during the 30 days prior the date of this
agreement; and (2) the Company’s average share price on the Belgium EuroNext Stock Exchange during the 30 days prior the
Conversion, and in each case subject to a discount at the rate of 20% of the Company’s average share price on the Belgium
EuroNext Stock Exchange at the applicable dates. As security for the Company's obligation including repayments of the loan and
any interest due thereon and the Conversion Rights, the Company shall grant to the shareholders a pledge in shares of common
stock of OIS held by the Company subject to a discount at a rate of 30% of the price of OIS’ shares, to be allocated among each
Shareholder pro-rata to the portion of the Loan which he actually provides.




                                                        F-57
                                              MEDIVISION MEDICAL IMAGING LTD.

                      NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)



NOTE 6
       TERMINATION OF MERGER AGREEMENT WITH OIS
 -

      In March 2009, the Company and OIS have mutually agreed to terminate their merger agreement. The termination of the agreement
      is due to exorbitant costs the companies and associated shareholders would incur as a result of regulatory requirements. The
      companies initially announced the merger agreement in March 2008.

NOTE 7
       ASSETS AND DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
 -

      As stated in Note 1F, the assets and liabilities that will be sold as a result of the APA agreement, have been classified as assets and
      liabilities held for sale.

      The carrying amounts of assets and liabilities in this disposal group are summarized as follows:

                                                                                  US dollars
                                                                                 (thousands)
                                                                                September 30,
                                                                                      2009
                                                                                  Unaudited
                 Current assets
                  Cash and cash equivalents                                                     271
                  Accounts receivable                                                           184
                  Inventories                                                                    93

                 Non-current assets
                  Property, plant and equipment                                                 165
                  Goodwill and other intangible
                       assets                                                                 3,266
                 Assets classified as held for sale                                           3,979


                 Current liabilities
                  Short-term bank credit and other
                      current liabilities                                                        23
                  Trade and other payables                                                      141

                 Non-current liabilities
                   Long-term loans                                                               85
                 Liabilities classified as held for
                     sale                                                                       249




                                                                  F-58
                                                 MEDIVISION MEDICAL IMAGING LTD.



                                              CONSOLIDATED FINANCIAL STATEMENTS



                                                      AS OF DECEMBER 31, 2008 AND

                                                       FOR THE YEAR THEN ENDED

                                                                       AND

                                                   INDEPENDENT AUDITOR'S REPORT




                                                   INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
Medivision Medical Imaging Ltd.

      We have audited the accompanying consolidated balance sheet of Medivision Medical Imaging Ltd. and subsidiaries (the "Company") as
of December 31, 2008, and the related consolidated statement of operations, changes in shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

         In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2008, and the results of their operations and their cash flows for the year then ended in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board.

         As discussed in Note 19, on June 24, 2009, to raise additional capital, Ophthalmic Imaging Systems, a subsidiary of the Company,
sold to AccelMed 9,633,228 shares and a warrant to purchase up to 3,211,076 shares for an aggregate purchase price of $4,000,000. On May
26, 2010, Ophthalmic Imaging Systems sold to AccelMed 3,581,089 shares and a warrant to purchase up to 1,193,696 shares for an aggregate
purchase price of $2,000,000.

        As discussed in Note 19, on October 21, 2009, the Company completed an Asset Purchase Agreement with Ophthalmic Imaging
Systems to sell substantially all the assets of the Company.




/S/ Perry-Smith, LLP



Sacramento, California
August 10, 2010
F-59
                                                 MEDIVISION MEDICAL IMAGING LTD.

                                                   CONSOLIDATED BALANCE SHEET

                                                             December 31, 2008
                                                        (in thousands of U.S. dollars)

                                     ASSETS

Current assets:
 Cash and cash equivalents                                                               $    2,785
 Restricted cash                                                                                158
 Accounts receivable:
   Trade, net                                                                                 2,343
   Other accounts receivable                                                                    428
 Inventories                                                                                  1,576

       Total current assets                                                                   7,290

Non-current assets:
 Property and equipment, net                                                                    600
 Goodwill and other intangible assets                                                         8,080

       Total assets                                                                      $   15,970


                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Short-term bank credit and other current liabilities                                    $    3,664
 Trade payables                                                                               1,409
 Other accounts payable                                                                       4,305

       Total current liabilities                                                              9,378

Long-term liabilities:
 Long-term loans, net of current maturities                                                   1,034
 Long-term employee benefits                                                                     64

       Total long-term liabilities                                                            1,098

       Total liabilities                                                                     10,476

Commitments and contingencies

Shareholders' equity:
 Equity attributable to equity holders of the parent:
   Ordinary shares of NIS 0.1 par value each; authorized – 10,000,000
     shares; issued and outstanding – 8,484,872                                                 215
 Additional paid-in capital                                                                   9,302
 Capital reserve                                                                               (311 )
 Foreign currency translation differences                                                        67
 Accumulated deficit                                                                         (6,826 )

                                                                                              2,447

Minority interest                                                                             3,047

       Total equity                                                                           5,494
Total liabilities equity                                                                                        $   15,970


                      The accompanying notes are an integral part of these consolidated financial statements.


                                                               F-60
                                          MEDIVISION MEDICAL IMAGING LTD.

                                       CONSOLIDATED STATEMENT OF OPERATIONS

                                              For the Year Ended December 31, 2008
                                        (in thousands of U.S. dollars, except per share data)


Sales                                                                                           $   14,410
Cost of sales                                                                                        6,630

   Gross profit                                                                                      7,780

Operating expenses:
 Research and development expenses                                                                   2,859
 Selling and marketing expenses                                                                      4,832
 General and administrative expenses                                                                 2,319

   Total operating expenses                                                                         10,010

Operating loss                                                                                      (2,230 )

Financial income                                                                                        73

Financial expenses                                                                                   (604 )

Loss before other loss                                                                              (2,761 )

Other loss, net                                                                                      (520 )

Loss before taxes on income                                                                         (3,281 )

Income tax expense                                                                                  (1,341 )

Net loss for the year                                                                               (4,622 )

Attributed to:
 Equity holders of the parent                                                                       (3,296 )
 Minority interest                                                                                  (1,326 )
                                                                                                $   (4,622 )


Basic loss per share                                                                            $    (0.43 )



                                             The accompanying notes are an integral
                                          part of these consolidated financial statements.


                                                                F-61
                                                      MEDIVISION MEDICAL IMAGING LTD.

                               CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                              For the Year Ended December 31, 2008
                                                    (in thousands of U.S. dollars)


                                                  Attributable to Equity Holders of the Parent
                                                                             Foreign
                                           Additional                       Currency
                            Share           Paid-In          Capital       Translation         Accumulated                           Minority           Total
                            Capital         Capital         Reserve        Differences           Deficit            Total            Interests          Equity

Balance, January 1,
2008                    $        165   $         8,775     $    (311 )   $          132      $       (3,492 )   $     5,269      $        4,454     $     9,723

Convertible loan
converted into
shares                            50               576                                                                  626                                 626

Total
comprehensive loss                                                                   (65 )           (3,334 )        (3,399 )            (1,326 )         (4,725 )

Warrants, equity
component of
   convertible loans
issued by
  subsidiary and
exercise of options
    into common
stock of a subsidiary                             (105 )                                                               (105 )               (98 )           (203 )

Cost of share-based
payment                                             56                                                                      56               17               73

Balance, December
31, 2008                $        215   $         9,302     $    (311 )   $            67     $       (6,826 )   $     2,447      $        3,047     $     5,494




                                                         The accompanying notes are an integral
                                                      part of these consolidated financial statements.


                                                                             F-62
                                                 MEDIVISION MEDICAL IMAGING LTD.

                                           CONSOLIDATED STATEMENT OF CASH FLOWS

                                                  For the Year Ended December 31, 2008
                                                        (in thousands of U.S. dollars)

Cash flows from operating activities:
 Net loss for the year                                                                       $   (4,622 )
 Adjustments to reconcile net loss to net cash used in
   operating activities:
     Depreciation                                                                                  242
     Loss of disposal of assets                                                                     10
     Deferred taxes, net                                                                         1,341
     Cost of share-based payment                                                                    73
     Financial costs                                                                               232
     Other                                                                                          14
     Changes in operating assets and liabilities:
       Decrease in trade receivables                                                             1,125
       Decrease in other accounts receivable and prepaid expenses                                  274
       Increase in inventories                                                                    (420 )
       Increase in trade payables                                                                 (312 )
       Decrease in other accounts payable and accrued expenses                                    (109 )
       Interest paid                                                                              (269 )

         Net cash used in operating activities                                                   (2,421 )

Cash flows from investing activities:
 Purchase of property and equipment                                                                (184 )
 Proceeds from the sale of property and equipment                                                     8
 Additions to intangible assets                                                                  (2,110 )

         Net cash used in investing activities                                                   (2,286 )

Cash flows from financing activities:
 Receipt of convertible loan from shareholder                                                       400
 Short-term credit from banks                                                                       476
 Repayment of long-term loans                                                                    (1,311 )

         Net cash used in financing activities                                                    (435 )

         Decrease in cash and cash equivalents                                                   (5,142 )

Net foreign exchange differences                                                                   (65 )
Cash and cash equivalents, beginning of year                                                     7,992

Cash and cash equivalents, end of year                                                       $   2,785


Supplementary Information:
 Cash paid during the year for interest                                                      $     269
 Income taxes                                                                                $       6

Supplementary schedule of non-cash activities:
 Repayment of notes payable and interest through conversion
   into shares                                                                               $     626
 Purchase of property and equipment with a financial loan                                    $      63
 Transfer of inventory into property and equipment                                           $      34

                                                    The accompanying notes are an integral
part of these consolidated financial statements.


                     F-63
                                           MEDIVISION MEDICAL IMAGING LTD.

                                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                              (in thousands of U.S. dollars)




1.    GENERAL

     The Business

     Medivision Medical Imaging Ltd. (the "Company"), an Israeli corporation located in Haifa, was incorporated and commenced
     business operations in June 1993. The Company and its subsidiaries (the "Group") is primarily engaged in the business of designing,
     developing, manufacturing and marketing digital imaging systems, image enhancements and analysis software and related products
     and services for use by practitioners in the ocular healthcare field. The principal markets of the Company are located in the United
     States.

     In January 2008, Ophthalmic Imaging Systems ("OIS"), through its wholly-owned subsidiary, Abraxas Medical Solutions, Inc., a
     Delaware corporation ("Abraxas"), acquired substantially all the assets of AcerMed, Inc., a leading developer of Electronic Medical
     Records (EMR) and Practice Management software. AcerMed has been providing comprehensive and advanced EMR and Practice
     Management software solutions for medical practices, from solo practitioners to multi-site practices nationwide. Through the
     acquisition, OIS gained the rights to software applications that automate the clinical, administrative, and financial operations of a
     medical office.

     Definitions

     "The Company"           Medivision Medical Imaging Ltd.

     "Subsidiaries"          Companies whose financial statements are fully consolidated with those of the Company.

     "The Group"             The Company and its subsidiaries.

     "OIS"                   Ophthalmic Imaging Systems.

                             OIS is a company incorporated in Sacramento, California, USA, whose shares are traded over the counter on
                             the NASDAQ (OISI.OB). At December 31, 2008, the Company owns 56% of OIS's outstanding common
                             stock. (See also Note 16).

     "CCS"                   CCS Pawlowski GmbH. (CCS), a company incorporated in Jena, Germany. CCS designs, develops,
                             manufactures and markets ophthalmic digital imaging and image enhancement systems. At December 31,
                             2008, the Company owns 63% of CCS's outstanding common stock. (See Note 6).

     "CPI"                   The Consumer Price Index as published by the Central Bureau of statistics in Israel.

     "NIS"                   New Israeli Shekels.


                                                                 F-64
1.    GENERAL (Continued)

     Definitions (Continued)

     "Dollar" or "$"           U.S. Dollar.

     "Euro" or "€"             European currency.

2.   SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting
     Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

     The consolidated financial statements have been prepared on the historical cost basis except for certain items that are measured at fair
     value.

     Use of Estimates

     The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,
     and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

     The significant management judgments in applying the accounting policies (critical account policies) of the Group are presented
     below.

     Financial Statements in U.S. Dollars
     The majority of the Company's and its U.S. subsidiary, OIS, sales are denominated in U.S. Dollars (Dollar) and the majority of their
     costs are incurred in Dollars or linked thereto. Accordingly, the Company has determined the Dollar as the currency of the Company
     and OIS primary economic environment, and thus as their functional currency in accordance with IAS 21. The consolidated financial
     statements are presented in Dollars.

     The financial currency of a certain subsidiary is the Euro, which is the currency of the economic environment in which that subsidiary
     operates. On consolidation, assets and liabilities have been translated into Dollars at the closing rate at the reporting date. Income and
     expenses have been translated into the Group's presentation currency at the average rate over the reporting period. Gains and losses
     from the translation of the subsidiary's financial statements to Dollars are reflected in shareholders' equity under "foreign currency
     translation differences". On disposal of a foreign operation, the cumulative translation differences recognized in equity are
     reclassified to profit or loss and recognized as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the
     acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into Dollars at the closing
     rate.


                                                                   F-65
                                              MEDIVISION MEDICAL IMAGING LTD.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (in thousands of U.S. dollars)
                                                          (Continued)


2.       SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Financial Statements in U.S. Dollars (Continued)

      Transactions and balances originally denominated in Dollars are presented at their original amounts. Balances in non-Dollar
      currencies are translated into Dollars using historical and current exchange rates for non-monetary and monetary balances
      respectively. For non-Dollar transactions reflected in the statement of operations, the average exchange rates prevailing at the date of
      the transaction are used. Depreciation and changes in inventories deriving from non-monetary items are based on historical exchange
      rates.

      All transaction gains and losses from the above translation are reflected in the statement of operations in financial expenses.

      Data regarding the representative exchange rates of the New Israeli Shekels (NIS) in relation to the Dollar and the Euro on the balance
      sheet date and the changes therein during the reported period are as follows:

                                                                                                       Exchange Rate of the NIS
                                                                                                      U.S. Dollar         Euro
     December 31, 2008                                                                               $      3.802             5.30

     Change during the year ended:
                                                                                                                    )                 )
       December 31, 2008                                                                                       (1.1 %           (6.34 %

      Principles of Consolidation

      The consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are all entities over
      which the Group has the power to control the financial and operating policies. Inter-company translations and balances, including
      profits from inter-company sales not yet realized outside the Group, have been eliminated upon consolidation.

      Acquisitions of subsidiaries are included in the financial statements using the purchase method of accounting. Subsidiaries are
      consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is
      transferred out of the Group. The financial statements of subsidiaries are prepared for the same reporting periods as the Company,
      using consistent accounting policies. Adjustments are made to conform to any dissimilar accounting policies that may exist.

      Minority interests represent the portion of a subsidiary's profit and loss and net assets that is not held by the Group. If losses in a
      subsidiary applicable to a minority interest exceed the minority interest in the subsidiary's equity, the excess is allocated to the
      majority interest except to the extent that the minority has a binding obligation and is able to cover the losses.




                                                                    F-66
                                             MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Cash and Cash Equivalents

     The Company considers all highly liquid investments readily convertible into cash, originally purchased with maturities of three
     months or less, to be cash equivalents.

     For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined
     above.

     Restricted Cash

     Restricted cash is primarily invested in certificates of deposits, which mature within one year and is used as security for a line of credit
     of OIS.

     Trade Receivables

     Trade receivables include amounts billed to customers from transactions arising in the ordinary course of business. Management
     periodically evaluates the collectibility of these receivables. An estimate for double debts is made when collection of the full amount
     is no longer probable. The allowance for doubtful account balances is estimated based on historical experience and any specific
     customer installation issues that have been identified. Bad debts are written off when identified.

     Inventories

     Inventories are valued at the lower of cost or net realizable value. Cost for raw materials is determined on a first-in, first-out
     basis. Cost for work-in-progress and finished products is determined as the cost of direct materials and labor and a proportion of
     manufacturing overhead based on normal operating activities.

     Net realizable value is estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated
     costs necessary to complete the sale.

     Property and Equipment

     Property and equipment are stated at cost, less accumulated depreciation and any impairment in value.

     Depreciation is computed by the straight-line method, on the basis of the estimated useful lives of the assets.

     Material residual value estimates and estimates of useful life are updated as required, but at least annually.




                                                                   F-67
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Property and Equipment (Continued)

     Annual depreciation rates are as follows:

                                                                                                                    Percent
            Machinery and equipment                                                                                  15 – 25
            Office furniture and equipment                                                                            6 – 15
            Computers and peripheral equipment                                                                       20 – 33
            Vehicles                                                                                                  16.67
                                                                                                                   Over the
                                                                                                                  term of the
            Leasehold improvements                                                                                   lease

     Gains or losses on the disposal of property and equipment are determined as the difference between the disposal proceeds and the
     carrying amount of the assets and are recognized in the consolidated statement of operations.

     The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate the
     carrying value may not be recoverable. If any such indication exists, and where the carrying values exceed the estimated recoverable
     amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property and
     equipment in the greater of the net selling price and the value in use. In assessing value in use, the estimated future cash flows are
     discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
     the risks specific to the assets. For an asset that does not generate largely independent cash inflows, the recoverable amount is
     determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in the consolidated statement of
     operations.

     Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating
     unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of
     goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An
     impairment charge is reversed if the cash-generating unit's recoverable amount exceeds its carrying amount.

     Business Combinations and Goodwill

     Business combinations are accounted for using the purchase method. The purchase method involves the recognition of the acquiree's
     identifiable assets and liabilities, including contingent liabilities, regardless of whether they were recorded in the financial statements
     prior to acquisition. On initial recognition the assets and liabilities of the acquired subsidiary are included in the consolidated balance
     sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting
     policies. Goodwill is stated after separating out identifiable intangible assets.




                                                                   F-68
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.      SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Business Combinations and Goodwill (Continued)

     Goodwill represents the excess of the cost of the acquisition over the fair value of identifiable net assets of a subsidiary at the date of
     acquisition. Goodwill arising from the purchase of OIS (for which the agreement date was prior to March 31, 2004) was amortized on
     a straight-line basis over its useful economic life of 20 years. Goodwill is stated at cost less accumulated amortization at December
     31, 2004, and any impairment in value as of December 31, 2008.

     In accordance with the transition provisions of the IFRS 3, the Group has ceased amortizing goodwill commencing on January 1,
     2005. IFRS 3 requires the Group to test goodwill for impairment annually at the cash generating unit level (unless an event occurs
     during the year which requires the goodwill to be tested more frequently). The Company has not recorded any impairment losses with
     respect to its annual goodwill test, in the reported periods.

     Leases

     Financial leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased
     item, are capitalized at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased
     property and equipment. Lease payments are apportioned between the finance changes and reduction of the lease liability to achieve a
     constant rate of interest on the remaining balance of the liability.

     Depreciation methods and useful lives for assets held under finance lease agreements, correspond to those applied to comparable
     assets which are legally owned by the Group.

     Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating
     leases. Operating lease payments are recognized as an expense in the consolidated statement of operations on a straight-line basis
     over the lease term.

     Warranty Provision

     The Group's warranty provision contains two components. A general product provision on a per product basis and a specific provision
     increased as the Group becomes aware of system performance issues. The product provision is calculated based on a fixed Dollar
     amount per shipped units each quarter. Specific provisions usually arise from the introduction of new products.

     When a new product is introduced, the Group provides for specific problems arising from potential issues, if any. As issues are
     resolved, the Group reduces the specific provision. These types of issues can cause the warranty provision to fluctuate outside of sales
     fluctuations.




                                                                   F-69
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Warranty Provision (Continued)

     The Group estimates the cost of the various warranty services by taking into account the estimated cost of services for routine
     warranty claims in the first year, including parts, labor and travel costs for service technicians. The Group analyzes the gross profit
     margin of their service department, the price of their extended warranty contracts, factoring in the hardware costs of various systems,
     and use a percentage to calculate the cost per system to use for the first year manufacturer's warranty.

     Borrowing Costs

     Borrowing costs are recognized as an expense when incurred in accordance with the benchmark accounting treatment under IAS 23.

     Convertible Debt

     Convertible Debt with Fixed Conversion Terms

     The component parts (liability and equity elements) of such convertible debt are measured and reported separately in the consolidated
     balance sheet. Upon the issuance of such convertible debt, the fair value of the liability component is determined using a market rate
     for an equivalent non-convertible debt. This amount is shown as a liability on the amortized cost basis until conversion or
     repayment. The remainder, if any, of the proceeds received upon the issuance of the convertible debt is allocated to the equity
     component (option) and included in shareholders' equity. The value of the option is not changed in subsequent periods.

     Such convertible debt is considered as a compound financial instrument that contains both a liability and an equity component.

     Issuance costs are allocated between the liability and equity components of the convertible debt based on the allocation of the
     proceeds to those components when they are first recognized.

     Convertible Debt with Variable Conversion Turns

     Such convertible debt is considered as a hybrid financial liability that contains an embedded derivative.

     Upon initial recognition of such instrument, the Company recognizes the embedded derivative (the conversion option) separately from
     the host contract based on its fair value at the initial recognition. The remainder is allocated to the liability component. The derivative
     is then measured at fair value at each balance sheet date and the changes in the fair value are reported through the consolidated
     statement of operations. The liability component is measured after initial recognition at amortized cost using the effective interest
     method. This component is shown as a liability until conversion or repayment.




                                                                   F-70
                                            MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Convertible Debt (Continued)

     Convertible Debt with Variable Conversion Turns (Continued)

     Issuance costs are allocated between the embedded derivative and the cost based on the allocation of the proceeds shown above. The
     costs allocated to the embedded derivative are charged to income on initial recognition and the proceeds allocated to the host
     component are charged to the host component.

     Long-term Employee Benefit

     The Company's liability for employee rights upon retirement with respect to its Israeli employees is calculated, pursuant to Israeli
     severance pay law, based on the most recent salary of each employee multiplied by the number of years of employment, as of the
     balance sheet date. Employees are entitled to one month's salary for each year of employment, or a portion thereof. The Company
     makes monthly deposits to insurance policies and severance pay funds. The liability of the Company is fully provided for.

     The deposited funds include profits accumulated up to the balance sheet date. The deposited funds may be withdrawn upon the
     fulfillment of the obligation pursuant to Israeli severance pay laws or labor agreements. The value of the deposited funds is based on
     the cash surrender value of these policies, and includes immaterial profits.

     The liability for employee rights upon retirement for the employees of the non-Israeli subsidiaries of the Company is calculated on the
     basis of the labor laws of the country in which the subsidiary is located and is covered by an appropriate accrual.

     Income Taxes

     Tax expense recognized in the consolidated statement of operations is comprised of deferred tax and current tax not recognized
     directly in equity.

     Deferred income tax is provided for, using the liability method, on all temporary differences at the balance sheet date, between the tax
     bases of assets and liabilities and their carrying amounts for financial reporting purposes. However, deferred tax is not provided on
     the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business
     combination or affects tax or accounting profit.

     Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax assets and unused tax
     losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry
     forward of unused tax assets, and unused tax losses can be utilized.




                                                                  F-71
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Income Taxes (Continued)

     Deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognized to the extent that
     it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the
     temporary difference can be utilized.

     The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
     probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

     Deferred income tax assets and liabilities are measured, without discounting, at the tax rates that are expected to apply to the period in
     which the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
     as of the balance sheet date.

     Revenue Recognition

     Revenue is recognized when the significant risks and rewards of ownership have passed to the buyer, the amount of revenue can be
     measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or
     to be incurred can be measured reliably, and when the criteria for each of the Group's different activities has been met.

     The multiple components of the Group's revenue are considered separate units of accounting in that revenue recognition occurs at
     different points of time for product shipment, installation and training services, and service contracts based on performance or contract
     period.

     Revenue for product shipment is recognized when title passes to the customer, which is upon shipment, provided there are no
     conditions to acceptance, including specific acceptance rights. If the Group makes an arrangement that includes specific acceptance
     rights, revenue is recognized when the specific acceptance rights are met. Upon review, the Group concluded that consideration
     received from their customer agreements are reliably measurable because the amount of the consideration is fixed and no specific
     refund rights are included in the arrangement. The Group defers 100% of the revenue from sales shipped during the period that they
     believe may be uncollectible.

     Installation revenue is recognized when the installation is complete. Separate amounts are charged and assigned in the customer
     quote, sales order and invoice, for installation and training services. These amounts are determined based on fair value, which is
     calculated in accordance with industry and competitor pricing of similar services and adjustments according to market
     acceptance. There is no price reduction in the product price if the customer chooses not to have the Group complete the installation.




                                                                   F-72
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Revenue Recognition (Continued)

     Extended product service contracts are offered to the Group's customers and are generally entered into prior to the expiration of the
     Group's one year product warranty. The revenue generated from these transactions are recognized over the contract period, normally
     one to four years.

     The Group does not have a general policy for cancellation, termination or refunds associated with the sale of their products and
     services. All items are on a quote/purchase order with payment terms specified for the whole order. Occasionally, the Group has
     customers who require specific acceptance tests and, accordingly, the Group does not recognize such revenue until these specific tests
     are met.

     Research and Developments Costs and Other Intangible Assets

     Research costs are expensed as incurred. An intangible asset arising from development expenditures on an individual project is
     recognized only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available
     for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
     availability of resources to complete the asset and the ability to measure reliably the expenditure during development.

     During the period of development, the asset is tested for impairment annually. Following the initial recognition of the development
     expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated
     impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized
     over the period of expected future sales. During the period of which the assets are not yet in use it is tested for impairment annually.

     Other intangible assets include acquired and internally developed software and knowledge used in production that qualify for
     recognition as an intangible asset in a business combination. They are accounted for using the cost model whereby capitalized costs
     are amortized on a straight line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful
     lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described above. The following useful
     life is applied:

     EMR related software – 15 years

     Royalty-bearing Grants

     Royalty-bearing grants form the Chief Scientist and BIRD-F for funding certain approved research projects are recognized at the time
     the Company is entitled to such grants on the basis of the related costs incurred and are presented as a reduction of research and
     development expenses.




                                                                    F-73
                                             MEDIVISION MEDICAL IMAGING LTD.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (in thousands of U.S. dollars)
                                                          (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Earnings Per Share

     The Group calculates basic and diluted earnings per share in accordance with IAS 33, Earnings Per Share . Basic earnings per share
     are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed
     using the weighted average number of shares outstanding during he period plus the dilutive effect of stock options outstanding during
     the period, if any, and after consideration with any dilutive effect of the convertible loans.

     Fair Value of Financial Instruments

     The carrying values of cash and cash equivalents, restricted cash, trade and other receivables, short-term bank credit, trade and other
     payable, and long-term loans reported in the consolidated balance sheet approximate their fair values.

     Concentrations of Credit Risk

     Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash, cash equivalents
     (including restricted cash) and trade receivables.

     Cash and cash equivalents are deposited with banks and financial institutions in Israel, Germany and the United States of
     America. Management believes that the financial institutions that hold the Group's investments are financially sound and,
     accordingly, minimal credit risk exists with respect to these investments.

     The Group has adopted credit policies and standards intended to accommodate industry growth and inherent risk. The Group
     performs ongoing credit evaluations of its customers' financial condition and has limited the risk by implementing a policy that
     requires deposits from customers, and that takes into account the number of customers and their geographic dispersion. The Group
     includes provisions in the consolidated financial statements which, in the opinion of management, are adequate to cover doubtful
     accounts.

     Share-based Payment

     IFRS 2, Share-Based Payment , requires an expense to be recognized when goods or services are acquired in exchange for shares or
     rights to shares (equity-settled transactions), or in exchange for other assets equivalent in value to a given number of shares or rights to
     shares (cash-settled transactions).

     All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where
     employees are rewarded using share-based payments, the fair values of employees' services are determined indirectly by reference to
     the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market
     vesting conditions (for example profitability and sales growth targets and performance conditions).




                                                                   F-74
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Share-based Payment (Continued)

     All share-based payment is ultimately recognized as an expense in the consolidated statement of operations with a corresponding
     credit to "additional paid-in capital".

     If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available
     estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the
     number of options that are expected to become exercisable. Estimates are subsequently revisited, if there is any indication that the
     number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in
     the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are
     different to that estimated on vesting.

     Provisions, Contingent Liabilities and Contingent Assets

     Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources
     from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation
     arises from the presence of a legal or constructive commitment that has resulted from past events, for example, product warranties
     granted, legal disputes or onerous contracts. Restructuring provisions are recognized only if a detailed formal plan for the
     restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected
     by it. Provisions are not recognized for future operating losses.

     Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence
     available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted
     to their present values, where the time value of money is material.

     Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a
     separate asset. However, this asset may not exceed the amount of the related provision.

     All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

     Financial Instruments

     Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial
     instrument.

     Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial
     asset and all substantial risks and rewards are transferred.


                                                                   F-75
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Financial Instruments (Continued)

     A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

     Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and
     financial liabilities carried at fair value through the consolidated statement of operations, which are measured initially at fair value.

     Financial assets and financial liabilities are measured subsequently as described below.

     Financial Assets

     For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments, are
     classified into the following categories upon initial recognition:

                     Loans and receivables
                     Financial assets at fair value through the consolidated statement of operations
                     Held-to-maturity investments
                     Available-for-sale financial assets

     The category determines subsequent measurement and whether any resulting income and expense is recognized in the consolidated
     statement of operations in other comprehensive income.

     All financial assets except for those at fair value through the consolidated statement of operations are subject to review for impairment
     at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of
     financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are
     described below.

     The financial assets of the Group were classified as "loans and receivables".

     Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
     market. After initial recognition these are measured at amortized cost using the effective interest method, less provision for
     impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and
     most other receivables fall into this category of financial instruments.


                                                                   F-76
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Financial Instruments (Continued)

     Financial Liabilities

     The Group's financial liabilities include borrowings, trade and other payables and derivative financial instruments.

     Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities
     held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses
     recognized in the consolidated statement of operations.

     All derivative financial instruments (including embedded derivatives) that are not designated and effective as hedging instruments are
     accounted for at fair value through the consolidated statement of operations.

     All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included
     within "financial expenses" or "financial income".

     IFRS and IFRIC Interpretations Not Yet Effective

     IAS 23 Borrowing Costs (Revised) (Effective from January 1, 2009)

     The revised standard requires the capitalization of borrowing costs, to the extent they are directly attributable to the acquisition,
     production or construction of qualifying assets that need a substantial period of time to get ready for their intended use or sale. The
     option currently used by the Group of immediately expensing those borrowing costs will be removed. In accordance with the
     transitional provisions of the revised standard, the Group capitalizes borrowing costs relating to qualifying assets for which the
     commencement date is on or after the effective date. No retrospective restatement will be made for borrowing costs that have been
     expensed for qualifying assets with a commencement date before the effective date. The revised standard will decrease the Group's
     reported interest expense and increase the capitalized cost of qualifying assets under construction in future periods. Management
     believes that borrowing costs are expected to be capitalized in the first year of application of this revised standard. The capitalization
     is primarily related to some of the Group's development projects.




                                                                  F-77
                                            MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     IFRS and IFRIC Interpretations Not Yet Effective (Continued)

     IFRIC 13 Customer Loyalty Programs (Effective from July 1, 2008)

     This interpretation clarifies that when goods or services are sold together with a customer loyalty incentive (for example loyalty points
     or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated
     between the components of the arrangement using fair values. The Group's current accounting policy is to recognize the consideration
     in full and to provide for the estimated cost of the future rewards. Consequently, the adoption of this interpretation will change the
     Group's accounting policy. The Group very seldom awards free products in connection with a sales transaction. Therefore,
     management believes the financial effects of this interpretation are insignificant for current and future reporting periods.

     IFRS 3 Business Combinations (Revised 2008) (Effective from July 1, 2009)

     The standard is applicable for business combinations occurring in reporting periods beginning on or after July 1, 2009 and will be
     applied prospectively. The new standard introduces changes to the accounting requirements for business combinations, but still
     requires use of the purchase method, and will have a significant effect on business combinations occurring in reporting periods
     beginning on or after July 2, 2009.

     IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (Effective from July 1, 2009)

     The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and for changes in the
     Group's interest in subsidiaries. Management does not expect the standard to have a material effect on the Group's consolidated
     financial statements.

     Amendments to IFRS 2 Share-based Payment (Effective From January 1, 2009)

     The IASB has issued an amendment to IFRS 2 regarding vesting conditions and cancellations. None of the Group's current
     share-based payment plans are affected by the amendments. Management does not consider the amendments to have an impact on the
     Group's consolidated financial statements.


                                                                  F-78
                                             MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


2.      SIGNIFICANT ACCOUNTING POLICIES (Continued)

     IFRS and IFRIC Interpretations Not Yet Effective (Continued)

     Annual Improvements 2008

     The IASB has issued Improvements for International Financial Reporting Standards 2008. Most of these amendments become
     effective in annual periods beginning on or after January 1, 2009. The Group expects the amendment to IAS 23 Borrowing Costs to
     be relevant to the Group's accounting policies. The amendment clarifies the definition of borrowing costs by reference to the effective
     interest method. This definition will be applied for reporting periods beginning on or after January 1, 2009. Management believes
     additional amendments are made to several other standards. These amendments are not expected to have a material impact on the
     Group's consolidated financial statements.

     Critical Accounting Estimates and Judgments

     Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of
     future events that are believed to be reasonable under the circumstances.

     Critical Accounting Estimates and Assumptions

     The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
     statements, and the reported amounts of revenues and expenses during the reporting periods Actual results could differ from those
     estimates.

     The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
     equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
     carrying amounts of assets and liabilities within the next financial year are discussed below.

     The following are significant management judgments in applying the accounting policies of the Group that have the most significant
     effect on the consolidated financial statements.

     Internally Generated Software and Research Costs

     Management monitors progress of internal research and development projects by using a project management system. Significant
     judgment is required in distinguishing research from the development phase. Development costs are recognized as an asset when all
     the criteria are met, whereas research costs are expensed as incurred.




                                                                   F-79
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)

2.     SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Internally Generated Software and Research Costs (Continued)

     To distinguish any research-type project phase from the development phase, it is the Group's accounting policy to also require a
     detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into the Group's
     overall budget forecast as the capitalization of development costs commences. This ensures that managerial accounting, impairment
     testing procedures and accounting for internally-generated intangible assets is based on the same data.

     The Group's management also monitors whether the recognition requirements for development costs continue to be met. This is
     necessary as the economic success of any product development is uncertain and may be subject to future technical problems after the
     time of recognition.

     Deferred Tax Assets

     The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based on the Group's latest
     approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any
     unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into
     consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be
     utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject
     to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and
     circumstances.

     Impairment

     An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its
     recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each
     cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process
     of measuring expected future cash flows, management makes assumptions about future gross profits. These assumptions relate to
     future events and circumstances. The actual results may vary, and may cause significant adjustments to the Group's assets within the
     next financial year.




                                                                    F-80
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)

3.     ACCOUNTS RECEIVABLE

      A summary of accounts receivable at December 31, 2008 follows:

     Trade, net:
     Open accounts                                                              $   2,567
     Less: allowance for doubtful accounts                                           (224 )

                                                                                $   2,343


     Other accounts receivable:
     Prepaid expenses                                                           $    354
     Other                                                                            74

                                                                                $    428


4.     INVENTORIES

      A summary of inventories at December 31, 2008 follows:

     Raw materials                                                              $    425
     Work in progress                                                                367
     Finished products                                                               784

                                                                                $   1,576




                                                               F-81
                                                 MEDIVISION MEDICAL IMAGING LTD.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  (in thousands of U.S. dollars)
                                                           (Continued)


5.     PROPERTY AND EQUIPMENT

      Property and equipment consists of the following:

                                                    Office            Computers
                                  Machinery        Furniture             and
                                     and             and              Peripheral                                Leashold
                                  Equipment       Equipment           Equipment            Vehicles*          improve-ments               Total
     Cost:
      Balance as of
         January 1, 2008      $          380      $       883     $           183      $          101     $               30          $    1,577

     Changes during the
     year:
       Foreign translation                (4 )                                                     (6 )                                       (10 )
       Additions, including
         through business
         combination                      36              192                      3               62                                        293
       Disposals                                          (13 )                                   (27 )                                      (40 )

       Balance as of
         December 31,
         2008                 $          412      $     1,062     $           186      $          130                     30          $    1,820

     Accumulated
     depreciation:
       Balance as of
         January 1, 2008      $          323      $       467     $           162      $           21 $                   29          $    1,002
       Foreign translation                (3 )                                                     (3 )                                       (6 )
       Additions                          25              182                  16                  19                                        242
       Disposals                                                                                  (18 )                                      (18 )

       Balance as of
         December 31,
         2008                 $          345      $       649     $           178      $           19     $               29          $    1,220


     Depreciated cost:
      Balance as of
        December 31,
        2008                  $           67      $       413     $                8   $          111     $                   1       $      600


      * Includes assets under capital lease agreements, whose original cost is $137 as of December 31, 2008.
      * Liens – see Note 10.

6.     GOODWILL AND OTHER INTANGIBLE ASSETS

      A summary of goodwill and other intangible assets at December 31, 2008 follows:

     Original amounts:
     Goodwill                                                                                                                     $        4,233
     Intangible assets                                                                                                                     4,872
                                       9,105
Accumulated amortization:
Goodwill *                             1,025
                                   $   8,080




                            F-82
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


6.     GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

      On August 18, 2000, the Company acquired a controlling interest of voting shares of OIS. The consideration for the acquisition, paid
      in cash, was $2,575. Goodwill arising on the acquisition amounted to $3,487.

      Effective July 1, 2004, the Company acquired 54% of the voting shares of CCS, a company incorporated in Jena, Germany. CCS
      designs, develops, manufactures and market ophthalmic digital imaging and image enhancement systems. The consideration for the
      acquisition was $845 of with $813 was paid in cash and the balance of $32 by transfer of shares of Medivision's U.S. subsidiary, OIS.

      In July 2005, the Company increased its holdings in CCS by an additional 9% in consideration of one thousand EURO and reached a
      63% holding in CCS.

      Intangible assets consist primarily of capitalized development costs and the purchase of substantially all the assets of AcerMed, Inc., a
      leading software developer for Electronic Medical Records.

7.     SHORT-TERM CREDIT AND CURRENT MATURITIES OF LONG-TERM LOANS

      A summary of short-term credit and current maturities of long-term loans at December 31, 2008 follows:

                                                                                                      Interest Rate         2008

     Short-term bank credit                                                                                                       505
     Line of credit                                                                                      Prime                    150
     Convertible shareholder loans                                                                           9%                   349
     Liability with respect to conversion component                                                                               100
     Current maturities of long-term notes (Note 9)                                                                             2,560

                                                                                                                        $       3,664




                                                                   F-83


                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)
7.    SHORT-TERM CREDIT AND CURRENT MATURITIES OF LONG-TERM LOANS (Continued)

      In May 2003, OIS entered into a line of credit agreement with a bank of up to $150. The line is secured by a $158 pledged deposit
      with the bank. Advances on the line bear interest at prime (3.25% at December 31, 2008) and are due monthly. The line of credit
      expires on May 10, 2011.

      In September 2007, the Company signed a Term Sheet which summarizes the various understandings reached between the Company
      and certain of its majority shareholders (the "Shareholders"), in connection with a convertible loan to be provided by the Shareholders
      to the Company. As of December 31, 2007, the Company received a loan in an amount of $550. On June 30, 2008, the Company
      issued 1,677,573 Ordinary Shares NIS 0.1 par value to Shareholders under the Term Sheet, in connection with a convertible loan
      provided by the Shareholders to the Company during the fourth quarter of 2007 and January 2008. In consideration of the issued
      shares, the shareholders loan in the amount of $626 was converted into share capital of the Company.

      During August 2008, under the above Term Sheet, the Shareholders granted the Company an additional loan in the amount of $400.

      The loan shall bear interest at an annual rate of 9% and shall be repaid within 12 months from the date of closing (September 2009).

      The loan will be convertible at the election of the shareholders at a price per share reflecting a discount rate of 20% of the average
      share price during the 30 days before conversion.

      The proceeds were allocated to a shareholders' loan component and to a liability with respect to the conversion component (an
      embedded derivative) (Note 2).

8.    OTHER ACCOUNTS PAYABLE

      Other accounts payable at December 31, 2008 consisted of the following:

     Employees                                                                                                        $       1,066
     Accrued expenses to shareholders                                                                                           278
     Deferred extended warranty revenue                                                                                       1,925
     Advances from customers                                                                                                    111
     Warranty provision                                                                                                          76
     Accrued expenses and other credit balances                                                                                 849

                                                                                                                      $       4,305


      In addition to OIS's one-year warranty, OIS offers an extended warranty for an additional charge to the customer. OIS records the sale
      of the extended warranty as deferred revenue and amortizes the revenue over the term of the agreement, generally one to four years.


                                                                  F-84
                                              MEDIVISION MEDICAL IMAGING LTD.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  (in thousands of U.S. dollars)
                                                           (Continued)


8.     OTHER ACCOUNTS PAYABLE (Continued)

      Product warranty provision changes consist of the following:

     Balance at beginning of the year                                                                               $          131

         Net provisions                                                                                                      134
         Warranty costs incurred                                                                                            (189 )

     Balance at end of the year                                                                                     $           76


9.     LONG-TERM LOANS

      Long-term loans at December 31, 2008 consisted of the following:


                                                                                                  Interest Rate         2008

                                                                                                    LIBOR +
     Bank loans                                                                                      3.75%          $      1,377
     Capitalized lease                                                                                3% – 4%               119
     Convertible shareholders' loan                                                                      9%                2,098

                                                                                                                           3,594

     Less: current maturities of long-term loans                                                                          (2,560 )

                                                                                                                    $      1,034


      For the loan agreement with United Mizrahi Bank, see Note 10.

      The LIBOR rate was 1.425% at December 31, 2008.

      In November 2006, the Company obtained a long-term bank loan in the amount of $750. The loan with interest at an annual rate of
      LIBOR + 3.75% is to be paid in eighteen monthly installments, commencing in July 2009.

      In February 2007, the Company obtained a long-term bank loan in the amount of $500. The loan with interest at an annual rate of
      LIBOR + 3.75% is to be paid in eighteen monthly installments, commencing in July 2009.

      On October 29, 2007, OIS entered into a Purchase Agreement (the "Purchase Agreement") with certain purchasers, pursuant to which
      OIS issued to the Purchasers (i) an aggregate of $2,750 in principal amount of its 6.5% interest bearing Convertible Notes Due April
      30, 2010 (the "Notes"), which Notes are convertible into 1,676,829 shares of OIS common stock, no par value, and (ii) warrants
      ("Warrants") to purchase an aggregate of 616,671 shares of OIS common stock at an exercise price of $1.87 per share. The Warrants
      expire on December 10, 2012.


                                                                 F-85
                                              MEDIVISION MEDICAL IMAGING LTD.

                                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (in thousands of U.S. dollars)
                                                             (Continued)


9.      LONG-TERM LOANS (Continued)

       The Company allocated the proceeds to the liability component and to the equity components (including warrants) in accordance with
       the principles detailed in Note 2 (including consideration with minority interest).

       Aggregate maturities of long-term loans are as follows:

      First year – current maturities                                                                                   $       2,560

      Second year                                                                                                                 928
      Third year                                                                                                                   45
      Fourth year                                                                                                                  61

                                                                                                                                1,034

                                                                                                                        $       3,594


10.     COMMITMENTS AND CONTINGENT LIABILITIES

       Chief Scientist

       The Company is committed, under agreements with the Chief Scientist in respect of certain research and development projects, to pay
       royalties to the Chief Scientist at the rate of 3.5% of the sales of products resulting from the research and development which resulted
       with the AngioVision product line, at an amount not to exceed the amount of the grants received by the Company, as participation in
       the research and development program. The sales of the AngioVision product line have decreased significantly. As of December 31,
       2008, the Company had an outstanding contingent obligation to pay royalties in the amount of $1,804. The obligation to pay these
       royalties is contingent on actual sales of the AngioVision product and in the absence of such sales no payment is required. Company
       management is of the opinion that payment of these royalties is remote.

       BIRD-F

       The Group received grants from the Binational Industrial Research Development Foundation (BIRD-F). Royalty payments to BIRD-F
       are due at the rate of 2.5% for the first year and 5% beginning with the second year and thereafter, on revenues derived from research
       and development projects in which BIRD-F participated in their financing, up to 15% of the amount received by the Group.

       As of December 31, 2008, grants received from BIRD-F amounted to $769, and the Group has an outstanding contingent obligation to
       pay royalties to BIRD-F aggregating up to $1,154. The obligation to pay these royalties is contingent on actual sales of the product
       and in the absence of such sales, no payment is required. Company management is of the opinion that payment of these royalties is
       remote.


                                                                    F-86
                                               MEDIVISION MEDICAL IMAGING LTD.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (in thousands of U.S. dollars)
                                                          (Continued)


10.     COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

       Liens

       The Company's liabilities to banks are secured by a fixed lien on the Company's share capital, goodwill, patents and insurance rights
       and a floating lien on all of its assets.

       To secure its liabilities to United Mizrahi Bank, the Company pledged 750,000 shares of its holdings in the common stock of OIS in
       favor of the bank.

       OIS granted a security interest in substantially all assets of OIS to United Mizrahi Bank Ltd., as security for amounts borrowed by the
       Company from the bank. To secure this debenture, the Company pledged 2,345,500 shares of OIS common stock.

       To secure its liabilities to its shareholders for convertible loans received during 2008, the Company pledged 4,837,391 shares of its
       holdings in the common stock of OIS in favor of its shareholder.

      Short-term bank loan, including current maturities of
          long-term loans                                                                                              $       2,560


      Long-term bank loans                                                                                             $       1,034


       Lease Agreements

       OIS leases its facilities under a non-cancelable operating lease that expires in June 2012 with minimum lease payments of
       approximately $111 for the year ended December 31, 2009, $143 for the years ended December 31, 2010 and 2011, and $72 for the
       six months ending June 30, 2012. OIS'S wholly-owned subsidiary, Abraxas, leases a facility for its office under a non-cancelable
       operating lease that expires April 30, 2009. The lease agreement provides for minimum lease payments of $28 for the four months
       ended April 30, 2009.

       The Company rents its facilities under a non-cancelable operating lease that expires in September 2010. The lease agreements require
       minimum lease payments of approximately $40 per year until 2010.

       Subsequent to the balance sheet date, the Company unilaterally terminated the agreement and moved to a new rented facility under a
       non-cancelable operating lease agreement that expires in February 22, 2011. The lease agreement requires minimum lease payments
       of approximately $20 per year.

       CCS leases its facilities under a six-month cancellation notice operating lease that is unlimited in time with minimum lease payments
       of approximately $22 per year.


                                                                   F-87
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


10.    COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

       Claims

       On March 12, 2007, one of the Company's subcontractors filed the following legal actions: (i) in the Tel Aviv District court – seeking
       judgment whereby any intellectual property rights arising from the parties' cooperation shall be partitioned between the Parties in
       equal parts; and (ii) in the Tel Aviv Magistrates Count – seeking monetary judgment against MediVision with respect to alleged
       debts. In June 2010, the Company reached a settlement agreement and paid the subcontractors $235.

       On May 11, 2007, OIS filed a civil action in the Superior Court of California for the County of Sacramento against its former
       president Steven Verdooner. OIS consequently moved for and was granted an order amending the complaint to add claims against
       defendants Opko Health, Inc. and the Frost Group, LLC. The complaint alleges against Mr. Verdooner claims of breach of fiduciary
       duty, intentional interference with contract, and intentional interference with prospective economic advantage, and it alleges claims
       against Opko Health and the Frost Group, as stated above, of interference and with aiding and abetting Verdooner's interference and
       breach of fiduciary duty. The complaint requests total damages against defendants in excess of $7,000. In May 2009, OIS agreed to a
       settlement with the defendants. The defendants paid OIS $1,200.

11.    SHARE CAPITAL

       Composition

       Share capital for the year ended December 31, 2008 consisted of the following:

                                                                                                                       Issued and
                                                                                                    Registered         Fully Paid

      Ordinary shares                                                                                  10,000,000         8,484,872



                                                                   F-88
                                             MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


11.   SHARE CAPITAL (Continued)

      Composition (Continued)

      On June 30, 2009, the Company issued 1,677,573 Ordinary Shares NIS 0.1 par value to certain majority shareholders (the
      "Shareholders") in respect of the Term Sheet signed in September 2007 between the Shareholders, in connection with a convertible
      loan provided by the Shareholders to the Company during the fourth quarter of 2007 and January 2008. In consideration of the issued
      shares, the Shareholders' loan in the amount of $626 was converted into share capital of the Company.

      Warrants

      In July 2005, the Company obtained a long-term bank loan in the amount of $2,000. The loan bears interest at an annual rate of
      LIBOR + 3.75%, and is to be paid in twenty four monthly installments, commencing on August 1, 2006. The Company and the bank
      reached a new payments schedule under which the company will pay until June 2009 a monthly payment of $30 and from there on
      $83 unless otherwise agreed between the parties. Under covenants set in the loan agreement, as long as any part of the loan is
      outstanding, the Company must maintain controlling ownership in OIS shares and a minimum amount of consolidated free cash as set
      in the agreement. The Company was in compliance with all restrictive loan covenants as of December 31, 2008 and during the
      reported period.

      In consideration for the loan, the Company modified the terms of the warrants issued to the bank during 2002. The warrants to
      purchase shares of the Company for a total consideration of up to Euro 348,603 may be exercised at any time, for a period ending at
      the earlier of 8.5 years after December 9, 2002 or 12 months after the consummation of an exit transaction as described in the
      agreement with the bank. The exercise price will be the lower of Euro 1.3 or the price per share set at the exit transaction less
      40%. The Company calculated the incremental fair value (increase in fair value of the warrants before and after the modification)
      using an option pricing model.

      Stock Option Plans

      On October 17, 1999, the Board of Directors of the Company adopted a Stock Option Plan (the "1999 Plan") pursuant to which share
      options in the Company may be granted to employees, officers, directors and consultants of the Company or any subsidiary. An
      aggregate of 500,000 Ordinary Shares of the Company are reserved for issuance under the 1999 Plan. Any options which are canceled
      or forfeited within the option period will become available for future grants. The 1999 Plan will terminate in 2010, unless previously
      terminated by the Board of Directors. The plan is under section 102 of the Israeli Tax Ordinance in connection with exemption from
      tax on the date of issuance of shares (subject to limitations). As of December 31, 2008, there are 236,888 Ordinary Shares available
      for issuance under the 1999 Plan.


                                                                  F-89
                                                 MEDIVISION MEDICAL IMAGING LTD.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (in thousands of U.S. dollars)
                                                          (Continued)


11.     SHARE CAPITAL (Continued)

       Stock Option Plans (Continued)

       On November 16, 2004, the Board of Directors of the Company adopted an Israeli Stock Option Plan (the "2004 ISOP") pursuant to
       which share options in the Company may be granted to employees, officers, directors and consultants of the Company or any
       subsidiary. An aggregate of 500,000 Ordinary Shares of the Company are reserved for issuance under the 2004 ISOP. Any options
       which are canceled or forfeited within the option period will become available for future grants. The vesting period will be 50% after
       two years, 25% after three years and 25% after four years from the grant date. The 2004 ISOP will terminate in 2014, unless
       previously terminated by the Board of Directors. As of December 31, 2008, there are 204,800 Ordinary Shares available for issuance
       under the 2004 ISOP.

       As of December 31, 2008, there are 558,312 options outstanding, of which 546,312 are exercisable into Ordinary Shares as follows:

                                                                               Weighted
                                                                               Average
                                                                              Contractual
                                             Outstanding                         Life                          Exercisable
                                              Number                          Remaining                         Number
      Exercise Price Per Share               of Options                        In Years                        of Options
              (EURO)
                    0.50 – 1.50                        263,112                       1.5                                  263,112
                           0.80                        271,200                        6                                   271,200
                    2.02 – 2.53                         24,000                        8                                    12,000

                                                       558,312 *                                                          546,312



        *   Including 218,768 options not issued under section 102 of the Israeli Tax Ordinance.

        ** Weighted average contractual life remaining in years.


                                                                                                        December 31, 2008
                                                                                                                    Weighted
                                                                                                                     Average
                                                                                                                     Exercise
                                                                                                      Amount           Price
                                                                                                                     (EURO)
      Outstanding at the beginning of the year                                                      $  763,489               0.88

      Granted
      Exercised
      Forfeited                                                                                         (205,177 )             1.83

      Outstanding at the end of the year                                                            $    558,312               1.08


      Exercisable options                                                                           $    546,312               1.07



                                                                   F-90
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


11.     SHARE CAPITAL (Continued)

       Stock Option Plans (Continued)

       The fair value of options grants is estimated at the date of grant using the Black-Scholes option pricing model. The following are the
       data and assumptions used:

      Dividend yield                                                                                                            0%
      Historical Volatility                                                                                                    74%
      Expected Volatility                                                                                                      74%
      Risk free interest rate                                                                                                 3.5%
      Expected life of options                                                                                              4 years
                                                                                                                             2.58 -
      Exercise price                                                                                                  $       $3.23
      Share price                                                                                                     $        3.14
                                                                                                                             1.77 -
      Fair value                                                                                                      $       $1.93

       The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not
       necessarily be the actual outcome.

       The Company recorded employee compensation expense of $56 for the year ended December 31, 2008, with a corresponding increase
       in equity (additional paid-in capital).

       In addition, compensation expense of $30 was recorded for the year ended December 31, 2008, in connection with grants of options
       by OIS.

       There were no grants during fiscal year 2008.

12.     SELECTED STATEMENT OF OPERATIONS DATA

       Sales

       Sales for the year ended December 31, 2008 is comprised as follows:

      North America                                                                                                   $      11,676
      Europe                                                                                                                  2,578
      Other                                                                                                                     156

                                                                                                                      $      14,410



                                                                   F-91
                                             MEDIVISION MEDICAL IMAGING LTD.

                                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (in thousands of U.S. dollars)
                                                            (Continued)


12.       SELECTED STATEMENT OF OPERATIONS DATA (Continued)

       Cost of Sales

       Cost of sales for the year ended December 31, 2008 is comprised as follows:

      Materials consumed                                                                                 $   2,769
      Salaries                                                                                               3,566
      Other                                                                                                    244

                                                                                                             6,579

      Changes in work in progress and finished products                                                        51

                                                                                                         $   6,630


       Research and Development Expenses

       Research and development expenses for the year ended December 31, 2008 is comprised as follows:

      Salaries and related expenses                                                                      $   1,612
      Subcontractors and consultants                                                                           370
      Materials and supplies                                                                                    42
      Depreciation                                                                                              24
      Miscellaneous                                                                                            811

                                                                                                         $   2,859


       Selling and Marketing Expenses

       Selling and marketing expense for the year ended December 31, 2008 is comprised as follows:

      Salaries and related expenses                                                                      $   3,173
      Advertising and exhibitions                                                                              491
      Foreign travel                                                                                           549
      Communications                                                                                            49
      Miscellaneous                                                                                            570

                                                                                                         $   4,832



                                                                  F-92
                                                 MEDIVISION MEDICAL IMAGING LTD.

                                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   (in thousands of U.S. dollars)
                                                            (Continued)


12.     SELECTED STATEMENT OF OPERATIONS DATA (Continued)

       General and Administrative Expenses

       General and administrative expenses for the year ended December 31, 2008 is comprised as follows:

      Salaries and related expenses                                                                        $        936
      Professional services                                                                                         529
      Rent                                                                                                          250
      Communications                                                                                                 72
      Vehicle maintenance                                                                                            19
      Doubtful and bad debts                                                                                         65
      Depreciation                                                                                                   55
      Miscellaneous                                                                                                 393

                                                                                                           $      2,319


       Financial Expenses, Income

       Financial expenses and income for the year ended December 31, 2008 is comprised as follows:

      Expenses:
      Bank expenses and interest, net                                                                      $        604


      Income:
       Interest income                                                                                     $          73


       Income Tax Expense

       Income tax expense for the year ended December 31, 2008 is comprised as follows:

      Current taxes                                                                                        $           1
      Deferred taxes                                                                                              (1,342 )


                                                                                                           $      (1,341 )


       Earnings Per Share

       Earnings per share for the year ended December 31, 2008 is comprised as follows:

      Net loss for the year attributed to equity holders of the parent                                     $      3,296


      Weighted average number of shares used in calculation of
      basic earnings per share                                                                                 7,646,086


      Basic and diluted earnings per share                                                                 $       (0.43 )
F-93
                                             MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


13.   INCOME TAXES

      Tax Benefits under the Encouragement of Capital Investments Law

      The Company was granted "approved enterprise" status. The main benefits to which the Company will be entitled, if it implements all
      the terms of the approved program, are exemption from tax on income from the approved enterprise, and reduced tax rates on
      dividends originating from this income. The income from the approved enterprise will be exempt from tax for a ten year period,
      commencing on the date that taxable income is first generated by the approved enterprise (limited to the earlier of a maximum period
      of 12 years from commencing operations or 14 years from the date the approval letter is received). In August 1999, the Company was
      granted an additional period of extension, thus extending the period of tax exemption until 2009.

      Dividend distributions originating in the income of the approved enterprise will be subject to tax at the rate of 15%, provided that the
      dividend is distributed during the period stipulated in the law. In the event of a dividend distribution (including withdrawals and
      charges that are deemed to be dividends) out of the income originating from the approved enterprise, and on which the Company
      received a tax exemption, income from which the dividend is distributed will be subject to corporate tax at the rate of 25%.

      The entitlement to the above benefits is conditional upon the Company fulfilling the conditions stipulated by the above law,
      regulations published hereunder and the instruments of approval for the specific investments in "approved enterprises". In the event of
      failure to comply with these conditions, the benefits may be canceled and the Company may be required to refund the amount of the
      benefits, in whole or in part, including interest. As of December 31, 2008, management believes that the Company is in compliance
      with all of the aforementioned conditions.

      Measurement of Results for Tax Purposes Under the Income Tax (Inflationary Adjust-ments) Law, 1985 (the "Inflationary Adjustment
      Law")

      The Company reports income for tax purposes in accordance with the provisions of the Inflationary Adjustments Law, whereby
      taxable income is measured in NIS, adjusted for changes in the Israeli Consumer Price Index.

      Results of operations for tax purposes are measured in terms of earnings in NIS after adjustments for changes in the Israeli Consumer
      Price Index ("CPI"). Commencing January 1, 2008,this law is void and in its place there are transition provisions, whereby the results
      of operations for tax purposes are to be measured on a nominal basis.

      Carry Forward Tax Losses

      The Company has accumulated losses for tax purposes as of December 31, 2008, in the amount of approximately $7,000, which may
      be carried forward and offset against taxable income in the future for an indefinite period.



                                                                   F-94
                                               MEDIVISION MEDICAL IMAGING LTD.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  (in thousands of U.S. dollars)
                                                           (Continued)


13.     INCOME TAXES (Continued)

       Carry Forward Tax Losses (Continued)

       In June 2004, an amendment to the Income Tax Ordinance (No. 140 and Temporary Provision), 2004 was passed by the "Knesset"
       (Israeli parliament) and on July 25, 2005, another law was passed, the amendment to the Income Tax Ordinance (No. 147) 2005,
       according to which the corporate tax rate is to be gradually reduced to the following tax rates: 2007 - 29%, 2008 - 27%, 2009 - 26%,
       2010 and thereafter - 25%.

       For the year ended December 31, 2008, a reconciliation of the theoretical tax expense, assuming all income is taxed at the statutory
       rate applicable to the income of companies in Israel, and the actual tax benefit, is as follows:

      Loss before taxes as reported in the consolidated
      statement of operations                                                                                        $     (3,281 )
      Statutory tax rate in Israel                                                                                             27 %

      Theoretical tax expense                                                                                                 866

      Increase in taxes resulting from:
       Losses in respect of which no deferred taxes were generated                                                            455

      Actual tax expense                                                                                             $      1,341



       Final Tax Assessments

       The Company has tax assessments that are deemed final through 2003.



                                                                     F-95
                                                MEDIVISION MEDICAL IMAGING LTD.

                                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      (in thousands of U.S. dollars)
                                                               (Continued)



14.     RELATED PARTY TRANSACTIONS AND BALANCES

       Balances

       Related party balances at December 31, 2008 consist of the following:

      Accrued expenses to shareholders                                                              $   211



      Other liabilities to shareholders                                                             $    44



      Convertible loans of shareholders                                                             $   449



      Other liabilities to Directors                                                                $    21


       No advances or loans were granted to Directors of the Company.

       Transactions

       Interest to related parties for the year ended December 31, 2008 consist of the following:

      Interest to related parties                                                                   $    40


      Salaries to key management personnel of the Company
      (shareholders), including stock-based compensation                                            $   171


      Salaries to key management personnel of a subsidiary
      (shareholders)                                                                                $   576


      Fees to Directors of the Company                                                              $    27


      Salaries to Directors of a subsidiary                                                         $    45




                                                                    F-96
                                             MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)


15.     DEVELOPMENT SHARE CAPITAL OF OIS

       As of December 31, 2008, the Company owns approximately 56% of outstanding common stock (9,445 thousand shares).

       Warrant activity for the year ended December 31, 2008 is summarized as follows:

                                                                                                                     Weighted
                                                                                                                     Average
                                                                                                                     Exercise
                                                                                                   Warrants           Price

      Outstanding at beginning and end of year                                                        929,671    $          1.79


      Currently exercisable                                                                           929,671    $          1.79


       On October 29, 2007, OIS entered into a Purchase Agreement with The Tail Wind Fund and Solomon Strategic Holdings, Inc. Within
       this agreement, there were warrants issued to purchase an aggregate of 616,671 shares of OIS common stock at an exercise price of
       $1.87 per share. 526,973 of the warrants were issued to The Tail Wind Fund and 89,698 were issued to Solomon Strategic Holdings,
       Inc. These warrants expire on December 10, 2012.

       The 313,000 warrants outstanding as of January 1, 2008 and December 31, 2008 were issued in conjunction with the debt offerings
       for Laurus Master Fund. The debt related to Laurus Master Fund was completely paid with cash or converted into shares as of
       December 31, 2006. These warrants expire on April 27, 2009.

       There were 929,671 warrants outstanding and exercisable as of December 31, 2008 with a weighted average remaining contractual life
       of 2.72 years, a weighted average exercise price of $1.79.

       As of December 31, 2008, the price of the OIS share on the stock exchange was $0.17. At December 31, 2008, the value of the share
       is $0.33 (Note 2).




                                                                 F-97
                                              MEDIVISION MEDICAL IMAGING LTD.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                (in thousands of U.S. dollars)
                                                         (Continued)



16.   FINANCIAL RISK MANAGEMENT

      Financial Risk Factors

      The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk),
      credit risk and liquidity risk.

      The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential
      adverse effects on the Company's financial performance.

      Company management designs principles for overall risk management, as well as develops policies covering specific areas, such as
      foreign exchange risk, pricing risk, interest rate risk, credit risk and liquidity risk.

      The Company's principal financial instruments are comprised of accounts receivable, cash and cash equivalents, trade and other
      payables, short-term bank credit and long-term loans which arise directly from its operations. During the year the Company did not
      undertake trading in financial instruments (including derivatives).

      Credit Risk

      Financial assets, which potentially subject the Company to credit risk, consist principally of trade receivables. The Company has
      policies in place to ensure that sales are made to customers with an appropriate credit history. The carrying amount of accounts
      receivable, represents the maximum amount exposed to credit risk. The Company has no significant concentrations of credit
      risk. Although collection of receivables could be influenced by economic factors, management believes that there is no significant
      risk of loss to the Company.

      Cash (including cash equivalents and restricted cash) is placed in financial institutions, which are considered at the time of deposit to
      have minimal risk of default.

      Foreign Exchange Risk

      The Company performs purchases of goods and services and sells its products, receives loans and credit lines, which are denominated
      mainly in U.S. Dollars and partly in Euro and in NIS. As a result, the Company is exposed to foreign exchange risk.

      The Company does not have formal arrangements to mitigate foreign exchange risks of the Company's operations.


                                                                   F-98
                                            MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


16.   FINANCIAL RISK MANAGEMENT (Continued)

      Financial Risk Factors (Continued)

      Price Risk

      The Company does not hold equity securities or any other publicly traded investments and therefore is not exposed to price risk with
      respect to financial instruments.

      Cash Flow and Fair Value Interest Rate Risk

      The Company's income and operating cash flows are substantially independent of changes in market interest rates. The Company is
      exposed to LIBOR interest rate risk as its borrowings are linked significantly to the LIBOR. The Company has no interest-bearing
      assets.

      Liquidity Risk

      Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an
      adequate amount of committed credit facilities, and the ability to close out market positions.

      The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial
      liabilities as well as cash-outflows due in a short-term perspective. Liquidity needs are monitored in various time bands, on a
      day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day
      and a 360-day lookout period are identified monthly.

      The Company maintains cash and cash equivalents to meet its liquidity requirements for up to 30-day periods.

17.   CAPITAL RISK MANAGEMENT

      The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to
      provide returns to the owner and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
      capital.

      In order to maintain or adjust the capital structure, the Company may return the capital to the shareholders, issue new capital and
      convertible loans or sell assets to reduce debt.




                                                                 F-99
                                              MEDIVISION MEDICAL IMAGING LTD.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                 (in thousands of U.S. dollars)
                                                          (Continued)


18.     SEGMENT REPORTING

       As of January 2008, with the commencing operation of Abraxas by OIS, the Company began operating through two different core
       activities, as follows:

                      Electronic record and practice management software
                      Ophthalmic application

                                                                                          Year Ended December 31, 2008
                                                                                    Electronic
                                                                                   Record and
                                                                                     Practice
                                                                                   Management        Ophthalmic
                                                                                    Software         Application       Total

      Revenue from external customers                                             $           298     $        14,112    $     14,410


      Operating loss                                                              $           754     $         1,476    $       2,230


      Loss                                                                        $           754     $         3,868    $       4,622


      Assets                                                                      $         1,904     $        14,066    $     15,970


19.     SUBSEQUENT EVENTS

       New Convertible loan Agreement

       During August 2008 in respect of the Term Sheet signed between certain majority shareholders (the "Shareholders"), in connection
       with a convertible loan provided by the Shareholders to the Company, the Shareholders granted the Company an additional loan in the
       amount of $400.

       Subsequent to the balance sheet date, a new Convertible Loan Agreement was signed with the Shareholders at an aggregate amount of
       up to additional $800. The loan agreement shall cover also the principal amount of the above mentioned $400 provided to the
       Company during August 2008 and will apply the terms and conditions as detailed in the Convertible Loan Agreement. The loan shall
       bear interest at an annual rate of 12% and shall be repaid within 12 months from the date of the grant. Loan and any interest due
       thereon may be converted in a whole or in part into ordinary shares of the Company, at a conversion price equal to the lower between
       (1) the Company's average share price on the Belgium EuroNext Stock Exchange during the 30 days prior the date of this agreement;
       and (2) the Company's average share price on the Belgium EuroNext Stock Exchange during the 30 days prior the Conversion, and in
       each case subject to a discount at the rate of 20% of the Company's average share price on the Belgium EuroNext Stock Exchange at
       the applicable dates. As security for the Company's obligation including repayments of the loan and any interest due thereon and the
       Conversion Rights, the Company shall grant to the shareholders a pledge in shares of common stock of OIS held by the Company
       subject to a discount at a rate of 30% of the price of OIS' shares, to be allocated among each Shareholder pro-rata to the portion of the
       Loan which the respective shareholder actually provides.


                                                                   F-100
                                            MEDIVISION MEDICAL IMAGING LTD.

                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (in thousands of U.S. dollars)
                                                        (Continued)


19.     SUBSEQUENT EVENTS (Continued)

      Termination of Merger Agreement with OIS

      In March 2008, the Company and OIS entered into a merger agreement. In March 2009, the Company and OIS have mutually agreed
      to terminate their merger agreement. The termination of the agreement is due to exorbitant costs the companies and associated
      shareholders would incur as a result of regulatory requirements. The companies initially announced the merger agreement in March
      2008.

      Asset Purchase

      On June 24, 2009, the Company entered into an Asset Purchase Agreement ("APA") with OIS to sell substantially all the assets of the
      Company, which was completed on October 21, 2009. Such assets included the European operations which consisted of the
      Company's business as conducted by CCS, its branch office in Belgium, certain agreements under which the Company contracted with
      third parties for distribution and other services, and rights to intellectual property which resulted from the Company's research and
      development activities performed in Israel.

      As payment for such assets, OIS agreed to assume a bank loan outstanding with Mizrahi Tefahot Bank Ltd. (the "United Mizrahi
      Bank") in the amount of $1,500, to which OIS was previously a guarantor, liabilities associated with the assets sold on and after
      October 21, 2009, the closing date, and certain taxes, and extinguishment of all intercompany indebtedness owed by us with a
      principal amount of $4,179.

      In addition, in early 2009, OIS hired all of the Company's research and development staff and moved them to the offices in the United
      States and Israel.

      During 2009, OIS had recorded intercompany accounts and notes receivable due from the Company of $450 and $3,169, respectively,
      prepaid product advances to the Company of $560, which were in anticipation of the completion of the Electro-optical Unit, and $274
      of exclusivity rights paid to the Company to sell the Electro-optical Unit in the U.S. All such amounts were extinguished upon
      completion of the Asset Purchase.
      Purchase Agreement

      On June 24, 2009, OIS entered into a Purchase Agreement with AccelMed. Pursuant to the terms of the Purchase Agreement, OIS
      authorized the issuance and sale of up to an aggregate of 13,214,317 shares of their common stock and warrants to purchase up to an
      aggregate of 4,404,772 shares of their common stock in two installments. On the date of the Purchase Agreement, OIS completed the
      1st installment, under which OIS issued to AccelMed 9,633,228 shares and a warrant to purchase up to 3,211,076 shares for an
      aggregate purchase price of $4,000. The 1st Installment Warrant entitles AccelMed to purchase 3,211,076 shares of their common
      stock at an exercise price of $1.00 per share and expires on June 24, 2012. On May 26, 2010 the 2 nd and final installment was
      completed, under which OIS issued to AccelMed 3,581,089 shares and a warrant to purchase up to 1,193,696 shares for an aggregate
      purchase price of $2,000. The 2 nd installment warrant has an exercise price of $1.00 per share and expires on June 23, 2012. The
      remaining 124,286 shares of common stock were purchased from the Company on January 6, 2010 at a purchase price of $0.70 per
      share.




                                                                 F-101
                                        OPHTHALMIC IMAGING SYSTEMS

                                              UNAUDITED PRO FORMA

                              CONDENSED COMBINED FINANCIAL STATEMENTS


The following tables present unaudited pro forma condensed combined financial data that reflects the acquisition of substantially all
the assets of MediVision Medical Imaging Ltd. (MediVision), which was completed on October 21, 2009 (the ―MediVision Asset
Purchase‖). Such assets included the European operations which consisted of MediVision’s business as conducted by CCS
Pawlowski GmbH (―CCS‖), its branch office in Belgium (the ―Belgium Activities‖), certain agreements under which MediVision
contracted with third parties for distribution and other services (the ―Purchased Agreements‖), and rights to intellectual property
which resulted from MediVision’s research and development (―R&D‖) activities performed in Israel.

This information is derived from and should be read in conjunction with the historical financial statements and notes thereto of
Ophthalmic Imaging Systems (―OIS‖) and MediVision that are included in this filing. The unaudited pro forma condensed
combined financial data are presented for illustrative purposes only and do not purport to be indicative of the results of operations or
financial position for future periods or the results that actually would have been realized had the business combination described
above been consummated as of January 1, 2008.

The pro forma financials that are being presented are the unaudited combined balance sheets of OIS at September 30, 2009, the
unaudited combined condensed statement of operations for the nine months ending September 30, 2009 and the audited combined
condensed statement of operation for the year ending December 31, 2008. OIS presents their financial statements under accounting
principles generally accepted in the United States (U.S. GAAP). When OIS consolidates the results of the MediVision Asset
Purchase into its financials statements, OIS converts MediVision’s results from IFRS, International Financial Reporting Standards
to U.S. GAAP. The pro forma financials presented are based on OIS’ and MediVision’s unaudited and audited consolidated
financials to OIS pro forma financials. The adjustments presented reflect adjustments due to changes from IFRS to U.S. GAAP,
consolidating and reclassification adjustments due to the transaction, and pro forma adjustments. The Company has adjusted the
historical consolidating financial information to give effect to pro forma events that are (1) directly attributable to the acquisition,
(2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the combined
results. This information should be read in conjunction with the:

    (i) accompanying notes to the unaudited pro form condensed combined financial statements;

   (ii) separate historical unaudited interim financial statements for the nine months ending September 30, 2009 and historical
        audited financial statements of OIS for year ending December 31, 2008; and

     (iii) separate historical unaudited interim financial statements for the nine months ending September 30, 2009 and historical
           audited financial statements of MediVision for the year ending December 31, 2008.




                                                           F-102
                                                                OPHTHALMIC IMAGING SYSTEMS
                                                                   UNAUDITED PRO FORMA
                                                             CONDENSED COMBINED BALANCE SHEET
                                                                         September 30, 2009
                                                                   (in thousands of U.S. Dollars)

                                                             Adjustments                                                       OIS and
                                                             to reclassify                                                    MediVision
                                                             and                                                                 after
                                                             consolidate             Consolidated      Adjustments            conversion
                           Historical       Historical       financial               MediVision       to reconcile to           to U.S.         Pro forma              Pro forma
                             OIS            MediVision       statements                and OIS         U.S. GAAP                GAAP           adjustments             combined
      ASSETS

Current assets:
Cash and cash
equivalents            $         4,811      $        74      $          271      A $        5,156                   -         $     5,156                    -         $     5,156
Accounts receivable,
net of allowance for             2,628             313                  184      A          3,125                   -               3,125      $        (42 )    E           3,083
Inventories                        868                                   93      A            961                   -                 961                 -                    961
Prepaid expenses
and other current
assets                             257             214                       -                471                   -                 471                    -                 471
Assets and disposal
group classified as
held for sale                                     3,979               (3,979 )   A              -                   -                   -                 -                      -
Total current assets             8,564            4,580               (3,431 )              9,713                   -               9,713               (42 )                9,671
                                                                                                                                                                                 -
Restricted cash                    158                   -                   -                158                   -                 158                    -                 158
Furniture and
equipment, at cost,
net                                349               29                 165      A            543                   -                 543                    -                 543
Goodwill and other
intangible assets                1,816                   -            3,266      A          5,082              (3,184 )   D         1,898               (82 )    F           1,816
Accumulated
Amortization                                                                                                                                           (105 )    G            (105 )
Investment in
affiliated company                      -         4,238               (4,238 )   B               -                  -                      -              -                     -
                                                                                                                                                          -                     -
Total assets           $        10,887      $     8,847      $        (4,238 )       $     15,496     $        (3,184 )       $    12,312      $       (229 )          $   12,083

                                                                                                                                                                                 -
Current liabilities:                                                                            -                   -                   -                 -                      -
Accounts payable       $           804      $      632       $          418      A $        1,854                   -         $     1,854      $        (42 )    E     $     1,812
Short term bank
credits and other
current liabilities                  -            2,643                   23     A          2,666                   -               2,666                 -                  2,666
Accrued liabilities              1,027            5,065               (4,436 )   C          1,656                   -               1,656                26      H           1,682
Liabilities included
in disposal group
held for sale                           -          249                 (249 )    A               -                  -                      -                 -                    -
Deferred warranty
revenue and
customer deposits                2,122                   -                   -              2,122                   -               2,122                    -               2,122
Notes payable -
current portion                         7                -                   -                  7                   -                   7                    -                   7
Total current
liabilities                      3,960            8,589               (4,244 )              8,305                   -               8,305               (16 )                8,289
                                                                                                                                                          -                      -
Line of credit                     150               61                      -                211                   -                 211                 -                    211
Notes payable, less
current portion                  1,369                -                   85     A          1,454                   -               1,454                 -                  1,454
Total liabilities                5,479            8,650               (4,159 )              9,970                   -               9,970               (16 )                9,954

                                                                                                                                                                                  -
Noncontrolling
interest                                -          172                 (172 )    B               -                  -                      -                                      -
Stockholders’
equity:                                                                                                                                                      -                  -
Capital                         20,494            9,206               (9,206 )   B         20,494                   -              20,494                                  20,494
Foreign currency
translation                          -              118                                       118                   -                 118                 -                    118
Accumulated deficit            (15,086 )         (9,299 )             9,299      B        (15,086 )            (3,184 )           (18,270 )            (213 )    F-H       (18,483 )
Total stockholders’
equity                           5,408             197                   (79 )              5,526              (3,184 )             2,342              (213 )                2,129
Total liabilities and
stockholders’ equity    $   10,887   $   8,847   $      (4,238 )   $     15,496   $     (3,184 )   $    12,312   $      (229 )       $   12,083



                  The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements



                                                                       F-103
                                                                OPHTHALMIC IMAGING SYSTEMS
                                                                     UNAUDITED PRO FORMA
                                                       CONDENSED COMBINED STATEMENT OF OPERATIONS
                                                            For the Nine Months Ended September 30, 2009
                                                                     (in thousands of U.S. Dollars)

                                                                         Adjustments                                                       OIS and
                                                                         to reclassify                                                    MediVision
                                                        MediVision            and                                                            after
                                     OIS Three          Nine Months      consolidate                 Consolidated        Adjustments      conversion
                                      Months              Ending           financial                 MediVision         to reconcile to     to U.S.         Pro forma                Pro forma
                                    Ended 9/30/09         9/30/09         statements                   and OIS           U.S. GAAP          GAAP           adjustments               combined
Revenues:
Net sales                           $        3,933     $      6,376      $               -       $          10,309                    -   $    10,309      $        (97 )    E   $        10,212
Cost of sales                                1,654            3,447                      -                   5,101                    -         5,101               (97 )    E             5,004

Gross profit                                 2,279            2,929                      -                   5,208                    -         5,208                    -                 5,208
Operating expenses:
Sales and marketing                           959             2,251                      -                   3,210                    -         3,210                 -                    3,210
General and administrative                    478             1,463                      -                   1,941                    -         1,941                45      G             1,986
Research and development                      693             1,344                      -                   2,037                    -         2,037                 -                    2,037
Total other (expenses) income                                  (420 )                    -                    (420 )                  -          (420 )               -                     (420 )
Total operating expenses                     2,130            4,638                      -                   6,768                    -         6,768                45                    6,813

Income (loss) from operations                 149             (1,709 )                   -                   (1,560 )                 -        (1,560 )             (45 )                 (1,605 )
                                                                                                                                                                      -
Total Other (expense) income                   (61 )           (419 )                    -                    (480 )                             (480 )             (11 )    H              (491 )
Net income before provision for
income tax (expense) benefit                   88             (2,128 )                   -                   (2,040 )                 -        (2,040 )             (56 )                 (2,096 )
Provision for income tax
(expense) benefit                               (2 )              (3 )                   -                       (5 )                              (5 )                  -                       (5 )
Share of loss of affiliated
Company                                          -             (660 )              660       A                      -                                  -                 -                        -
Net income before noncontrolling
interest                                       86             (2,791 )             660                       (2,045 )                 -        (2,045 )             (56 )                 (2,101 )
                                                                                                                                                                      -
Noncontrolling Interest                                         294               (294 )     B                    -                   -             -                 -                        -
Net income (loss)                   $          86      $        294      $        (294 )         $           (2,045 )                 -   $    (2,045 )    $        (56 )        $        (2,101 )


Basic earnings per (loss) share     $         0.00                                                                                                                               $         (0.10 )


Shares used in the calculation of
basic earnings (loss) per share         20,289,626                                                                                                                                    20,289,626


Diluted earnings (loss) per share   $         0.00                                                                                                                               $         (0.10 )


Shares used in the calculation of
diluted earnings per share              20,799,494




                    The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements




                                                                                             F-104
                                                         OPHTHALMIC IMAGING SYSTEMS
                                                              UNAUDITED PRO FORMA
                                               CONDENSED COSOLIDATED STATEMENT OF OPERATIONS
                                                    For the Twelve Months Ended December 31, 2008
                                                             (in thousands of U.S. Dollars)

                                                                                                                                OIS and
                                                                Adjustments to                                                 MediVision
                                                                reclassify and                                                    after
                                                Historical       consolidate           Consolidated         Adjustments        conversion
                                               MediVision         financial            MediVision          to reconcile to       to U.S.            Pro forma             Pro forma
                            Historical OIS     Stand Alone       statements              and OIS            U.S. GAAP            GAAP              adjustments            combined
Revenues:
Net sales                   $       12,491     $     1,919                   -     $          14,410                     -     $    14,410                       -    $        14,410
Cost of sales                        5,768             862                   -                 6,630                     -           6,630                       -              6,630

Gross profit                         6,723           1,057                   -                  7,780                    -           7,780                       -              7,780
Operating expenses:
Sales and marketing                  4,035             797                   -                  4,832                    -           4,832                       -              4,832
General and
administrative                       1,551             769                   -                  2,320               3,184 D          5,504                   60 G               5,564
Research and
development                          2,220             638                   -                  2,858                    -           2,858                       -              2,858
Total operating
expenses                             7,806            2,204                  -                10,010                 3,184          13,194                   60                13,254
Loss from operations                (1,083 )         (1,147 )                -                (2,230 )              (3,184 )        (5,414 )                (60 )              (5,474 )

Financial expense, net                 (84 )          (447 )                 -                   (531 )                  -            (531 )                (15 ) H              (546 )
Merger Expenses                       (520 )             -                   -                   (520 )                  -            (520 )                  -                  (520 )

Net loss before
provision for
income tax (expense)
benefit                             (1,687 )         (1,594 )                -                  (3,281 )            (3,184 )        (6,465 )                (75 )               (6,540 )

Provision for income
tax (expense) benefit               (1,299 )            (42 )                -                  (1,341 )                 -          (1,341 )                     -              (1,341 )
Net loss before
noncontrolling interest             (2,986 )         (1,636 )                -                  (4,622 )            (3,184 )        (7,806 )                (75 )               (7,881 )

Noncontrolling Interest                                  53                (53 ) A                   -                   -               -                    -                      -
Net loss                    $       (2,986 )   $     (1,583 )              (53 )   $            (4,622 )            (3,184 )   $    (7,806 )   $            (75 )     $         (7,881 )


Basic loss per share        $        (0.18 )                                                                                                                          $          (0.47 )


Shares used in the
calculation of basic loss
per share                       16,866,831                                                                                                                                  16,866,831



                                               The accompanying notes are an integral part of these financial statements




                                                                                        F-105
                                        OPHTHALMIC IMAGING SYSTEMS

                                       NOTES TO UNAUDITED PRO FORMA

                              CONDENSED COMBINED FINANCIAL STATEMENTS


1. Adjustments to reclassify and consolidate financial statements.



        A. Represents the reclassification of assets and liabilities recorded by MediVision as Assets and Disposal Group Held for
           Sale to various assets and liability financial statement categories as of September 30, 2009. The Assets and Disposal
           Group Held for Sale is comprised of all CCS assets and liabilities, goodwill, and the IRI intangible asset at September
           30, 2009.

        B. Represents the reversal of the Investment in Affiliated Company asset and all equity recorded by MediVision as of
           September 30, 2009.

        C. Represents the reversal of inter-company liabilities which were considered impaired and written off by OIS as of June
           30, 2009. These liabilities were not considered impaired and written off by MediVision as of September 30, 2009 and as
           such reflected in MediVision’s unaudited interim balance sheet at September 30, 2009.

2. Adjustments of the financial results of the business activities purchased in connection with the MediVision Asset Purchase from
   IFRS to U.S. GAAP.

        D. Represents the expensing of capitalized assets on MediVision’s balance sheet at September 30, 2009 under IFRS related
           to research and development expenses for the IRI product and goodwill (according to U.S. GAAP, we need to expense
           $2,479,741 of capitalized assets related to the IRI product and decrease goodwill by $704,000 due to the change in the
           amortization rules between IFRS and U.S. GAAP) (IFRS allowed MediVision to amortize through 2004; U.S. GAAP
           only allows for amortization through 2001). This entry decreases (credit to) goodwill and other assets of $3,183,741.



3. Pro forma adjustments

   The following pro forma adjustments are included in the unaudited pro forma condensed combined financial statements:

        E. Represents the pro forma impact of the elimination of inter-company sales to MediVision and CCS during the three
           months ended September 30, 2009. The adjustment to the pro forma financial statements is necessary as MediVision
           ceased consolidating OIS as of June 24, 2009 which is the day that MediVision lost control over OIS. During the three
           months ended September 30, 2009 OIS recorded sales of approximately $62,000 to MediVision and approximately
           $35,000 to CCS. In addition as of September 30, 2009 OIS had approximately $42,000 due from CCS.

        F. Represents the write off of approximately $82,000 of goodwill recorded by MediVison as of September 30, 2009. This
           balance represents the remaining balance of goodwill recorded by MediVision at September 30, 2009 after the
           expensing of goodwill in connection with the conversion of MediVision to U.S. GAAP from IFRS (For more details on
           this conversion see Note D to the Notes to Unaudited Pro Forma Condensed Combined Financial Statements).

        G. Represents the pro forma impact of amortization expense related to the customer relationship and the Purchased
           Agreements intangible assets. The total balance of these intangible assets are $493,000 which are amortized for 8.2
           years resulting in additional amortization expense $45,091 for the nine months ending September 30, 2009 and $60,122
           the year ended December 31, 2008. This pro forma adjustment also resulted in accumulated amortization of $105,213 as
           of September 30, 2009 related to the expense recognized for the nine months ending September 30, 2009 and the year
           ending December 31, 2008.

        H. Represents the pro forma impact of the increase in interest expense related to the $1,500,000 loan from United Mizrahi
           Bank Ltd. The pro forma adjustment to interest expense is calculated as the change in the fixed interest rate component
           of the loan after OIS assumed the loan in connection with the MediVision Asset Purchase. The fixed interest rate
           component of the loan changed from 3.75% to 4.75% which results in additional interest expense for the nine months
            ending September 30, 2009 of $11,250 and additional interest of $15,000 for the year ending December 31, 2008. This
            pro forma adjustment also resulted in accrued interest of $26,250 as of September 30, 2009 related to pro forma interest
            expense for the nine months ending September 30, 2009 and the year ending December 31, 2008.

4. Other events that did not result in a pro forma adjustments


         I. Pursuant to an Extension Agreement, dated June 24, 2009, between us and the Tail Wind Fund Ltd. and Solomon
            Strategic Holdings, Inc. (together with The Tail Wind Fund Ltd., the ―Holders‖), the Holders agreed to extend the
            principal payments due thereon for 18 months, such that the next principal payment with respect to the Notes will be due
            December 31, 2010, and extend the maturity date of the Notes to October 31, 2011. As consideration for these
            extensions and waivers, we issued warrants (the ―New Warrants‖) to purchase an aggregate of 500,000 shares of our
            common stock. These New Warrants have an exercise price of $1.00 per share and expire on June 24, 2012.

            We combined the New Warrants with existing instruments issued to the Holders, and first allocated the proceeds
            received in this financing transaction that includes a convertible instrument to the convertible instrument and any other
            detachable instruments included in the exchange (such as detachable warrants) on a relative fair value basis. We then
            calculated the effective conversion used to measure the intrinsic value, if any, of the embedded conversion option based
            on the Black-Scholes-Merton option valuation model. We adjust for the changes in the Black-Scholes-Merton option
            valuation model at each reporting period. As the New Warrants are not separable from the existing financial instruments
            issued to the Holders, we did not record the pro forma impact of the issuance of the New Warrants to the pro forma
            financial statements.

         J. On October 23, 2009, in connection with the assumption of the United Mizrahi loan, we issued to United Mizrahi
            Bank a warrant (the ―Warrant‖) to purchase 350,000 shares of our common stock at an exercise price of $1.00. On
            October 22, 2009 we determined that the fair value of these Warrants were $40,138 using the Black-Scholes-Merton
            valuation model. We recorded the fair value of these Warrants as permanent equity as the Warrants were issued in
            relation to the Purchase Agreement. As the Warrants were recorded as permanent equity, this issuance did not result in
            an adjustment to the pro forma financial statements.




                                                           F-106
                                                                   PART II

                                           INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

        The following table sets forth the estimated expenses in connection with the offering described in this Registration Statement:

                                                                                                   Amount
                                   Item                                                               ($)

                                   SEC Registration Fee                                        $       373
                                   Legal Fees                                                       10,000
                                   Accounting Fees                                                   5,000
                                   Miscellaneous                                                     5,000

                                   Total                                                       $ 20,373


Item 14. Indemnification of Directors and Officers

         Our bylaws, filed as Exhibit 3.2, provide that we will indemnify our officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on account of their being or having been our directors or officers in
accordance with Section 317 of the California Corporations Code. Our bylaws also permit us to maintain insurance on behalf of our officers,
directors, employees and agents against any liability asserted against and incurred by that person whether or not we have the power to
indemnify such person against liability for any of those acts.

        Pursuant to the terms of the Purchase Agreement, on June 24, 2009, we extended Indemnification Agreements to all of our board
members and to date, we entered into agreements with Uri Geiger, Menachem Inbar, Uri Ram, Gil Allon, Ariel Shenhar, Jonathan Phillips and
William Greer. Under the Indemnification Agreements, we agreed to hold harmless and indemnify each of Messrs. Geiger, Inbar, Ram, Allon,
Shenhar, Phillips and Greer to the fullest extent authorized under the California General Corporations Code and our Articles of Incorporation,
as amended, subject to certain limitations as specified therein.

         Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the ―Securities Act‖) may be permitted
to directors, officers and controlling persons of Ophthalmic Imaging Systems pursuant to the foregoing provisions, or otherwise, Ophthalmic
Imaging Systems has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

Item 25. Recent Sales of Unregistered Securities

         On June 2, 2010, we granted to certain employees, options to purchase an aggregate of 172,500 shares of common stock for
compensation. The options vest in 6 equal installments, each installment includes options to purchase 28,750 shares of common stock on the
following dates: December 3, 2010, June 3, 2011, December 3, 2011, June 3, 2012, December 3, 2012, and June 3, 2013. The options are
exercisable at $1.10 per share and expire on June 2, 2020. We relied upon the exemption from registration under 4(2) of the Securities Act as of
1933, as amended (the ―Securities Act‖) in connection with these issuances.

        On May 26, 2010, we issued to U.M. AccelMed, Limited Partnership (―AccelMed‖) 3,581,089 shares of our common stock and a
warrant to purchase 1,193,696 shares of our common stock at an exercise price of $1.00 per share which expires on June 23, 2012. In
connection with this issuance we relied upon the exemption from registration under Section 4(2) of the Securities Act and Rule 506 as
promulgated thereunder.



                                                                      II-1
        May 26, 2010, in connection with the issuance to AccelMed, we issued a warrant to Alon Baraket, the placement agent, an option to
purchase 36,464 shares of our common stock at an exercise price of $0.01 per share. This option expires on May 26, 2013. We relied upon the
exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

        On December 23, 2009, we granted Noam Allon, our Business Development Officer, options to purchase 180,000 shares of common
stock. The options vest in 4 equal semi-annual installments beginning on June 23, 2010, are exercisable at $0.84 per share and expire on
December 23, 2019. We relied upon the exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

         On November 18, 2009, we granted Gil Allon, our CEO, options to purchase 242,141 shares of common stock. The options vest in 4
equal semi-annual installments beginning on May 18, 2010, are exercisable at $0.65 per share and expire on November 18, 2019. We relied
upon the exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

         On November 18, 2009, we granted Ariel Shenhar, our CFO, options to purchase 318,285 shares of common stock. The options vest
in 4 equal semi-annual installments beginning on May 18, 2010, are exercisable at $0.65 per share and expire on November 18, 2019. We
relied upon the exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

          On October 29, 2009, we granted Uri Ram, a director, options to purchase 30,000 shares of common stock for his services as
Chairman of the Board. The options vest in 6 equal installments, each installment includes options to purchase 5,000 shares of common stock
on the following dates: October 29, 2009, March 13, 2010, September 13, 2010, March 13, 2011, September 13, 2011 and March 13,
2012. The options are exercisable at $0.55per share and expire on October 29, 2019. We relied upon the exemption from registration under
4(2) of the Securities Act in connection with this issuance.

         On October 29, 2009, we granted to certain employees, options to purchase an aggregate of 19,333 shares of common stock for
returning to OIS as employees. The options vest in 6 equal installments, each installment includes options to purchase 3,222 shares of common
stock on the following dates: April 29, 2010, October 29, 2010, April 29, 2011, October 29, 2011, April 29, 2012 and October 29, 2012. The
options are exercisable at $0.55 per share and expire on October 29, 2019. We relied upon the exemption from registration under 4(2) of the
Securities Act in connection with these issuances.

          On October 23, 2009, we granted United Mizrahi bank a warrant to purchase 350,000 shares of our common stock at an exercise price
of 1.00 which will expire upon the earlier of October 23, 2012 or 12 months following the completion of (1) a primary public offering of our
common stock (a ― Public Offering ‖) or (2) (a) the sale of all or substantially all of our assets or (b) the merger or consolidation of our
business with or into another entity, pursuant to which 50% of our outstanding common stock is held be person(s) who prior to the transaction
held, in aggregate, less than 5% (together, a ― Liquidity Event, ‖ and together with a Public Offering, an ― Exit Event ‖); provided however, if
the underwriter in a Public Offering or the purchasing person(s) in a Liquidity Event require that all of our outstanding warrants and options,
including this warrant to United Mizrahi Bank be exercised prior to or part of the Public Offering or Liquidity Event, as applicable, then this
warrant will terminate, subject to certain notice requirements, upon completion of such transaction. We relied upon the exemption from
registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder (―Rule 506‖) in connection with
this issuance.

         On June 24, 2009, we entered into a private placement transaction with U.M. AccelMed, Limited Partnership (―AccelMed‖) which
was exempt from registration under Section 4(2) of the Securities Act and Rule 506 promulgated threunder. Pursuant to the Purchase
Agreement between AccelMed and us dated June 23, 2009, we issued 9,633,228 shares of our common stock and a warrant to purchase
3,211,076 shares of our common stock at an exercise price of $1.00 per share and expire on June 24, 2012. Under the Purchase Agreement, we
are obligated to register for resale the shares of common stock issued and the shares of common stock issuable upon exercise of the warrant.


                                                                      II-2
        On June 24, 2009, in connection with the private placement transaction with AccelMed, we issued a warrant to Alon Baraket, the
placement agent, an option to purchase 123,500 shares of our common stock at an exercise price of $0.01 per share. This option expires on June
24, 2012. We relied upon the exemption from registration under Section 4(2) of the Securities Act in connection with these issuances.

        On June 24, 2009, we entered into an Extension Agreement with The Tail Wind Fund Ltd. (―Tail Wind‖) and Solomon Strategic
Holdings, Inc. (―Solomon‖). Pursuant to the Extension Agreement among us, Tail Wind and Solomon, we issued warrants to purchase an
aggregate of 500,000 shares of our common stock at an exercise price of $1.00 per share and expire on June 24, 2012. We relied upon the
exemption from registration under Section 4(2) of the Securities Act in connection with these issuances.

         On January 6, 2009, we granted Gil Allon, our CEO, options to purchase 272,500 shares of common stock in lieu of 20% of his annual
salary for fiscal 2009. The options vest in 12 equal monthly installments beginning on January 31, 2009, are exercisable at $0.16 per share and
expire on January 6, 2019. We relied upon the exemption from registration under Section 4(2) of the Securities Act in connection with this
issuance.

          On January 6, 2009, we granted Ariel Shenhar, our CFO, options to purchase 265,000 shares of common stock in lieu of 20% of his
annual salary for fiscal 2009. The options vest in 12 equal monthly installments beginning on January 31, 2009, are exercisable at $0.16 per
share and expire on January 6, 2019. We relied upon the exemption from registration under Section 4(2) of the Securities Act in connection
with this issuance.

          On January 6, 2009, we granted Noam Allon, a consultant to OIS, options to purchase 180,000 shares of common stock in lieu of 20%
of his compensation for fiscal 2009. The options vest in 12 equal monthly installments beginning on January 31, 2009, are exercisable at $0.16
per share and expire on January 6, 2019. We relied upon the exemption from registration under Section 4(2) of the Securities Act in connection
with this issuance.

         On December 19, 2007, we granted Gil Allon, our CEO, options to purchase 260,000 shares of common stock for services rendered
during 2007. The options vest in 6 equal installments every 6 months beginning on June 19, 2008. Options to purchase 130,000 shares are
exercisable at $0.82 per share and the remaining 130,000 at $1.05 per share. All of the options expire on December 19, 2015. We relied upon
the exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

         On December 19, 2007, we granted Ariel Shenhar, our CFO, options to purchase 230,000 shares of common stock for services
rendered during 2007. The options vest in 6 equal installments every 6 months beginning on June 19, 2008. Options to purchase 115,000 shares
are exercisable at $0.82 per share and the remaining 115,000 at $1.05 per share. All of the options expire on December 19, 2015. We relied
upon the exemption from registration under Section 4(2) of the Securities Act in connection with this issuance.

          On October 29, 2007, we entered into a private placement transaction with Tail Wind and Solomon which was exempt from
registration under Section 4(2) and Rule 506. Pursuant to the purchase agreement among Tail Wind, Solomon and us, as amended by the
Extension Agreement, we issued convertible notes in the principal amount of $2,750,000 bearing interest at the rate of six and one-half percent
(6.5%) per annum, due October 31, 2011, convertible into shares of our common stock at an adjusted conversion price of $1.06 per share.
Interest is payable at our option in cash or shares of common stock. Additionally, we issued warrants to Tail Wind and Solomon, to purchase an
aggregate of 950,357 shares of our common stock at an adjusted exercise price of $1.21 per share. Tail Wind and Solomon may exercise the
warrant through October 29, 2012. We are obligated to register for resale the shares of common stock issuable upon conversion of the note and
upon exercise of the warrant pursuant to a registration rights agreement dated October 29, 2007. In March 2010, the Holders of the Notes
converted $250,000 of the principal balance into 218,780 shares of our common stock.



                                                                     II-3
Item 16. Exhibits and Financial Statements




Ophthalmic Imaging Systems :                                                                                                   Page


June 30, 2010
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                      F-1
Unaudited Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2010              F-2
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months ended June 30, 2010             F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 and 2009                      F-4
Notes to Unaudited Condensed Consolidated Financial Statements                                                                 F-5

December 31, 2009
Report of Independent Registered Public Accounting Firm                                                                        F-10
Consolidated Balance Sheets as of December 31, 2009 and 2008                                                                   F-11
Consolidated Statements of Operations for the Years Ended December 31, 2009 and 2008                                           F-13
Consolidated Statement of Comprehensive Loss for the Year Ended December 21, 2009 and 2008                                     F-14
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2009 and 2008                                 F-15
Consolidated Statements of Cash Flow for the Years Ended December 31, 2009 and 2008                                            F-16
Notes to Consolidated Financial Statements                                                                                     F-17

MediVision Medical Imaging, Ltd. :

September 30, 2009
Unaudited Consolidated Balance Sheets as of September 30, 2009 and 2008, and December 31, 2008                                 F-44
Unaudited Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-46
Unaudited Consolidated Statement of Changes in Equity for the Nine Month period ending September 30, 2009, and 2008            F-47
Unaudited Consolidated Statements of Cash Flows for the Three and Nine Months ended September 30, 2009 and 2008, and for the
Year Ended December 31, 2008                                                                                                   F-49
Notes to Unaudited Consolidated Financial Statements                                                                           F-51

December 31, 2008
Report of Independent Registered Public Accounting Firm                                                                        F-59
Consolidated Balance Sheets as of December 31, 2008                                                                            F-60
Consolidated Statement of Operations for the Year Ended December 31, 2008                                                      F-61
Consolidated Statement of Changes in Equity for the Year Ended December 31, 2008                                               F-62
Consolidated Statement of Cash Flows for the Year Ended December 31, 2008                                                      F-63
Notes to Consolidated Financial Statements                                                                                     F-64

Pro Forma Financial Statements :

September 30, 2009
Unaudited Pro Forma Combined Balance Sheets as of September 30, 2009                                                           F-103
Unaudited Pro Forma Combined Statements of Operations for the Nine Months ended September 30, 2009                             F-104
Notes to Unaudited Pro Forma Combined Financial Statements                                                                     F-106

December 31, 2008
Pro Forma Combined Statement of Operations for the Year Ended December 31, 2008                                                F-105
Notes to Unaudited Combined Pro Forma Financial Statements                                                                     F-106



                                                                  II-4
Exhibit                                                                                                             Footnote
Number Description of Exhibit                                                                                       Reference

3.1     Articles of Incorporation of Ophthalmic Imaging Systems, as amended.                                        (1)
3.2     Amendment to Articles of Incorporation (Certificate of Determination of Preferences of Series A Junior      (2)
        Participating Preferred Stock of Ophthalmic Imaging Systems)
3.3     Amendment to Articles of Incorporation (Certificate of Determination of Preferences of Series B Preferred   (3)
        Stock of Ophthalmic Imaging Systems).
3.4     Amended and Restated Bylaws of Ophthalmic Imaging Systems.                                                  (4)
3.5     Amendment to Articles of Incorporation (increases the number of common shares which the Corporation         (31)
        is authorized to issue to one hundred million)
4.1     Specimen of Stock Certificate.                                                                              (1)
4.2     Purchase Agreement dated October 29, 2007 among Ophthalmic Imaging Systems, The Tail Wind Fund              (6)
        Ltd. and Solomon Strategic Holdings, Inc.
4.3     Form of Convertible Notes dated October 29, 2007 issued to The Tail Wind Fund Ltd. and Solomon              (6)
        Strategic Holdings, Inc.
4.4     Form of Warrant dated October 29, 2007 issued to The Tail Wind Fund Ltd. and Solomon Strategic              (6)
        Holdings, Inc.
4.5     Registration Rights Agreement dated October 29, 2007 by and among Ophthalmic Imaging Systems, The           (6)
        Tail Wind Fund Ltd., and Solomon Strategic Holdings, Inc.
4.6     Warrant dated June 24, 2009, issued in favor of U.M. AccelMed, Limited Partnership.                         (18)
4.7     Form of 2nd Installment Warrant to be issued in favor of U.M. AccelMed, Limited Partnership.                (19)
4.8     Form of Warrant issued in favor of The Tail Wind Fund, Ltd. and Solomon Strategic Holdings, Inc.            (20)
4.9     Warrant dated May 26, 2010, issued in favor of U.M. AccelMed, Limited Partnership                           (32)
5.1     Opinion of Troutman Sanders LLP                                                                               **
9.1     Agreement dated June 24, 2009, by and among U.M. AccelMed, Limited Partnership, MediVision Medical          (21)
        Imaging Ltd., Agfa Gevaert N.V., Delta Trading and Services (1986) Ltd., Gil Allon, Noam Allon, Ariel
        Shenhar and Yuval Shenhar.
10.1    Lease Agreement, dated as of April 21, 2001, between Ophthalmic Imaging Systems and Jackson-Jahn,           (7)
        Inc.
10.2    First Amendment to the Lease Agreement dated as of April 21, 2001 between Ophthalmic Imaging                (8)
        Systems and Jackson-Jahn, Inc.
10.3    Second Amendment to the Lease Agreement dated as of April 21, 2001 between Ophthalmic Imaging               (8)
        Systems and Jackson-Jahn, Inc.
10.4    Confidentiality Agreement dated March 27, 1992 between Ophthalmic Imaging Systems and Steven R.             (1)
        Verdooner.
10.5    Assignment dated October 23, 1990 of U.S. Patent Application for Apparatus and Method for                   (1)
        Topographical Analysis of the Retina to Ophthalmic Imaging Systems by Steven R. Verdooner, Patricia C.
        Meade and Dennis J. Makes (as recorded on Reel 5490, Frame 423 in the Assignment Branch of the U.S.
        Patent and Trademark Office).
10.6    Form of International Distribution Agreement used by Ophthalmic Imaging Systems and sample form of          (1)
        End User Software License Agreement.
10.7    2009 Stock Option Plan                                                                                      (9)+
10.8    Rental Agreement dated May 1, 1994 by and between Ophthalmic Imaging Systems and Robert J.                  (10)
        Rossetti.
10.9    Ophthalmic Imaging Systems’ 1997 Nonstatutory Stock Option Plan and sample form of Nonstatutory             (11)+
        Stock Option Agreement.



                                                                  II-5
Exhibit                                                                                                       Footnote
Number Description of Exhibit                                                                                 Reference
10.10   Form of Indemnification Agreement between Ophthalmic Imaging Systems and each of its directors,       (12)
        officers and certain key employees.
10.11   Cooperation and Project Funding Agreement dated January 21, 2001, among Israel- United States         (13)
        Binational Industrial Research and Development Foundation, MediVision and Ophthalmic Imaging
        Systems.
10.12   2000 Stock Option Plan.                                                                               (7)+
10.13   2003 Stock Option Plan.                                                                               (14)+
10.14   Loan and Security Agreement dated as of February 28, 2005 by and between Ophthalmic Imaging Systems   (15)
        and MediVision Medical Imaging Ltd.
10.15   Promissory Note dated as of February 28, 2005 by and between Ophthalmic Imaging Systems and           (8)
        MediVision Medical Imaging Ltd.
10.16   Secured Debenture dated as of July 20, 2005 by and between Ophthalmic Imaging Systems and United      (15)
        Mizrahi Bank Ltd.
10.17   Research and Development Services Agreement dated as of January 1, 2004 by and between Ophthalmic     (15)
        Imaging Systems and MediVision Medical Imaging Ltd.
10.18   Distribution Agreement dated as of February 14, 2006 by and between Ophthalmic Imaging Systems and    (15)
        CCS Pawlowski GmbH.
10.19   Distribution Agreement dated as of January 1, 2004 by and between Ophthalmic Imaging Systems and      (15)
        MediVision Medical Imaging Ltd. and Addendum thereto dated December 9, 2005.
10.20   Services Agreement dated as of January 1, 2004 by and between Ophthalmic Imaging Systems,             (15)
        MediStrategy Ltd. and Noam Allon and Addendum thereto dated September 30, 2005.
10.21   Employment Agreement dated December 1, 2001 between Ophthalmic Imaging Systems and Gil Allon.         (17)
10.22   Amendment to Employment Agreement dated April 12, 2006 between Ophthalmic Imaging Systems and         (17)
        Gil Allon.
10.23   Employment Agreement dated July 11, 2002, between Ophthalmic Imaging Systems and Ariel Shenhar.       (17)
10.24   Amendment to Employment Agreement dated December 3, 2003, between Ophthalmic Imaging Systems          (17)
        and Ariel Shenhar.
10.25   Amendment to Employment Agreement dated February 29, 2004, between Ophthalmic Imaging Systems         (17)
        and Ariel Shenhar.
10.26   Amendment to Employment Agreement dated April 12, 2006, between Ophthalmic Imaging Systems and        (17)
        Ariel Shenhar.
10.27   Purchase Agreement dated October 29, 2007 by and among Ophthalmic Imaging Systems, the Tail Wind      (16)
        Fund Ltd. and Solomon Strategic Holdings, Inc.
10.28   Confidential Settlement and Mutual Release Agreement dated May 3, 2009, by and between Ophthalmic     (22)
        Imaging Systems, Steven Verdooner, OPKO Health, Inc. and The Frost Group, LLC
10.29   Purchase Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and U.M.            *
        AccelMed, Limited Partnership.
10.30   Form of Indemnification Agreement.                                                                    (23)
10.31   Asset Purchase Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and           *
        MediVision Medical Imaging Ltd.
10.32   Escrow Agreement dated June 24, 2009, by and among Ophthalmic Imaging Systems, MediVision             (24)
        Medical Imaging Ltd. and Stephen L. Davis, Esq.
10.33   Letter Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and Mizrahi Tefahot   (25)
        Bank Ltd.
10.34   Extension Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems, The Tail Wind     (26)
        Fund Ltd. and Solomon Strategic Holdings.



                                                                II-6
Exhibit                                                                                                                Footnote
Number Description of Exhibit                                                                                          Reference
10.35     Secured Debenture dated October 23, 2009, by and between Ophthalmic Imaging Systems and Mizrahi              (28)
          Tefahot Bank Ltd.
10.36     Warrant dated October 23, 2009, issued to Mizrahi Tefahot Bank Ltd.                                          (29)
10.37     2009 Stock Option Plan                                                                                       (27)
10.38     2010 Stock Option Plan                                                                                       (33)
14        Code of Ethics                                                                                               (8)
23.1      Consent of Perry-Smith LLP, Independent Auditors.                                                            *
23.2      Consent of Troutman Sanders LLP (included in Exhibit 5.1)                                                    **
24.1      Powers of Attorney (included on the signature page of the initial filing of this registration statement)     (30)
_________________________
*       Filed herewith.
**      To be filed by amendment.
+       Management contract or compensatory plan or arrangement.
(1)     Incorporated by reference to Ophthalmic Imaging Systems’ Registration Statement on Form S-18, number 33-46864-LA.
(2)     Incorporated by reference to Exhibit A of Exhibit 1 of Ophthalmic Imaging Systems’ Form 8-K, filed on January 2, 1998.
(3)     Incorporated by reference to Exhibit 3.1 of Ophthalmic Imaging Systems’ Form 8-K, filed on November 24, 1999.
(4)     Incorporated by reference to Exhibit 3.1 of Ophthalmic Imaging Systems’ Form 10-K filed on March 29, 2010.
(5)     Incorporated by reference to Exhibit 4.3 of Ophthalmic Imaging Systems’ Form 8-K, filed on April 29, 2004.
(6)     Incorporated by reference to Ophthalmic Imaging Systems’ Form 8-K filed on October 31, 2007.
(7)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2001, filed on March 26, 2002.
(8)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2004, filed on March 18, 2005.
(9)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended August 31,
        1993, filed on November 26, 1993.
(10)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the fiscal year ended August 31, 1994,
        filed on November 29, 1994.
(11)    Incorporated by reference to Ophthalmic Imaging Systems’ Quarterly Report on Form 10-QSB for the quarterly period ended
        November 30, 1997, filed on January 14, 1998.
(12)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended August 31,
        1998, filed on December 15, 1998.
(13)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the transition period from September 1,
        2000 to December 31, 2000, filed on March 29, 2001.
(14)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the fiscal year ended December 31,
        2003, filed on March 25, 2004.
(15)    Incorporated by reference to Exhibit 99.2 of Ophthalmic Imaging Systems’ Form 8-K filed on July 25, 2005.
(16)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2005, filed on March 28, 2006.
(17)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2006, filed on March 29, 2006.
(18)    Incorporated by reference to Exhibit 10.2 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(19)    Incorporated by reference to Exhibit 10.3 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(20)    Incorporated by reference to Exhibit 10.10 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.



                                                                  II-7
(21)   Incorporated by reference to Exhibit 10.4 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(22)   Incorporated by reference to Ophthalmic Imaging Systems’ Quarterly Report on Form 10-Q for the quarterly period ended March 31,
       2009, filed on May 15, 2009.
(23)   Incorporated by reference to Exhibit 10.5 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(24)   Incorporated by reference to Exhibit 10.7 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(25)   Incorporated by reference to Exhibit 10.8 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(26)   Incorporated by reference to Exhibit 10.9 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(27)   Incorporated by reference to Ophthalmic Imaging Systems’ Schedule 14A filed on April 15, 2009.
(28)   Incorporated by reference to Exhibit 10.2 of Ophthalmic Imaging Systems’ Form 8-K filed on October 27, 2009.
(29)   Incorporated by reference to Exhibit 10.3 of Ophthalmic Imaging Systems’ Form 8-K filed on October 27, 2009.
(30)   Incorporated by reference to Ophthalmic Imaging Systems’ Registration Statement, Registration Number 333-161778 filed on
       September 8, 2009.
(31)   Incorporated by reference to Exhibit 3.4 of Ophthalmic Imaging Systems’ Form 10-K filed on March 29, 2010.
(32)   Incorporated by reference to Exhibit 10.10 of Ophthalmic Imaging Systems’ Form 8-K filed on May 27, 2010.
(33)   Incorporated by reference to Exhibit A of Ophthalmic Imaging Systems’ Schedule 14A filed on July 26, 2010.




                                                                 II-8
Item 28. Undertakings

         The undersigned registrant hereby undertakes:

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

         (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

          (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent
post−effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering price set forth in the ―Calculation of Registration Fee‖ table
in the effective registration statement;

 (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

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

          (3) To remove from registration by means of a post−effective amendment any of the securities being registered which remain unsold
at the termination of the offering.

         (4) That, for purposes of determining liability under the Securities Act to any purchaser:

         (ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to
an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement
made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.

          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of such issue.



                                                                         II-9
                                                               SIGNATURES

         Pursuant to the requirement of the Securities Act of 1933, the registrant has caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Sacramento, State of California, on August 13, 2010.



                                                                                  OPHTHALMIC IMAGING SYSTEMS


                                                                                 By: /s/ Gil Allon
                                                                                  Gil Allon
                                                                                  Chief Executive Officer
                                                                                  (Principal Executive Officer)

                                                                                   By: /s/ Ariel Shenhar
                                                                                   Ariel Shenhar
                                                                                   Chief Financial Officer, Vice
                                                                                   President and Secretary
                                                                                   (Principal Financial and
                                                                                   Accounting Officer)




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


              /s/ Gil Allon
              Gil Allon                                Director                                 August 13, 2010
              Chief Executive Officer
              (Principal Executive Officer)


              /s/ Ariel Shenhar
              Ariel Shenhar                            Director                                 August 13, 2010
              Chief Financial Officer
              (Principal Financial and
              Accounting Officer)


              /s/ Uri Ram
              Uri Ram                                  Director                                 August 13, 2010


              /s/ Jonathan R. Phillips
              Jonathan R. Phillips                     Director                                 August 13, 2010


              /s/ William Greer
              William Greer                            Director                                 August 13, 2010


              /s/ Eric Maurincomme
              Eric Maurincomme                         Director                                 August 13, 2010


              /s/ Uri Geiger
Uri Geiger                   Director           August 13, 2010


/s/ Menachem Inbar
Menachem Inbar               Director           August 13, 2010


By :     /s/ Ariel Shenhar
Name:    Ariel Shenhar
Title:   Attorney in Fact




                                        II-10
                                                           EXHIBIT INDEX




Exhibit                                                                                                             Footnote
Number Description of Exhibit                                                                                       Reference

3.1     Articles of Incorporation of Ophthalmic Imaging Systems, as amended.                                        (1)
3.2     Amendment to Articles of Incorporation (Certificate of Determination of Preferences of Series A Junior      (2)
        Participating Preferred Stock of Ophthalmic Imaging Systems)
3.3     Amendment to Articles of Incorporation (Certificate of Determination of Preferences of Series B Preferred   (3)
        Stock of Ophthalmic Imaging Systems).
3.4     Amended and Restated Bylaws of Ophthalmic Imaging Systems.                                                  (4)
3.5     Amendment to Articles of Incorporation (increases the number of common shares which the Corporation         (31)
        is authorized to issue to one hundred million)
4.1     Specimen of Stock Certificate.                                                                              (1)
4.2     Purchase Agreement dated October 29, 2007 among Ophthalmic Imaging Systems, The Tail Wind Fund              (6)
        Ltd. and Solomon Strategic Holdings, Inc.
4.3     Form of Convertible Notes dated October 29, 2007 issued to The Tail Wind Fund Ltd. and Solomon              (6)
        Strategic Holdings, Inc.
4.4     Form of Warrant dated October 29, 2007 issued to The Tail Wind Fund Ltd. and Solomon Strategic              (6)
        Holdings, Inc.
4.5     Registration Rights Agreement dated October 29, 2007 by and among Ophthalmic Imaging Systems, The           (6)
        Tail Wind Fund Ltd., and Solomon Strategic Holdings, Inc.
4.6     Warrant dated June 24, 2009, issued in favor of U.M. AccelMed, Limited Partnership.                         (18)
4.7     Form of 2nd Installment Warrant to be issued in favor of U.M. AccelMed, Limited Partnership.                (19)
4.8     Form of Warrant issued in favor of The Tail Wind Fund, Ltd. and Solomon Strategic Holdings, Inc.            (20)
4.9     Warrant dated May 26, 2010, issued in favor of U.M. AccelMed, Limited Partnership                           (32)
5.1     Opinion of Troutman Sanders LLP                                                                             **
9.1     Agreement dated June 24, 2009, by and among U.M. AccelMed, Limited Partnership, MediVision Medical          (21)
        Imaging Ltd., Agfa Gevaert N.V., Delta Trading and Services (1986) Ltd., Gil Allon, Noam Allon, Ariel
        Shenhar and Yuval Shenhar.
10.1    Lease Agreement, dated as of April 21, 2001, between Ophthalmic Imaging Systems and Jackson-Jahn,           (7)
        Inc.
10.2    First Amendment to the Lease Agreement dated as of April 21, 2001 between Ophthalmic Imaging                (8)
        Systems and Jackson-Jahn, Inc.
10.3    Second Amendment to the Lease Agreement dated as of April 21, 2001 between Ophthalmic Imaging               (8)
        Systems and Jackson-Jahn, Inc.
10.4    Confidentiality Agreement dated March 27, 1992 between Ophthalmic Imaging Systems and Steven R.             (1)
        Verdooner.
10.5    Assignment dated October 23, 1990 of U.S. Patent Application for Apparatus and Method for                   (1)
        Topographical Analysis of the Retina to Ophthalmic Imaging Systems by Steven R. Verdooner, Patricia C.
        Meade and Dennis J. Makes (as recorded on Reel 5490, Frame 423 in the Assignment Branch of the U.S.
        Patent and Trademark Office).
10.6    Form of International Distribution Agreement used by Ophthalmic Imaging Systems and sample form of          (1)
        End User Software License Agreement.
10.7    Stock Option Plan.                                                                                          (9)+
10.8    Rental Agreement dated May 1, 1994 by and between Ophthalmic Imaging Systems and Robert J.                  (10)
        Rossetti.
10.9    Ophthalmic Imaging Systems’ 1997 Nonstatutory Stock Option Plan and sample form of Nonstatutory             (11)+
        Stock Option Agreement.




                                                                  II-11
Exhibit                                                                                                       Footnote
Number Description of Exhibit                                                                                 Reference
10.10   Form of Indemnification Agreement between Ophthalmic Imaging Systems and each of its directors,       (12)
        officers and certain key employees.
10.11   Cooperation and Project Funding Agreement dated January 21, 2001, among Israel- United States         (13)
        Binational Industrial Research and Development Foundation, MediVision and Ophthalmic Imaging
        Systems.
10.12   2000 Stock Option Plan.                                                                               (7)+
10.13   2003 Stock Option Plan.                                                                               (14)+
10.14   Loan and Security Agreement dated as of February 28, 2005 by and between Ophthalmic Imaging Systems   (15)
        and MediVision Medical Imaging Ltd.
10.15   Promissory Note dated as of February 28, 2005 by and between Ophthalmic Imaging Systems and           (8)
        MediVision Medical Imaging Ltd.
10.16   Secured Debenture dated as of July 20, 2005 by and between Ophthalmic Imaging Systems and United      (15)
        Mizrahi Bank Ltd.
10.17   Research and Development Services Agreement dated as of January 1, 2004 by and between Ophthalmic     (15)
        Imaging Systems and MediVision Medical Imaging Ltd.
10.18   Distribution Agreement dated as of February 14, 2006 by and between Ophthalmic Imaging Systems and    (15)
        CCS Pawlowski GmbH.
10.19   Distribution Agreement dated as of January 1, 2004 by and between Ophthalmic Imaging Systems and      (15)
        MediVision Medical Imaging Ltd. and Addendum thereto dated December 9, 2005.
10.20   Services Agreement dated as of January 1, 2004 by and between Ophthalmic Imaging Systems,             (15)
        MediStrategy Ltd. and Noam Allon and Addendum thereto dated September 30, 2005.
10.21   Employment Agreement dated December 1, 2001 between Ophthalmic Imaging Systems and Gil Allon.         (17)
10.22   Amendment to Employment Agreement dated April 12, 2006 between Ophthalmic Imaging Systems and         (17)
        Gil Allon.
10.23   Employment Agreement dated July 11, 2002, between Ophthalmic Imaging Systems and Ariel Shenhar.       (17)
10.24   Amendment to Employment Agreement dated December 3, 2003, between Ophthalmic Imaging Systems          (17)
        and Ariel Shenhar.
10.25   Amendment to Employment Agreement dated February 29, 2004, between Ophthalmic Imaging Systems         (17)
        and Ariel Shenhar.
10.26   Amendment to Employment Agreement dated April 12, 2006, between Ophthalmic Imaging Systems and        (17)
        Ariel Shenhar.
10.27   Purchase Agreement dated October 29, 2007 by and among Ophthalmic Imaging Systems, the Tail Wind      (16)
        Fund Ltd. and Solomon Strategic Holdings, Inc.
10.28   Confidential Settlement and Mutual Release Agreement dated May 3, 2009, by and between Ophthalmic     (22)
        Imaging Systems, Steven Verdooner, OPKO Health, Inc. and The Frost Group, LLC
10.29   Purchase Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and U.M.            *
        AccelMed, Limited Partnership.
10.30   Form of Indemnification Agreement.                                                                    (23)
10.31   Asset Purchase Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and           *
        MediVision Medical Imaging Ltd.
10.32   Escrow Agreement dated June 24, 2009, by and among Ophthalmic Imaging Systems, MediVision             (24)
        Medical Imaging Ltd. and Stephen L. Davis, Esq.
10.33   Letter Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems and Mizrahi Tefahot   (25)
        Bank Ltd.
10.34   Extension Agreement dated June 24, 2009, by and between Ophthalmic Imaging Systems, The Tail Wind     (26)
        Fund Ltd. and Solomon Strategic Holdings.



                                                               II-12
Exhibit                                                                                                                Footnote
Number Description of Exhibit                                                                                          Reference
10.35     Secured Debenture dated October 23, 2009, by and between Ophthalmic Imaging Systems and Mizrahi              (28)
          Tefahot Bank Ltd.
10.36     Warrant dated October 23, 2009, issued to Mizrahi Tefahot Bank Ltd.                                          (29)
10.37     2009 Stock Option Plan                                                                                       (27)
10.38     2010 Stock Option Plan                                                                                       (33)
14        Code of Ethics                                                                                               (8)
23.1      Consent of Perry-Smith LLP, Independent Auditors .                                                           *
23.2      Consent of Troutman Sanders LLP (included in Exhibit 5.1)                                                    **
24.1      Powers of Attorney (included on the signature page of the initial filing of this registration statement)     (30)
_________________________
*       Filed herewith.
**      To be filed by amendment.
+       Management contract or compensatory plan or arrangement.
(1)     Incorporated by reference to Ophthalmic Imaging Systems’ Registration Statement on Form S-18, number 33-46864-LA.
(2)     Incorporated by reference to Exhibit A of Exhibit 1 of Ophthalmic Imaging Systems’ Form 8-K, filed on January 2, 1998.
(3)     Incorporated by reference to Exhibit 3.1 of Ophthalmic Imaging Systems’ Form 8-K, filed on November 24, 1999.
(4)     Incorporated by reference to Exhibit 3.1 of Ophthalmic Imaging Systems’ Form 10-K filed on March 29, 2010.
(5)     Incorporated by reference to Exhibit 4.3 of Ophthalmic Imaging Systems’ Form 8-K, filed on April 29, 2004.
(6)     Incorporated by reference to Ophthalmic Imaging Systems’ Form 8-K filed on October 31, 2007.
(7)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2001, filed on March 26, 2002.
(8)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2004, filed on March 18, 2005.
(9)     Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended August 31,
        1993, filed on November 26, 1993.
(10)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the fiscal year ended August 31, 1994,
        filed on November 29, 1994.
(11)    Incorporated by reference to Ophthalmic Imaging Systems’ Quarterly Report on Form 10-QSB for the quarterly period ended
        November 30, 1997, filed on January 14, 1998.
(12)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended August 31,
        1998, filed on December 15, 1998.
(13)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the transition period from September 1,
        2000 to December 31, 2000, filed on March 29, 2001.
(14)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-K for the fiscal year ended December 31,
        2003, filed on March 25, 2004.
(15)    Incorporated by reference to Exhibit 99.2 of Ophthalmic Imaging Systems’ Form 8-K filed on July 25, 2005.
(16)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2005, filed on March 28, 2006.
(17)    Incorporated by reference to Ophthalmic Imaging Systems’ Annual Report on Form 10-KSB for the fiscal year ended December 31,
        2006, filed on March 29, 2006.
(18)    Incorporated by reference to Exhibit 10.2 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(19)    Incorporated by reference to Exhibit 10.3 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(20)    Incorporated by reference to Exhibit 10.10 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.




                                                                 II-13
(21)   Incorporated by reference to Exhibit 10.4 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(22)   Incorporated by reference to Ophthalmic Imaging Systems’ Quarterly Report on Form 10-Q for the quarterly period ended March 31,
       2009, filed on May 15, 2009.
(23)   Incorporated by reference to Exhibit 10.5 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(24)   Incorporated by reference to Exhibit 10.7 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(25)   Incorporated by reference to Exhibit 10.8 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(26)   Incorporated by reference to Exhibit 10.9 of Ophthalmic Imaging Systems’ Form 8-K filed on June 29, 2009.
(27)   Incorporated by reference to Ophthalmic Imaging Systems’ Schedule 14A filed on April 15, 2009.
(28)   Incorporated by reference to Exhibit 10.2 of Ophthalmic Imaging Systems’ Form 8-K filed on October 27, 2009.
(29)   Incorporated by reference to Exhibit 10.3 of Ophthalmic Imaging Systems’ Form 8-K filed on October 27, 2009.
(30)   Incorporated by reference to Ophthalmic Imaging Systems’ Registration Statement, Registration Number 333-161778 filed on
       September 8, 2009.
(31)   Incorporated by reference to Exhibit 3.4 of Ophthalmic Imaging Systems’ Form 10-K filed on March 29, 2010.
(32)   Incorporated by reference to Exhibit 10.10 of Ophthalmic Imaging Systems’ Form 8-K filed on May 27, 2010.
(33)   Incorporated by reference to Exhibit A of Ophthalmic Imaging Systems’ Schedule 14A filed on July 26, 2010.


                                                                II-14
                                                                                                                                    Exhibit 10.29




                                                          PURCHASE AGREEMENT


             THIS AGREEMENT is made as of the 24 day of June, 2009, by and between Ophthalmic Imaging Systems (the ― Company ‖), a
corporation organized under the laws of the State of California, with its principal offices at 221 Lathrop Way, Suite I, Sacramento, CA 95815
and the purchaser whose name and address is set forth on the signature page hereof (the ― Purchaser ‖).

             IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

             SECTION 1.        Authorization of Sale of the Shares and Warrants . Subject to the terms and conditions of this Agreement, the
Company has authorized the issuance and sale of up to 13,214,317 shares of common stock, no par value (the ― Common Stock ‖), of the
Company, and warrants to purchase up to 4,404,772 shares of Common Stock, in one or more transactions that are exempt from the registration
requirements of the Securities Act of 1933, as amended (the ― Securities Act ‖), provided by Section 4(2) thereof and Rule 506 of Regulation
D thereunder.

             SECTION 2.       Agreement to Sell and Purchase the Shares and the Warrants.

                          2.1      Closing . At the Closing (as defined in Section 3.1), the Company will, subject to the terms of this Agreement,
issue and sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set forth:

                                      (a)    9,633,228 shares of Common Stock (the ― 1 st Installment Shares ‖) for a purchase price per
share equal to $0.41522 resulting in an aggregate purchase price of $3,999,908.90 (the ― 1 st Installment ‖), which reflects a pre-money
valuation of the Company of $7,200,000 as of the Closing Date, taking into account all outstanding shares of the Company and assuming the
conversion or exercise of all outstanding notes and warrants (calculating their conversion at the maximum number of underlying shares),
options, convertible securities or loans, which in any event, can only be exercised on a price per share lower than $0.41522 (such calculation
shall be referred as the ― Fully Diluted Basis ‖); at the Closing, the 1 st Installment Shares shall represent 36.35% of the Company’s issued and
outstanding shares on a Fully Diluted Basis; and

                                 (b)     a warrant to purchase up to 3,211,076 shares of Common Stock (i.e., 33% of the 1 st Installment
Shares) (the ― 1 st Installment Warrant Shares ‖) exercisable at $1.00 per share for a period of three years commencing upon the Closing
Date (the ― 1 st Installment Warrant ‖), which warrant shall be substantially in the form set forth in Exhibit A-1 hereto.

                         2.2      Deferred Closing . At the Deferred Closing (as defined in Section 3.2), the Company will, subject to the terms
of this Agreement, issue and sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set
forth:

                                      (a)    3,581,089 shares of Common Stock (the ― 2 nd Installment Shares ‖ and, together with 1 st
Installment Shares, the “ Shares ‖) for a purchase price per share equal to $0.55848 (subject to adjustment for reverse and forward stock splits
and similar transactions) resulting in an aggregate purchase price of $1,999,966.50 (the ― 2 nd Installment ‖), which reflects
a pre-money valuation of the Company of $10,800,000 as of the Deferred Closing Date, on a Fully Diluted Basis; and

                                      (b)    a warrant to purchase up to 1,193,696 shares of Common Stock (i.e., 33% of the 2 nd Installment
Shares) (the ― 2 nd Installment Warrant Shares ‖ and, together with the 2 nd Installment Warrant Shares, the ― Warrant Shares ‖)
exercisable at $1.00 per share, for a period of three years from the Closing Date (the ― 2 nd Installment Warrant ‖ and, together with the 1 st
Installment Warrant, the ― Warrants ‖,and the Shares, the Warrants and the Warrant Shares shall be collectively referred to as, the ― Securities
‖), which warrant shall be substantially in the form set forth in Exhibit A-2 hereto.

                                      (c)     If at the time of the Deferred Closing Date, the Company’s Board of Directors determines in good
faith that the Company’s financial situation requires the Company to raise additional funds in a capital raising transaction (in addition to 2 nd
Installment), the Purchaser (in its capacity as a shareholder in the Company) hereby agrees not to object to such capital raising transaction and
will agree to waive its participation right (as set forth in Section 8.14 below) in connection therewith; provided , that such capital raising
transaction is with Persons who are shareholders of MediVision Medical Imaging Ltd., the parent entity of the Company (― MediVision ‖), on
the date hereof, in an aggregate amount not to exceed $1,500,000, at a price per share not less than $0.55848 (subject to adjustment for reverse
and forward stock splits and similar transactions), and without the provision of any special rights to such investors. For avoidance of doubt,
nothing herein shall be deemed as an obligation of any Purchaser Director (as defined below) to vote in any manner at any meeting of the
Company’s Board of Directors (the ― Board ‖) concerning this matter and each such director shall serve his duties in accordance with
applicable law.

            SECTION Delivery of the Shares at the Closing and at the Deferred Closing.
            3.

                   3.1   Closing

                                      (a)     The completion of the purchase and sale of the 1 st Installment Shares (the ― Closing ‖) shall occur
at the offices of Troutman Sanders LLP, 405 Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed to by the
parties hereto, within three business days following the execution of this Agreement, or on such later date or at such different location as the
parties shall agree in writing, but not prior to the date that the conditions for Closing set forth in Sections 3.1(b) and 3.1(c) below have been
satisfied or waived by the appropriate party (the ― Closing Date ‖).

                                      (b)    The Company’s obligation to complete the purchase and sale of the 1 st Installment Shares and
deliver such stock certificate to the Purchaser at the Closing shall be subject to the following conditions, any one or more of which may be
waived by the Company:
                                               (i)        receipt by the Company of the 1 st Installment; and

                                                   (ii)  each of the representations and warranties of the Purchaser made herein shall be true and
correct in all respects as of the date of this Agreement and as of the Closing Date as though made at that time.

                                     (c)    The Purchaser’s obligation to accept delivery of the 1 st Installment Shares, such stock certificate
and the 1 st Installment Warrant, and to pay the 1 st Installment at the



                                                                         2
Closing shall be subject to the following conditions, any one or more of which may be waived by the Purchaser:

                                               (i)    the delivery to the Purchaser by counsel to the Company of a legal opinion dated as of
the Closing Date in the form set forth in Exhibit B ;

                                                   (ii)  each of the representations and warranties of the Company set forth herein are true and
correct in all respects as of the date of this Agreement and as of such Closing Date as though made at that time and that the Company shall have
complied in all respects with all the agreements and satisfied in all respects all the conditions herein on its part to be performed or satisfied on
or prior to such Closing Date, and the Purchaser shall have received a certificate executed by the chief executive officer and chief financial
officer of the Company, dated as of the Closing Date, to the foregoing effect, in the form set forth in Exhibit C-1 ;

                                                (iii)  the execution by the Company of a written agreement (copy of each shall be delivered to
the Purchaser at the Closing) with each of the Company’s lenders, United Mizrachi Bank (― United Bank ‖) and The Tail Wind Fund Ltd. (―
Tail Wind ‖) which agreement is binding on the parties thereto, and pursuant to which each of United Bank and Tail Wind agree to forgo any
principal payments payable by the Company (or any of its subsidiaries) under any United Bank or Tail Wind indebtedness outstanding on the
Closing Date until January 1, 2011, and in the case of United Bank, the United Bank consents to and approves the MediVision Assets
Transaction (as defined below) and the transaction contemplated thereunder. Notwithstanding the foregoing, if the Company makes a principal
payment to United Bank in 2010 in amount higher than the Company’s Earnings Before Interest, Taxes and Amortization (― EBITDA ‖) for
the year ended December 31, 2010, then within three business days after the filing with the SEC (as defined below) of the Company’s audited
financial statements for the year ended December 31, 2010, the Company will issue shares of Common Stock to the Purchaser free of charge
and without payment of any consideration by the Purchaser, in an amount equal to the amount of principal payments made to United Bank
minus EBITDA divided by 0.41522 (the ― Additional Shares ‖); the provisions of Section 7.1 shall apply, mutatis mutandis , to the Additional
Shares, and the Company shall take all required actions set forth in Section 7.1 in order to register the Additional Shares;

                                                  (iv)   the execution by the Company and MediVision of a written agreement (a copy of which
shall be delivered to the Purchaser at the Closing) (the ― Assets Purchase Agreement ‖), which agreement is binding on the Company and the
parties thereto, for the purchase of certain assets of MediVision in a manner and under terms reasonably satisfactory to the Purchaser (the ―
MediVision Assets Transaction ‖);

                                                (v)     the deposit by MediVision of 3,793,452 shares of Common Stock, currently owned by
MediVision, in escrow with Stephen L. Davis, Esq. and the execution of the escrow agreement by all parties thereto (copy of which shall be
delivered to the Purchaser at the Closing), pursuant to the terms of Section 8.7(b) herein;

                                                (vi)    the execution by MediVision and the receipt by the Purchaser at the Closing of a copy of
a binding and irrevocable proxy, substantially in the form set forth in Exhibit D , appointing Gil Allon as its true and lawful attorney-in-fact
and proxy with respect to all shares of Common Stock owned by MediVision (i.e, 9,380,843 shares) to vote FOR the Stockholder Approvals
(as defined below) at the Company’s 2010 Annual Meeting of



                                                                         3
Shareholders; provided that MediVision may transfer up to 2,000,000 shares of Common Stock free and clear of this irrevocable proxy; and

                                                  (vii) the execution by Agfa Gevaert N.V., Delta Trading and Services (1986) Ltd, Gil Allon,
Noam Allon, Ariel Shenhar and Yuval Shenhar (collectively, the ― Principal MV Shareholders ,” and together with MediVision, the ―
MediVision/Principal MV Shareholders Group ‖ ) and the receipt by the Purchaser at the Closing of copies of binding and irrevocable
proxies, substantially in the form of set forth in Exhibit E , appointing Noam Allon as their true and lawful attorney-in-fact and proxy with
respect to all shares of MediVision owned by such entities or persons to vote FOR the MediVision Assets Transaction and any other matters for
which MediVision’s shareholders are asked to grant their vote or consent in connection with the consummation of the MediVision Assets
Transaction.

                                              (viii) the receipt by the Purchaser from the Company of a copy of resolutions adopted by the
Board approving the execution of the Transaction Documents, the consummation of the transactions contemplated therein, the appointment of
Uri Geiger and Moshe Arkin to the Board as of the Closing and the delivery of a director indemnification agreement to each of them.

                                                (ix)    the delivery to the Purchaser of a duly executed secretary certificate, dated as of the
Closing Date, in the form of Exhibit F-1 .
                   3.2 Deferred Closing.

                                       (a)    The completion of the purchase and sale of the 2 nd Installment Shares (the ― Deferred Closing ‖)
shall occur at the offices of Troutman Sanders LLP, 405 Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed
to by the parties hereto, within 14 days from the Company’s filing with the United States Securities and Exchange Commission (the ― SEC ‖)
of its Form 10-Q for the fiscal quarter ended March 31, 2010 (the ― Q1 Financial Statements ‖), or on such later date or at such different
location as the parties shall agree in writing, but not prior to the date that the conditions for Deferred Closing set forth in Sections 3.2(b) and
3.2(c) below have been satisfied or waived by the appropriate party (the ― Deferred Closing Date ‖).

                                     (b)    The Company’s obligation to complete the purchase and sale of the 2 nd Installment Shares and the 2
ndInstallment Warrant, and deliver the stock certificate and the 2 nd Installment Warrant to the Purchaser at the Deferred Closing shall be
subject to the following conditions, any one or more of which may be waived by the Company:
                                       (i) receipt by the Company of the 2 nd Installment; and

                                                  (ii)   each of the representations and warranties of the Purchaser made herein shall be true and
correct in all material respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be
true and correct in all respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such specific date.

                                     (c)    The Purchaser’s obligation to accept delivery of the 2 nd Installment Shares, the stock certificate and
the 2 nd Installment Warrant, and to pay the 2 nd Installment at the Deferred Closing, shall be subject to the completion of the Closing in all
respects, and to the following conditions, any one or more of which may be waived by the Purchaser:



                                                                         4
                                                   (i)    The Company shall have generated, for the period from January 1, 2009 to March 31,
2010, consolidated aggregate revenues (calculated in accordance with ―generally accepted accounting principles‖ as shall be defined in the Q1
Financial Statements) of at least $2,000,000 from the sale of EMR Products (as defined below), of which at least $1,000,000 is generated (as
shall be evidenced in writing to the Purchaser prior to the Deferred Closing Date) from sales of the Company (excluding sales by Abraxas
Medical Solutions Ltd., a subsidiary of the Company (― Abraxas Medical ‖)) to the ophthalmology segment (the ― Milestone ‖). If the
Milestone shall not be achieved in full, the Purchaser shall not be obligated to invest any portion of the 2 nd Installment; provided , that the
Purchaser shall be entitled at its sole discretion to invest all or any portion of the 2 nd Installment on the terms set forth herein. For the purpose
of this Section 3.2, ― EMR Product ‖ shall mean all software, installation training, service and maintenance of the Electronic Medical Records
and Practice Management;

                                                (ii)  the delivery to the Purchaser by counsel to the Company of a legal opinion dated as of
the Deferred Closing Date in the form set forth in Exhibit B ; and

                                                  (iii)  each of the representations and warranties of the Company set forth herein shall be true
and correct in all material respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be
true and correct in all respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such specific date) and that the Company has complied in all respects with all
the agreements and satisfied in all respects all the conditions herein on its part to be performed or satisfied on or prior to such Deferred Closing
Date, and the Purchaser shall have received a certificate executed by the chief executive officer and chief financial officer of the Company,
dated as of the Deferred Closing Date, to the foregoing effect in the form set forth in Exhibit C-2 .

                                              (iv)       the delivery to the Purchaser of a duly executed secretary certificate, dated as of the
Deferred Closing Date, in the form of Exhibit F-2 .

                         3.3    At each of the Closing and the Deferred Closing, the Purchaser shall deliver, in immediately available funds,
the full amount of the purchase price for the Shares being purchased hereunder by wire transfer to an account designated by the Company, and
the Company shall deliver to the Purchaser one or more stock certificates and Warrants registered in the name of the Purchaser, or in such
nominee name(s) as designated by the Purchaser in writing, representing the number of Shares and the number of the Warrant Shares set forth
in Section 2 above and bearing an appropriate legend referring to the fact that the Shares and the Warrants were sold in reliance upon the
exemption from registration under the Securities Act provided by Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder.
The name(s) in which the stock certificates are to be registered are set forth in the Stock Certificate Questionnaire attached hereto as part of
Appendix I .

            SECTION 4. Representations, Warranties and Covenants of the Company . The Company hereby represents and warrants to,
and covenants with, the Purchaser as follows:



                                                                          5
                           4.1     Organization and Qualification . The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation with corporate power and authority to own or lease its properties and conduct
its business in all material respects as described in the SEC Reports (as defined below) and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect
(as defined herein). The Company’s subsidiaries (each a ― Subsidiary ‖ and collectively the ― Subsidiaries ‖) are listed on Exhibit G to this
Agreement and are the only subsidiaries, direct or indirect, of the Company. Each Subsidiary is a direct or indirect wholly owned subsidiary of
the Company (except as otherwise set forth in Exhibit G). Each Subsidiary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with corporate power and authority to own or lease its properties and conduct its business, and is
qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would
not have a Material Adverse Effect.

                         4.2      Reporting Company; Registration Statement . The Company is not an ―ineligible issuer‖ (as defined in
Rule 405 promulgated under the Securities Act) and is eligible to register the Shares and the Warrant Shares for resale by the Purchaser on a
registration statement under the Securities Act.

                           4.3       Authorized Capital Stock . The Company has the authorized and the issued and outstanding capitalization as
set forth on Schedule 4.3(i) ; all of the issued and outstanding securities of the Company have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof
contained in the SEC Reports. Except as set forth on Schedule 4.3(ii) , the Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations. With respect to each of the
Subsidiaries (i) all the issued and outstanding shares of such Subsidiary’s capital stock is owned and held by the Company, and have been duly
authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and
were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and (ii) there are no
outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of such Subsidiary’s capital stock or any such options, rights,
convertible securities or obligations.

                          4.4      Issuance, Sale and Delivery of the Shares . The Shares and the Warrants issuable on each of the Closing Date
and the Deferred Closing Date, as the case may be, have been duly authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be validly issued, fully paid and nonassessable, and will conform in all material respects to the description of the
Common Stock set forth in the Company’s Form 8-A filed with the Commission on May 13, 1993 (the ― Form 8-A ‖). No preemptive rights or
other rights to subscribe for or purchase any shares of Common Stock of the Company exist with respect to the



                                                                        6
issuance and sale of the Shares and Warrant Shares by the Company pursuant to this Agreement. The Warrant Shares have been duly
authorized and, upon exercise in accordance with the applicable Warrants, the Warrant Shares will be validly issued, fully paid and
nonassessable, and will conform in all material respects to the description of the Common Stock set forth in the Form 8-A. No stockholder of
the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company’s
intention to file the Registration Statement (as hereinafter defined)) to require the Company to register the sale of any capital stock owned by
such stockholder under the Registration Statement (other than rights granted to the Tail Wind Fund, Ltd. and Solomon Strategic Holdings,
Inc.).

                           4.5      Due Execution, Delivery and Performance of the Agreements; No Conflicts; No Consents . The Company has
the requisite corporate power and authority to enter into this Agreement, the Voting Agreement and the Warrants (collectively, the ―
Transaction Documents ‖) and to consummate the transactions contemplated hereby and thereby. The Transaction Documents have been duly
authorized and when delivered in accordance with the terms of this Agreement, will be duly executed and delivered by the Company, and will
constitute legal, valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application
relating to or affecting the enforcement of creditors’ rights and the application of equitable principles relating to the availability of remedies,
and except as rights to indemnity or contribution, including but not limited to, indemnification provisions set forth in Sections 7.4 and 8.7
below, this Agreement may be limited by federal or state securities law or the public policy underlying such laws. The execution and
performance of the Transaction Documents by the Company and the consummation of the transactions herein and therein contemplated
(including the issuance of the Shares, the Warrants and the Warrant Shares) will not: (i) violate any provision of the articles of incorporation or
bylaws of the Company or the organizational documents of any Subsidiary; (ii) result in the creation of any lien, charge, security interest or
encumbrance upon any assets of the Company or any Subsidiary pursuant to the terms or provisions of, or will not conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument to which any of the Company or any Subsidiary is a party or by
which any of the Company or any Subsidiary or their respective properties may be bound; or (iii) result in a violation of any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental
agency or body applicable to the Company or any Subsidiary or any of their respective properties, except in the case of (ii) and (iii), such as
could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. No consent, approval,
authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required for the
execution and delivery of the Transaction Documents or the consummation of the transactions contemplated herein or therein, except for
compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Securities. For the purposes of this Agreement,
the term ― Material Adverse Effect ‖ shall mean a material adverse effect on the condition (financial or otherwise), properties, business,
prospects or results of operations of the Company and/or its Subsidiaries, individually or taken as a whole.



                                                                         7
                         4.6      Accountants . Perry-Smith LLP, who has expressed its opinion with respect to the consolidated financial
statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, which will be incorporated by
reference into the Registration Statement and the Prospectus (as defined herein) that forms a part thereof, are registered independent public
accountants as required by the Securities Act and the rules and regulations promulgated thereunder (the ― 1933 Act Rules and Regulations ‖)
and by the rules of the Public Accounting Oversight Board.

                           4.7     Contracts . The material contracts to which the Company is a party that are filed with, or incorporated by
reference to, the Company’s Annual Report on Form 10-K or and Exchange Act report filed by the Company with the Commission after
December 31, 2008 have been duly and validly authorized, executed and delivered by the Company and constitute the legal, valid and binding
agreements of the Company, enforceable by and against the Company in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to enforcement of creditors’ rights generally,
and general equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws.

                          4.8      No Actions . Except as disclosed in the SEC Reports, there are no legal or governmental actions, suits or
proceedings pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary before or by any court, regulatory
body or administrative agency or any other governmental agency or body, domestic, or foreign, which actions, suits or proceedings,
individually or in the aggregate, might reasonably be expected to have a Material Adverse Effect; and no labor disturbance by the employees of
the Company exists or is imminent, that might reasonably be expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative
agency or other governmental agency or body that might have a Material Adverse Effect.

                           4.9      Properties . Except as disclosed in the SEC Reports, the Company and each Subsidiary have good and
marketable title to all the properties and assets described as owned by it in the consolidated financial statements included in the SEC Reports,
free and clear of all liens, mortgages, pledges, or encumbrances of any kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those that are not material in amount and do not adversely affect the use made and proposed to be made of such property by
the Company or its Subsidiaries. Except as disclosed in the SEC Reports, the Company and each Subsidiary holds its leased properties under
valid and binding leases. The Company and any Subsidiary owns or leases all such properties as are necessary to their respective operations as
described in the SEC Reports.

                         4.10      No Material Adverse Change . Since December 31, 2008: (i) the Company and its Subsidiaries have not
incurred any material liabilities or obligations, indirect, or contingent, or entered into any material agreement or other transaction that is not in
the ordinary course of business or that could reasonably be expected to result in a material reduction in the future earnings of the Company;
(ii) the Company and its Subsidiaries have not sustained any material loss or interference with their businesses or properties from fire, flood,
windstorm, accident or other calamity not covered by insurance; (iii) the Company and its Subsidiaries have



                                                                          8
not paid or declared any dividends or other distributions with respect to their capital stock and none of the Company or any Subsidiary is in
default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the
Company or its Subsidiaries other than the sale of the Shares hereunder and shares or options issued pursuant to employee equity incentive
plans or purchase plans approved by the Company’s Board of Directors, or indebtedness material to the Company or its Subsidiaries (other than
in the ordinary course of business and any required scheduled payments); and (v) there has not occurred any event that has caused or could
reasonably be expected to cause a Material Adverse Effect.

                           4.11    Intellectual Property . Except as disclosed in the SEC Reports, (i) the Company and each Subsidiary owns or
has obtained valid and enforceable licenses or options for the inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights and trade secrets necessary for the conduct of its respective business as described in the SEC Reports
(collectively, the ― Intellectual Property ‖); and (ii) (a) there are no third parties who have any ownership rights to any Intellectual Property
that is owned by, or has been licensed to, the Company or each Subsidiary for the products described in the SEC Reports that would preclude
the Company or any Subsidiary from conducting its business as currently conducted and have a Material Adverse Effect, except for the
ownership rights of the owners of the Intellectual Property licensed or optioned by the Company or any Subsidiary; (b) to the Company’s
knowledge, there are currently no sales of any products that would constitute an infringement by third parties of any Intellectual Property
owned, licensed or optioned by the Company or any Subsidiary, which infringement would have a Material Adverse Effect; (c) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the rights of the Company or any
Subsidiary in or to any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary, other than claims which could not
reasonably be expected to have a Material Adverse Effect; (d) there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company or
any Subsidiary, other than non-material actions, suits, proceedings and claims; and (e) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company or any of any Subsidiaries infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary right of others, other than non-material actions, suits, proceedings and claims.

                            4.12    Compliance . None of the Company nor its Subsidiaries has been advised, nor do any of them have any reason
to believe, that it is not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations, except where
failure to be so in compliance would not have a Material Adverse Effect.

                          4.13     Taxes . The Company and each Subsidiary has filed on a timely basis (giving effect to extensions) all federal,
state and foreign income and franchise tax returns and has paid or accrued all taxes that shown as due thereon, and the Company has no
knowledge of a tax deficiency that has been or might be asserted or threatened against it that could have a Material Adverse Effect. All tax
liabilities accrued through the date hereof have been adequately provided for on the books of the Company.



                                                                        9
                         4.14    Transfer Taxes . On the Closing Date, all stock transfer or other taxes (other than income taxes) that are
required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will have been, fully paid or
provided for by the Company and all laws imposing such taxes will have been fully complied with.

                         4.15     Investment Company . The Company is not an ―investment company‖ or an ―affiliated person‖ of, or
―promoter‖ or ―principal underwriter‖ for an investment company, within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission promulgated thereunder.

                           4.16   Insurance . The Company maintains insurance underwritten by insurers of recognized financial responsibility,
of the types and in the amounts that the Company reasonably believes is adequate for its business, including, but not limited to, insurance
covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, with such deductibles as are customary for companies in the same or similar business, all of which insurance
is in full force and effect.

                           4.17     Additional Information . In the past 12 calendar months, the Company has filed all documents required to be
filed by it prior to the date hereof with the Commission pursuant to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the ― Exchange Act ‖) (all of the foregoing filed prior to the Closing Date and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the ― SEC Reports ‖). The
Company has made available to the Purchaser or its representatives true, correct and complete copies of the SEC Reports not available on the
SEC’s EDGAR system, if any. As of their respective filing dates, the SEC Reports complied in all material respects with the requirements of
the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder (the ― 1934 Act Rules and Regulations ‖ and,
together with the 1933 Act Rule and Regulations, the ― Rules and Regulations ‖) applicable to the SEC Reports, and none of the SEC Reports,
at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not
misleading.

                          4.18     Price of Common Stock . The Company has not taken, and will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or that might reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of the Common Stock to facilitate the sale or resale of the Securities.

                      4.19     Use of Proceeds . The Company shall use the proceeds from the sale of the Securities pursuant to the
Company’s budget and a strategic work plan in the form attached on Schedule 4.19 .

                         4.20    Non-Public Information . The Company has not disclosed to the Purchaser information that would constitute
material non-public information as of the Closing Date other than the existence of the transaction contemplated hereby.

                        4.21     Use of Purchaser Name . Except as otherwise required by applicable law or regulation, the Company shall not
use the Purchaser’s name or the name of any of its affiliates in any advertisement, announcement, press release or other similar public
communication unless it




                                                                         10
has received the prior written consent of the Purchaser for the specific use contemplated which consent shall not be unreasonably withheld.

                            4.22     Related Party Transactions . No transaction has occurred between or among the Company, on the one hand,
and its affiliates, officers or directors on the other hand, that is required to have been described under applicable securities laws in its SEC
Reports and is not so described in such reports.

                          4.23   Off-Balance Sheet Arrangements . There is no transaction, arrangement or other relationship between the
Company and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its SEC Reports and is not
so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect. There are no such transactions, arrangements or
other relationships with the Company that may create contingencies or liabilities that are not otherwise disclosed by the Company in its SEC
Reports.

                           4.24    Governmental Permits, Etc . The Company and each Subsidiary has all franchises, licenses, certificates and
other authorizations from such federal, state or local government or governmental agency, department or body that are currently necessary for
the operation of the business of the Company as described in the SEC Reports, except where the failure to posses currently such franchises,
licenses, certificates and other authorizations is not reasonably expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permit that, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to have a Material Adverse Effect.

                         4.25     Financial Statements . The consolidated financial statements of the Company and the related notes and
schedules thereto included in the SEC Reports fairly present the financial position, results of operations, stockholders’ equity and cash flows of
the Company and its consolidated Subsidiaries at the dates and for the periods specified therein. Such financial statements and the related notes
and schedules thereto have been prepared in accordance with generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and all adjustments necessary for a fair presentation of results for such periods have been
made; provided , however , that the unaudited financial statements are subject to normal year-end audit adjustments (which are not expected to
be material) and do not contain all footnotes required under generally accepted accounting principles.

                           4.26    Internal Accounting Controls . The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company has disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the
Exchange Act) that are designed to ensure that material information relating to the Company is made known to the Company’s principal
executive officer and the Company’s principal financial officer or persons performing similar functions. The Company is otherwise in
compliance in all material respects




                                                                        11
with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated thereunder.

                            4.27    Foreign Corrupt Practices . Neither the Company, nor any Subsidiary, nor, to the knowledge of the Company,
any director, officer, agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or
on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.

                          4.28      Employee Relations . Neither the Company nor any Subsidiary is a party to any collective bargaining
agreement or employs any member of a union. The Company and each Subsidiary believe that their relations with their employees are good.
The Company is not engaged in any unfair labor practice except for matters which would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the Company’s knowledge, threatened against the Company
before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements
is pending or threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the
Company and (C) no union representation dispute currently existing concerning the employees of the Company, and (ii) to the Company’s
knowledge, (A) no union organizing activities are currently taking place concerning the employees of the Company and (B) there has been no
violation of any federal, state, local or foreign law relating to discrimination in the hiring, promotion or pay of employees or any applicable
wage or hour laws. No executive officer of the Company (as defined in Rule 501(f) promulgated under the Securities Act) has notified the
Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. No executive
officer of the Company is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing
matters.

                          4.29     ERISA . The Company is in compliance in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (herein
called ― ERISA ‖); no ―reportable event‖ (as defined in ERISA) has occurred with respect to any ―pension plan‖ (as defined in ERISA) for
which the Company would have any liability; the Company has not incurred and does not expect to incur liability under: (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any ―pension plan‖; or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the ― Code ‖); and each ―Pension Plan‖ for which the Company
would have liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of such qualification.



                                                                        12
                          4.30     Environmental Matters . There has been no storage, disposal, generation, manufacture, transportation,
handling or treatment of toxic wastes, hazardous wastes or hazardous substances by the Company or to its knowledge, any Subsidiary (or, to
the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased
by the Company or any Subsidiary in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or that
would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit; there has been no
material spill, discharge, leak, emission, injection, escape, dumping or release of any kind into such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the
Company or any Subsidiary or with respect to which the Company or any Subsidiary have knowledge; the terms ―hazardous wastes,‖ ―toxic
wastes,‖ ―hazardous substances,‖ and ―medical wastes‖ shall have the meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.

                          4.31     Integration; Other Issuances of Shares . Neither the Company nor its subsidiaries or any affiliates, nor any
person acting on its or their behalf, has issued any shares of Common Stock or shares of any series of preferred stock or other securities or
instruments convertible into, exchangeable for or otherwise entitling the holder thereof to acquire shares of Common Stock which would be
integrated with the sale of the Securities to the Purchaser for purposes of the Securities Act or of any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or its subsidiaries or affiliates take any action or steps that would
require registration of any of the Securities under the Securities Act or cause the offering of the Securities to be integrated with other offerings.
Assuming the accuracy of the representations and warranties of the Purchaser, the offer and sale of the Securities by the Company to the
Purchaser pursuant to this Agreement will be exempt from the registration requirements of the Securities Act.

                          4.32     Money Laundering Laws . The operations of the Company and its Subsidiaries are and have been conducted
at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the ― Money Laundering
Laws ‖) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened,
except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

                         4.33      Foreign Assets Controls . Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (― OFAC ‖); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered
by OFAC.



                                                                         13
                        4.34   Shareholders Rights Plan . No claim will be made or enforced by the Company that the Purchaser is an
―Acquiring Person‖ under any shareholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that
any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving the Securities.

                           4.35    No General Solicitation; Offering Materials . Neither the Company nor, to the Company’s knowledge, any
person acting on behalf of the Company, has engaged in any form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities. Each of the Company, its directors and officers has not distributed and will
not distribute prior to the Closing Date or the Deferred Closing Dates any offering material, including any ―free writing prospectus‖ (as defined
in Rule 405 promulgated under the Securities Act), in connection with the offering and sale of the Shares other than the SEC Reports or any
amendment or supplement thereto.

             SECTION 5. Representations, Warranties and Covenants of the Purchaser . The Purchaser represents and warrants to, and
covenants with, the Company that:

                        5.1      Investment Experience . The Purchaser can bear the economic risk and complete loss of its investment in the
Securities and is knowledgeable, sophisticated and experienced in financial and business maters, in making, and is qualified to make, decisions
with respect to investments representing an investment decision like that involved in the purchase of the Securities.

                             5.2     Investment Intent . The Purchaser is acquiring the Securities in the ordinary course of its business and for its
own account for investment only not with a view to distribution (within the meaning of Section 2(11) of the Securities Act) (this representation
and warranty not limiting the Purchaser’s right to sell pursuant to the Registration Statement or in compliance with the Securities Act and the
Rules and Regulations, or, other than with respect to any claims arising out of a breach of this representation and warranty, the Purchaser’s
right to indemnification under Section 7.4). Prior to the Closing, the Purchaser was not an affiliate of the Company. Neither the Purchaser nor
any of its affiliates is a registered broker dealer or an entity engaged in the business of being a broker dealer. The Purchaser does not have any
agreement or understanding, directly or indirectly, with any person to distribute the Securities.

                          5.3      Shareholder Questionnaire . The Purchaser has completed or caused to be completed the Registration
Statement Questionnaire attached hereto as part of Appendix I , for use in preparation of the Initial Registration Statement (as defined below),
and the answers thereto are true and correct as of the date hereof and will be true and correct as of the effective date of the Registration
Statement and the Purchaser will notify the Company immediately of any material change in any such information provided in the Registration
Statement Questionnaire until such time as the Purchaser has sold all of its Shares and Warrant Shares or until the Company is no longer
required to keep the Initial Registration Statement effective.

                         5.4       Disclosure of Information . The Purchaser has had an opportunity to receive documents related to the
Company and to ask questions of and receive answers from the Company regarding the Company, its business, finances and operations and the
terms and conditions of the offering of the Securities. Neither such inquiries nor any other due diligence investigation conducted by the
Purchaser (or on its behalf) shall modify, amend, limit or affect




                                                                         14
the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or made pursuant to this Agreement
or the Company’s obligation to indemnify the Purchaser indemnitees pursuant to Section 8.7 herein. The Purchaser has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

                           5.5     Accredited Investor . At the time the Purchaser was offered the Shares and Warrants it was, at the date hereof
it is, on each of the Closing Date and Deferred Closing Date it will be, and on each date on which it exercises Warrants it will be, either (i) an
―accredited investor‖ within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act or (ii) a ―qualified institutional
buyer‖ as defined in Rule 144A promulgated under the Securities Act.

                         5.6     General Solicitation . The Purchaser is not purchasing the Securities as a result of any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or
radio or presented at any seminar or any other general solicitation or general advertisement.

                         5.7      Governmental Review . The Purchaser understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

                        5.8      Brokers and Finders . The Purchaser has not retained any finder, broker or like agent in connection with the
transactions contemplated by this Agreement.

                           5.9     Reliance on Exemptions . The Purchaser understands that the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions
and the eligibility of the Purchaser to acquire the Securities.

                           5.10      Confidentiality . For the benefit of the Company, the Purchaser previously agreed with the Company to keep
confidential all information concerning this private placement. The Purchaser acknowledges that it is prohibited from reproducing or
distributing this Agreement or any other offering materials or other information provided by the Company in connection with the Purchaser’s
consideration of its investment in the Company, in whole or in part, or divulging or discussing any of their contents, except to its partners,
officers, directors, or financial, investment, business or legal advisors in connection with its proposed investment in the Securities. Further, the
Purchaser understands that the existence and nature of all conversations and presentations, if any, regarding the Company and this offering
must be kept strictly confidential. The Purchaser understands that the federal securities laws impose restrictions on trading based on
information regarding this offering. In addition, the Purchaser hereby acknowledges that unauthorized disclosure of information regarding this
offering may result in a violation of Regulation D. This obligation will terminate upon the filing by the Company of a Current Report on Form
8-K in accordance with Section 7.1 hereof describing this



                                                                         15
offering. In addition to the above, the Purchaser shall maintain in confidence the receipt and content of any notice of a Suspension (as defined
in Section 5.17 below). The foregoing agreements shall not apply to any information that is or becomes publicly available through no fault of
the Purchaser, or that the Purchaser is legally required to disclose; provided , however , that if the Purchaser is requested or ordered to disclose
any such information pursuant to any court or other government order or any other applicable legal procedure, it shall use commercially
reasonable efforts to provide the Company with prompt notice of any such request or order in time sufficient to enable the Company to seek an
appropriate protective order.

                         5.11     Investment Decision . The Purchaser understands that nothing in the Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the Securities constitutes legal, tax or investment advice. The Purchaser
has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.

                          5.12     Restricted Securities . The Purchaser understands that the Securities are ―restricted securities‖ under the U.S.
federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable state laws and regulations such securities may be resold without registration under the Securities Act only in certain
limited circumstances. The Purchaser understands that the Securities have not been and, except as contemplated in Section 7 hereof, are not
required to be, registered for resale under the Securities Act or any state securities laws, and may not be offered for resale, assigned or
transferred unless (A) subsequently registered thereunder or (B) pursuant to an exemption from such registration, to the extent reasonably
requested, including pursuant to Section 4(1) under the Securities Act or Rule 144 promulgated under the Securities Act, as amended, or a
successor rule thereto (― Rule 144 ‖).

                       5.13     Legend . The Purchaser understands that, except as set forth in Section 5.14, the certificates representing the
Shares or Warrant Shares will bear a restrictive legend in substantially the following form:

                         ―[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
                         OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT
                         BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR
                         THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
                         EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
                         AMENDED (THE ―SECURITIES ACT‖), AND, ACCORDINGLY, MAY NOT BE
                         OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                         STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
                         EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
                         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
                         WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE
                         FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
                         FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
                         SECURED BY THE SECURITIES.‖




                                                                         16
             The Purchaser understands that the Warrants will bear a restrictive legend in substantially the same form.

                           5.14    Removal of Legend; Transfer Agent Instructions . The Company hereby covenants with the Purchaser to, no
later than three trading days following the delivery by the Purchaser to the Company of a legended certificate representing Shares or Warrant
Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer), and either (i) Purchaser’s Certificate of Subsequent Sale (A) in the form of Appendix II hereto, (B) executed by an officer of, or
other authorized person designated by, the Purchaser, and (C) to the effect that the Shares or Warrant Shares have been sold in accordance with
a Registration Statement or in a transaction exempt from the registration requirements of the Securities Act and any applicable state securities
or Blue Sky laws or (ii) an opinion of counsel reasonably satisfactory to the Company that the Shares or Warrant Shares are freely transferable
and that the legend is no longer required on such stock certificate, deliver or cause the Company’s transfer agent to deliver to the transferee of
the Shares or Warrant Shares or to the Purchaser, as applicable, a new stock certificate representing such Shares or Warrant Shares that is free
from all restrictive and other legends. The Company acknowledges that the remedy at law for a breach of its obligations under this Section 5.14
may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5.14, that the
Purchaser shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

                        5.15    Stop Transfer . The certificates representing the Shares and Warrant Share will be subject to a stop transfer
order with the Company’s transfer agent that restricts the transfer of such shares except upon receipt by the transfer agent of a written
confirmation from the Purchaser to the effect that the Purchaser has satisfied its prospectus delivery requirements, in the form attached as
Appendix II hereto.

                       5.16     Residency . The Purchaser’s principal executive offices are in the jurisdiction set forth immediately below the
Purchaser’s name on the signature pages hereto.

                          5.17    Public Sale or Distribution . The Purchaser hereby covenants with the Company not to make any sale of the
Shares or Warrant Shares under any Registration Statement without complying with the provisions of this Agreement and without effectively
causing the prospectus delivery requirement under the Securities Act to be satisfied (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule), and the Purchaser acknowledges and agrees that such Shares or Warrant Shares are not
transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a
separate Purchaser’s Certificate of Subsequent Sale: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized
person designated by, the Purchaser, and (iii) to the effect that (A) the Shares or Warrant Shares have been sold in accordance with the
Registration Statement, the Securities Act and any applicable state securities or Blue Sky laws and (B) the prospectus delivery requirement
effectively has been satisfied. The




                                                                       17
Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus (the ― Prospectus ‖)
forming a part of the Registration Statement (a ― Suspension ‖) until such time as an amendment to the Registration Statement has been filed
by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. Without the Company’s prior written consent, which consent shall not be unreasonably withheld or
delayed, the Purchaser shall not use any written materials to offer the Shares for resale other than the Prospectus, including any ―free writing
prospectus‖ as defined in Rule 405 under the Securities Act. The Purchaser covenants that it will not sell any Shares or Warrant Shares
pursuant to said Prospectus during the period commencing at the time when Company gives the Purchaser written notice of the suspension of
the use of said Prospectus and ending at the time when the Company gives the Purchaser written notice that the Purchaser may thereafter effect
sales pursuant to said Prospectus. Notwithstanding the foregoing, the Company agrees that no Suspension shall be for a period of longer than
60 consecutive days, and no Suspension shall be for a period longer than 90 days in the aggregate in any 365 day period. The Purchaser further
covenants to notify the Company promptly of the sale of all of its Shares or Warrant Shares.

                          5.18     Organization; Validity; Enforcements . The Purchaser further represents and warrants to, and covenants with,
the Company that: (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement;
(ii) the making and performance of this Agreement by the Purchaser and the consummation of the transactions herein contemplated will not
violate any provision of the organizational documents of the Purchaser or conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Purchaser is a party or, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the Purchaser;
(iii) no consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or
body is required on the part of the Purchaser for the execution and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement; (iv) upon the execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or the enforcement of creditor’s rights and
the application of equitable principles relating to the availability of remedies, and except as rights to indemnity or contribution, including, but
not limited to, the indemnification provisions set forth in Section 7.3 and 8.7 of this Agreement, may be limited by federal or state securities
laws or the public policy underlying such laws; and (v) there is not in effect any order enjoining or restraining the Purchaser from entering into
or engaging in any of the transactions contemplated by this Agreement.

                           5.19     Short Sales . Prior to the date hereof, the Purchaser has not taken, and prior to the public announcement of the
transaction after the Closing the Purchaser shall not take, any action that has caused or will cause the Purchaser to have, directly or indirectly,
sold or agreed to sell any shares of Common Stock, effected any short sale, whether or not against the box, established any ―put equivalent
position‖ (as defined in Rule 16a-1(h) under the Exchange Act with respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any
significant part of its value from the Common Stock.




                                                                         18
               SECTION 6. Survival of Agreements; Survival of Company Representations and Warranties . Notwithstanding any
investigation made by any party to this Agreement, all covenants and agreements made by the Company and the Purchaser herein and in the
certificates for the Shares and the Warrants delivered pursuant hereto shall survive the execution of this Agreement, the Closing and the
Deferred Closing (as the case may be), the delivery to the Purchaser of the Shares and Warrants being purchased and the payment therefor. All
representations and warranties, made by the Company and the Purchaser herein and in the certificates for the Shares and Warrants delivered
pursuant hereto shall survive (a) with respect to the transaction consummated at the Closing - for a period of two years following the later of
the execution of this Agreement, the delivery to the Purchaser of the 1 st Installment Shares and 1 st Installment Warrant being purchased at the
Closing and the payment therefor, and (b) with respect to the transaction consummated at the Deferred Closing - for a period of two years
following the later of the Deferred Closing, the delivery to the Purchaser of the 2 nd Installment Shares and 2 nd Installment Warrant being
purchased at the Deferred Closing and the payment therefor.

            SECTIO Registration of the Shares; Compliance with the Securities Act .
            N 7.

                   7.1   Registration Procedures and Expenses . The Company shall:

                                      (a)     as soon as practicable, but in no event later than 60 days following the Closing Date (the ― Initial
Registration Statement Filing Deadline ‖), prepare and file with the Commission a Registration Statement on Form S-1 or Form S-3 (or such
other form appropriate for such purpose) (the ― Initial Registration Statement ‖), relating to the resale of the 1 st Installment Shares, the 1 st
Installment Warrant Shares and any shares of Common Stock issued or issuable, directly or indirectly upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing by the Purchaser from time to time.

                                      (b)     as soon as practicable, but in no event later than 60 days following the Deferred Closing Date (the ―
Deferred Closing Filing Deadline ‖), prepare and file with the Commission a Registration Statement on Form S-1 or Form S-3 (or such other
form appropriate for such purpose) (the ― Deferred Closing Registration Statement ‖), relating to the resale of the 2 nd Installment Shares, the
2 nd Installment Warrant Shares and any shares of Common Stock issued or issuable, directly or indirectly upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the foregoing by the Purchaser from time to time. For purposes of this
Agreement, the term, ― Registration Statement ‖ shall include each of the Initial Registration Statement, the Deferred Closing Registration
Statement and any registration Statement filed pursuant to Section 7.2 and the term ― Registrable Securities ‖ shall mean, collectively, 1 st
Installment Shares, the 1 st Installment Warrant Shares, 2 nd Installment Shares, the 2 nd Installment Warrant Shares and any shares of Common
Stock issued or issuable, directly or indirectly upon any stock split, dividend or other distribution, recapitalization or similar event with respect
to the foregoing.



                                                                         19
                                     (c)    use its commercially reasonable efforts, subject to receipt of necessary information from the
Purchaser, to cause the Commission to declare each of the Initial Registration Statement and the Deferred Closing Registration Statement
effective within 180 days after the Closing Date or the Deferred Closing Date (as the case may be) (the ― Effectiveness Deadline ‖);

                                      (d)    promptly prepare and file with the Commission such amendments and supplements to each
Registration Statement and the prospectus used in connection therewith as may be necessary to keep each Registration Statement effective
until such time as all of the Registrable Securities covered by the Registration Statement become eligible for resale by the Purchaser without
any volume or other restrictions under Rule 144 or any other rule of similar effect; provided , that for the avoidance of doubt, in no event shall
the Company have any obligation to keep any Registration Statement effective after such time as all of the Registrable Securities covered by
such Registration Statement have been sold pursuant to the Registration Statement or Rule 144;

                                       (e)     furnish to the Purchaser with respect to the Registrable Securities registered under any Registration
Statement (and to each underwriter, if any), such number of copies of prospectuses and such other documents as the Purchaser may reasonably
request, in order to facilitate the public sale or other disposition of all Registrable Securities under such Registration Statement by the Purchaser
(or its valid transferees);

                                      (f)     file documents required of the Company for normal Blue Sky clearance in states specified in writing
by the Purchaser; provided , however , that the Company shall not be required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;

                                     (g)     bear all expenses in connection with the procedures in paragraphs (a) through (f) of this Section 7.1
and the registration of the Registrable Securities pursuant to any Registration Statement, other than fees and expenses, if any, of counsel or
other advisers to the Purchaser or underwriting discounts, brokerage fees and commissions incurred by the Purchaser, if any, in connection with
the offering of the Registrable Securities pursuant to any Registration Statement;

                                     (h)    file a Form D with respect to the 1 st Installment Shares and the 1 st Warrants and the 2 nd
Installment Shares and the 2 nd Installment Warrants (as the case may be) as required under Regulation D;

                                   (i)    file a Current Report on Form 8-K with the Commission describing the transactions contemplated
by this Agreement on each of the Closing Date and the Deferred Closing Date (as the case may be); and

                                    (j)    in order to enable the Purchaser to sell the Registrable Securities under Rule 144 under the
Securities Act, use its commercially reasonable efforts to comply with the requirements of Rule 144, including without limitation, use its
commercially reasonable efforts to comply with the requirements of Rule 144(c)(1) with respect to current public information about the
Company and to timely file all reports required to be filed by the Company under the Exchange Act until the Purchaser is no longer an affiliate
of the Company, but in any




                                                                         20
event for at least one year from the Closing Date or the Deferred Closing Date (as the case may be).

               The Company understands that the Purchaser disclaims being an underwriter, but the Purchaser being deemed an underwriter
shall not relieve the Company of any obligations it has hereunder. A draft of the proposed Registration Statement Questionnaire to be
completed by the Purchaser is attached hereto as Appendix I .

                   7.2   Commission Comments .

                                     (a)     If the Commission informs the Company that all of the Registrable Securities required to be
registered under any Registration Statement cannot be included in such Registration Statement due to Commission Comments (as defined
below), then the Company shall, from, time to time, (i) inform the Purchaser of the receipt of the Commission Comments and use its
commercially reasonable efforts to file amendments to such Registration Statement as required by the Commission and/or (ii) withdraw such
Registration Statement and file a new registration statement (a ― New Registration Statement ‖), in either case covering the maximum number
of Registrable Securities permitted to be registered by the Commission, on Form S-1 or S-3 or such other form available to register for resale
the Registrable Securities as a secondary offering; provided , however , that prior to filing such amendment or New Registration Statement, the
Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with the Commission Comments. Notwithstanding any other provision of this Agreement, if any
Commission Comments sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by the Purchaser as to its Registrable
Securities, the number of Registrable Securities to be registered on such Registration Statement will first be reduced by Warrant Shares. In the
event the Company amends a Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above,
the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or
Commission Comments provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or
Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Registration
Statement, as amended, or the New Registration Statement.

                                    (b)     For purposes of this Agreement, ― Commission Comments ‖ means written comments pertaining
solely to Rule 415 under the Securities Act which are received by the Company from the Commission with respect to a filed Registration
Statement which requires the Company to limit the amount of Registrable Securities which may be included therein to a number of shares
which is less than such amount sought to be registered under such Registration Statement.

                                      (c)     For purposes of this Agreement, the Filing Deadline of any Registration Statement filed pursuant to
this Section 7.2, shall be 30 days after the receipt of the Commission Comments which required the filing of such Registration Statement.



                                                                       21
                                      (d)    For purposes of this Agreement, the Effectiveness Deadline of any Registration Statement filed
pursuant to this Section 7.2, shall be 90 days after the receipt of the Commission Comments which required the filing of such Registration
Statement.

                                      (e)   The Company agrees that it will, subject to receipt of necessary information from the Purchaser, file
each New Registration Statement as soon as practicable after it becomes aware that the filing of such New Registration Statement will be
required, but in any event by its Filing Deadline, and it will use commercially reasonable efforts to cause the Commission to declare each New
Registration Statement effective within by its respective Effectiveness Deadline.

                                   (f)     The Company agrees that it will use commercially reasonable efforts to respond to any comments
received from the SEC with respect to any Registration Statement, including but not limited to Commission Comments, as soon as practical but
in any event within 14 business days (United States) from the receipt thereof.

                   7.3   Transfer of Shares After Registration .

                                       (a)   The Purchaser agrees that it will not effect any disposition of the Shares or Warrant Shares or its
right to purchase the Shares or Warrant Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any
applicable state securities laws, except as contemplated in the Registration Statement referred to in Section 7.1 or as otherwise permitted by
law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the
Purchaser or its plan of distribution.

                                      (b)      The Company acknowledges and agrees that the Purchaser may from time to time pledge, and/or
grant a security interest in, some or all of the legended Shares and Warrant Shares in connection with applicable securities laws, pursuant to a
bona fide margin agreement in compliance with a bona fide margin loan. Such a pledge would not be subject to approval or consent of the
Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but
such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Purchaser transferee of the
pledge. No notice shall be required of such pledge, but Purchaser’s transferee shall promptly notify the Company of any such subsequent
transfer or foreclosure. The Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Shares or Warrant Shares or for any agreement, understanding or arrangement between the Purchaser and its
pledgee or secured party. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Shares or Warrant Shares may reasonably request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders thereunder. Each Purchaser acknowledges and agrees that, except as
otherwise provided in Section 5.17 and in this Section 7.3, any Shares or Warrant Shares subject to a pledge or security interest as
contemplated by this Section 7.3(b) shall continue to bear the legend set forth in Section 5.13 and be subject to the restrictions on transfer set
forth in Section 5.17 and in this Section 7.3.

                   7.4   Indemnification . For the purpose of this Section 7.4:



                                                                        22
                                       (i)    the term ― Purchaser/Affiliate ‖ shall mean any affiliate of the Purchaser, including a transferee who
is an affiliate of the Purchaser, and any person who controls the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act; and

                                     (ii)   the term ― Registration Statement ‖ shall include any preliminary prospectus, final prospectus, free
writing prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated by reference in, any
Registration Statement referred to in Section 7.1 and 7.2.

                                       (a)     The Company agrees to indemnify and hold harmless the Purchaser and each Purchaser/Affiliate,
against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser or Purchaser/Affiliates may become subject,
under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and schedules, and
all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rules 430B, 430C or 434, of
the Rules and Regulations, or the Prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed as
part of the Registration Statement at the time of effectiveness if no Rule 424(b) filing is required or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary
to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any
amendment or supplement thereto not misleading in light of the circumstances under which they were made, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, and will promptly reimburse the Purchaser and each Purchaser/Affiliate for any legal
and other expenses as such expenses are reasonably incurred by the Purchaser or such Purchaser/Affiliate in connection with investigating,
defending or preparing to defend, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided ,
however , that the Company will not be liable for amounts paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, and the Company will not be
liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement
or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser
expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 5.17 or 7.3
hereof respecting the sale of the Shares or Warrant Shares, or (iii) the inaccuracy of any representation or warranty made by such Purchaser
herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser
prior to the pertinent sale or sales by the Purchaser.




                                                                         23
                                      (b)    Each Purchaser will indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its
directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the
Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation,
but only if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or are based upon: (i) any failure to comply with the covenants and
agreements contained in Sections 5.10 or 7.2 hereof respecting the sale of the Shares; (ii) the inaccuracy of any representation or warranty
made by such Purchaser herein; or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under
which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein; and will reimburse
the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other
expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling
person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action;
provided , however , that each Purchaser’s aggregate liability under this Section 7 shall not exceed the amount of proceeds received by such
Purchaser on the sale of the Shares pursuant to the Registration Statement.

                                       (c)    Promptly after receipt by an indemnified party under this Section 7.4 of notice of the threat or
commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this
Section 7.4 promptly notify the indemnifying party in writing thereof, but the omission to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this
Section 7.4 to the extent it is not prejudiced as a result of such failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided , however , if the defendants in any such action include both the indemnified party,
and the indemnifying party and the indemnified party shall have reasonably concluded, based on an opinion of counsel reasonably satisfactory
to the indemnifying party, that there may be a conflict




                                                                       24
of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate
in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.4 for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless: (i) the indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel, reasonably satisfactory to such indemnifying party, representing all
of the indemnified parties who are parties to such action); or (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in
each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. The indemnifying party
shall not be liable for any settlement of any action without its written consent. In no event shall any indemnifying party be liable in respect of
any amounts paid in settlement of any action unless the indemnifying party shall have approved in writing the terms of such settlement;
provided , that such consent shall not be unreasonably withheld. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnification could have been sought hereunder by such indemnified party from all liability on claims that are the subject
matter of such proceeding.

                                      (d)     If the indemnification provided for in this Section 7.4 is required by its terms but is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 7.4 in
respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein: (i) in
such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the private placement of
Common Stock hereunder; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in
connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement and/or the Registration
Statement that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Purchaser on the other shall be deemed to be in the same proportion as the
amount paid by the Purchaser to the Company pursuant to this Agreement for the Shares purchased by the Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the ― Difference ‖) between the amount the Purchaser paid for the Shares that were sold
pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company on the one
hand and the Purchaser on the other shall




                                                                        25
be determined by reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the
Company or by the Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 7.4, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph
(c) of this Section 7.4 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is
to be made under this paragraph (d); provided , however , that no additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 7.4 were determined solely by pro rata allocation (even if the Purchaser were treated
as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in
this paragraph. Notwithstanding the provisions of this Section 7.4, the Purchaser shall not be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

                         7.5     Information Available . The Company, upon the reasonable request of the Purchaser, shall make available for
inspection during normal business hours by the Purchaser, any underwriter participating in any disposition pursuant to any Registration
Statement and any attorney, accountant or other agent retained by the Purchaser or any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the Company’s officers, employees and independent accountants to
supply all information reasonably requested by the Purchaser or any such underwriter, attorney, accountant or agent in connection with any
Registration Statement.

                          7.6     Assignment of Registration Rights . The right to cause the Company to register Registrable Securities granted
to the Purchaser by the Company under this Agreement may be assigned in full by the Purchaser (or a subsequent holder of any Registrable
Securities (a ― Holder ‖)) in connection with a transfer by the Purchaser or a Holder of its Registrable Securities, but only if: (i) such transfer
may otherwise be effected in accordance with applicable securities laws; (ii) the Purchaser or the Holder gives written notice of the proposed
transfer to the Company including the name and address of such transferee and a copy of the transfer documents and agreements; and (iii) such
transfer is otherwise in compliance with this Agreement.

            SECTION Covenants .
            8.

                   8.1   Proxy Statement .

                                   (a)    In connection with (i) the Company’s 2010 Annual Meeting of Shareholders or (ii) or any other
special meeting of the Company’s shareholders duly convened prior to the Company’s 2010 Annual Meeting of Shareholders, the Company
shall prepare and file with the Commission a proxy statement




                                                                        26
meeting in accordance with the requirements of Section 14 of the Exchange Act and the related rules and regulations thereunder promulgated
by the Commission (the ― Proxy Statement ‖) to solicit the approval by stockholders holding a majority of the outstanding voting stock of the
Company present, in person or by proxy, at the Stockholders’ Meeting (as defined below) of an amendment to the Company’s articles of
incorporation providing for an increase in the amount of authorized Common Stock equal to 100,000,000 shares or in any greater amount such
that in any event, the Company shall have at the Deferred Closing sufficient amount of authorized Common Stock to enable it to perform its
obligations under this Agreement (the ― Stockholder Approval[s] ‖). The Company shall use its best efforts to (i) file the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009 (the ― 2009 10-K ‖) as soon as possible after such date, (ii) file the Proxy
Statement immediately after it files the 2009 10-K, (iii) cause the Proxy Statement to be declared effective under the Exchange Act as soon as
possible promptly as reasonably practicable after such filing (if the first filing is a preliminary proxy statement) and (iv) mail the Proxy
Statement to the stockholders of the Company as soon as practicable.

                                  (b)     The Company shall keep the Purchaser apprised of the status of matters relating to the Proxy
Statement and the Stockholders’ Meeting, including promptly furnishing the Purchaser and its counsel with copies of notices or other
communications related to the Proxy Statement and the Stockholders’ Meeting received by the Company from the Commission or any other
third party.

                        8.2       Stockholders’ Meeting . The Company shall, in accordance with the laws of the State of California and the
Company’s articles of incorporation and bylaws, use its commercially reasonable efforts to convene a meeting of holders of Common Stock to
consider and vote upon giving the Stockholder Approval (the ― Stockholders’ Meeting ‖) as soon as practicable after the filing of a definitive
proxy statement in connection with the Stockholders’ Meeting, but in any event by May 15, 2010. Subject to fiduciary obligations under
applicable law, the Board shall recommend such Stockholder Approval, shall not withdraw or modify such recommendation and shall solicit
such Stockholder Approval. Without limiting the generality of the foregoing, if the Board withdraws or modifies its recommendation, the
Company shall nonetheless cause the Stockholders’ Meeting to be convened and a vote to be taken, and the Board may communicate to the
Company’s stockholders its basis for such withdrawal or modification.

                         8.3     Election of Directors .

                                      (a)    The Company shall take all necessary actions (including, if necessary, amend its by-laws) following
the Closing to adjust the size of the Board to nine members, to elected as follows:

                                                 (i)    two ―Independent Directors‖ as defined under the listing standards of The Nasdaq
Capital Market, regardless of whether the Common Stock is then listed on the Nasdaq Capital Market, the identity of one shall be nominated by
the Purchaser, and the identity of the other shall be nominated by the MediVision/Principal MV Shareholders Group (which two directors are
currently Mr. William Greer and Mr. Jonathan R. Phillips);

                                                 (ii)   three directors to be nominated by the Purchaser (the ― Purchaser Directors ‖). One of
the Purchaser Directors shall be appointed as the Chairman of the Company’s Audit Committee. The Company shall ensure the appointment
of the Purchaser Directors at the Closing, and shall use its commercially reasonable efforts to cause (i) the Purchaser Directors to be nominated
and elected to the Board in each election of directors and (ii) if any Purchaser Director who has been so elected to the Board shall cease for any
reason to be a member of the Board during such person’s term as a director, the Company shall use its best efforts, subject to applicable laws
and regulations, to cause such vacancy to be filled by a replacement designated by the Purchaser;



                                                                        27
                                                (iii)   three directors to be nominated by MediVision or the Principal MV Shareholders (the ―
MediVision Directors ‖); and

                                              (iv) one director to be nominated by the Purchaser and MediVision or the Principal MV
Shareholders who shall be a reputable individual from the Company’s industry, and who shall act as the Chairman of the Board;

provided , that at the first annual meeting of the Company’s shareholders following the execution of this Agreement, (1) the Purchaser shall
nominate Mr. Ariel Shenhar, pursuant to Section 8.3(a)(ii), to serve as a director until the next annual meeting, subject to his continuance
service as the Company’s chief financial officer during such period and (ii) MediVision or the Principal MV Shareholders shall nominate
Mr. Gill Allon, pursuant to Section 8.2(a)(iii), to serve as a director until the next annual meeting, subject to his continuance service as the
Company’s chief executive officer during such period.

In addition, Noam Allon, in the sole discretion of the Board of Directors of the Company, shall attend all meetings of the Board of Directors as
an observer (the ― Representative ‖) and, in this respect, the Company shall give the Representative copies of all notices, minutes, consents,
and other materials that it provides to its directors; provided , however , that such representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information so provided; and provided further , that the Company reserves the right to withhold
any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such
meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a
conflict of interest.

                           8.4      D&O Insurance . Promptly following the date hereof and prior to the applicable appointment, the Company
shall cause each director appointed or elected to the Board pursuant to Section 8.3 to be fully covered by the Company’s existing directors’ and
officers’ liability insurance, in an amount reasonably acceptable to the Purchaser to be not less than $10,000,000. The Company shall provide
the Purchaser with a written approval of its insurance agent to the foregoing effect. The Company shall maintain such insurance valid and in
place in all times thereafter during which the Purchaser is entitled to elect members of the Board.

                        8.5       Indemnification Agreements . At the Closing, the Company shall execute and deliver indemnification
agreements substantially in the form attached hereto as Exhibit H (the ― Indemnification Agreements ‖) with each of the Purchaser Directors.

                      8.6       Board of Directors; Powers; Committees . As of the Closing Date, the bylaws of the Company will have been
amended in accordance with its terms, to provide the following:



                                                                         28
                                    (a)    The Board will have nine members.

                                    (b)    The Board shall have an audit committee, the composition and duties of which shall be in
compliance with all applicable federal and state securities laws and the rules of the OTC Bulletin Board, and which shall consist of at least
three members of the Board. One of the Purchaser Directors shall be appointed as the Chairman of the Company’s Audit Committee.

                                     (c)    The Board shall have a compensation committee, the composition and duties of which shall be in
compliance with all applicable federal and state securities laws and rules of the OTC Bulletin Board, and which shall consist of three members
of the Board. The duties of the compensation committee will include (i) authorizing the compensation of any executive officer, (ii) setting
number of shares reserved under the Company’s option pool, and (iii) setting employee compensation guidelines. The Purchaser Director shall
have a veto right with respect to any resolution adopted by the compensation committee with regards to any issuance of Abraxas options (as set
forth in Section 8.17 below).

                                   (d)    The Purchaser and MediVision shall have the right, but not the obligation, to cause one Purchaser
Director and one MediVision Director to serve on each of the Audit Committee, the Compensation Committee and any other committee of the
Board or any other committee of the Board of any subsidiary of the Company (if any).
                  8.7 Indemnification.

                                       (a)     Indemnification for breach representations, warranties or covenants . The Company will, to the
fullest extent permitted by law, defend the Purchaser, and each of its Affiliates, directors, officers, agents and employees (the ― Purchaser
Indemnitees ‖) or settle (provided that the Company will not agree to any settlement without the applicable Purchaser Indemnitee’s prior
written consent, which consent shall not be unreasonably withheld or delayed) at the Company’s expense any Action or Proceeding and
indemnify them for all Losses and Expenses (both as defined below) arising out of or in connection with a breach of any representations,
warranties or covenants of the Company in this Agreement. The Company will indemnify and hold harmless the Purchaser Indemnitees from
and against any and all damages, costs, liabilities and attorneys’ fees, incurred in defending and/or resolving such Action or Proceeding;
provided , that (i) the Company is promptly notified in writing of such Action or Proceeding ( provided , that any failure to deliver such notice
will not relieve the Company of liability under this Section 8.7), (ii) the Company will have the sole control of the defense and/or settlement
thereof ( provided , that if representation of the Purchaser Indemnitees by counsel retained by the Company would be inappropriate due to any
actual or potential differing interest between the Purchaser Indemnitee and the Company or any third party represented by such counsel, the
Purchaser Indemnitees will have the right to retain one separate counsel, with reasonable fees and expenses to be paid by the Company), (iii)
the Purchaser Indemnitees furnish to the Company, on request, information available to the Purchaser Indemnitees for such defense, and (iv)
the Purchaser Indemnitees reasonably cooperate in any defense and/or settlement thereof as long as the Company pays all of the Purchaser
Indemnitees’ reasonable out of pocket expenses and attorneys’ fees. The Purchaser Indemnitees will not admit any such Action or Proceeding
or any allegations made in such Action or Proceeding without, to the extent practicable, the prior written consent of the Company (which will
not be unreasonably withheld or delayed). For purposes of this Agreement, an ― Action or Proceeding ‖ means any claim,



                                                                        29
action, suit, judgments, settlements, litigation, proceeding, mediation, arbitration or investigation or audit by any Person, and ― Losses and
Expenses ,‖ means damages, expenses, losses, costs, liabilities (including without limitation, incident to any Action or Proceeding.

                                       (b)      Special Indemnification for the MediVision Assets Transaction . The Company will, to the fullest
extent permitted by law, defend the Purchaser Indemnitees or settle (provided that the Company will not agree to any settlement without the
applicable Purchaser Indemnitee’s prior written consent, which consent shall not be unreasonably withheld or delayed) at the Company’s
expense any Action or Proceeding and indemnify them for all Losses and Expenses (both as defined below) arising out of or in connection with
any liability, indebtedness, restriction or obligation imposed on the Company or any subsidiary of the Company or any Material Adverse Effect
suffered by the Company or any subsidiary of the Company as a result of or in connection with the MediVision Assets Transaction (including
without limitation, any liability related to the obligations of MediVision to the Israeli Office of the Chief Scientist (the ― OCS Claims ‖) or any
approval required to be provided by it in connection with such transaction (the ― OCS Approval ‖). In order to secure certain obligations of
MediVision to the Company under the Asset Purchase Agreement and to secure the indemnification obligation of the Company to the
Purchaser set forth in this Section 8.7(b), MediVision shall comply with the escrow provisions set forth in Section 10.5 of the Asset Purchase
Agreement. The Company hereby undertakes to take all required actions and to enforce any and all rights and remedies granted to it or to
which it is entitled under the Assets Purchase Agreement, by applicable law, or otherwise, in order to perform its indemnification obligation set
forth in this Section 8.7(b), including without limitation, (i) Company’s right to purchase and sell certain shares of Common Stock for the
repayment of the Elop Debt (as such term is defined and as further described Section 8.14 of the Asset Purchase Agreement), (ii) Company’s
right to purchase and cancel and/or reclassify certain shares of Common Stock into treasury shares entitling their holder to no rights, in
connection with the Untied Mizrachi Bank Loan (as such term is defined and as further described in Section 8.15 of the Asset Purchase
Agreement); The Board of the Company shall adopt, on or prior to the Closing Date, a resolution (a copy of which shall be delivered to the
Purchaser at the Closing) approving such cancellation and/or reclassification, subject to the occurrence of the relevant conditions, and (iii)
Company’s rights purchase and sell certain shares of Common Stock for the repayment of the OCS Debt and Obligations (as such term is
defined and as further described Section 8.16 of the Asset Purchase Agreement).

                         8.8     Voting Agreement . At the Closing, MediVision and certain of its stockholders shall execute a voting
agreement with the Purchaser pursuant to which they will undertake to vote all their shares in the Company for the appointment of the
Purchasers Directors (as defined above) and will agree on other terms customary in such agreements.

                         8.9      Management Fee . In consideration for the Purchaser’s service on the Board (through its Purchasers Directors)
and strategic consulting services, the Company shall pay the Purchaser an annual management fee of $20,000 plus VAT (to the extent
applicable) per each director appointed by it which is not an employee of the Company.

                         8.10   Operation of Business . The Company agrees that, between the date of this Agreement and the earlier of the
termination of this Agreement and the Closing Date, except as expressly contemplated by any provision of this Agreement, (i) the business of
the Company




                                                                        30
shall be conducted only in, and the Company shall not take any action except in, the ordinary course of business consistent with past practice,
and (ii) the Company shall use its commercially reasonable efforts to preserve its business organization intact, to keep available the services of
its current officers and employees, and to maintain its existing relations with suppliers, creditors, business partners and others having business
dealings with the Company, to the end that the Company’s goodwill and ongoing business shall be unimpaired at the Closing.

                            8.11     Exclusivity; Break-Up Fee . Until the Closing Date, the Company shall not, directly or indirectly, and shall
direct its directors, officers, employees, representatives, Affiliates and agents, including investment bankers, financial advisors, attorneys and
accountants (collectively, the ― Representatives ‖) not to, directly or indirectly, solicit or encourage any offers, engage in any discussions
(other than to inform any initiating party that it is subject to this provision) or enter into any agreements or commitments with respect to the
purchase of, or the sale or transfer or issuance (whether by merger, consolidation or otherwise) of, (i) any shares of capital stock of the
Company or another entity organized by affiliates or any securities convertible into or exchangeable for any such stock for the primary purpose
of raising capital or (ii) all or substantially all of the assets, or any material assets, of the Company or any subsidiary thereof (―
Acquisition Proposals ‖); provided , however , that nothing contained in this Section 8.11 shall prohibit the Board from providing
information in connection with, and negotiating, another unsolicited, bona fide written proposal regarding an Acquisition Proposal that the
Board shall have determined in good faith, after considering applicable law, and after consulting with independent outside counsel, that such
action is required in order for the Board to comply with its fiduciary duties to the Company’s stockholders under applicable law; provided ,
further , that if (a) the Board determines to enter into an Acquisition Proposal prior to the Closing, (b) the Stockholder Approvals are not
obtained prior to the Deferred Closing Date, the Closing is not consummated due to failure to obtain any consent of any third party on part of
the Company (including any governmental approvals), (c) the Stockholder Approvals are not obtained prior to the Deferred Closing Date, or
(d) the Company breaches its exclusivity undertaking above, the Company shall pay to the Purchaser a break-up fee equal to $100,000 within
seven days of the Purchaser’s written request. The Company shall notify the Purchaser promptly if any proposal or offer, or any inquiry or
contact with any Person with respect thereto, regarding an Acquisition Proposal is made, such notice to include the identity of the Person
making such proposal, offer, inquiry or contact, and the terms of such Acquisition Proposal. In addition, if the Company receives an
Acquisition Proposal that would require the Board, in exercising its fiduciary duties as described above, to determine not to consummate the
transactions contemplated hereby prior to the Closing, the Company shall endeavor to negotiate with the Purchaser, for a period not to exceed
10 days, a new transaction with the Purchaser that is comparable to such Acquisition Proposal.

                          8.12    Reasonable Efforts; Notification; Representations . Subject to the other terms and conditions of this
Agreement, each of the parties to this Agreement shall use reasonable efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the issuance of Warrant Shares upon the exercise of Warrants. Each party
to this Agreement shall give prompt notice to each other party to this Agreement upon becoming aware that any representation or warranty
made by such party in this Agreement has become untrue or



                                                                        31
inaccurate or that such party has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied
with or satisfied by such party under this Agreement, in each case such that the conditions set forth in this Agreement would not be satisfied.
No party to this Agreement shall take any action that would cause any representation or warranty made by such party in this Agreement to be
untrue if made at Closing.

                       8.13     Approval Rights . For so long as the Purchaser owns more than 20% of the issued and outstanding shares of
Common Stock (giving effect to the Warrant Shares underlying the Warrants held by the Purchaser) the Company must obtain prior written
approval from the Purchaser to:

                                                   (i)    Merge into or consolidate with any other person or entity or permit any other person or
entity to merge or consolidate with it; sell all or substantially all of the assets of the Company; liquidate, dissolve or wind-up the Company;
acquire any interest in any business from any person or entity; sell, transfer, lease or otherwise dispose of (in one or more transactions) any of
its material assets; purchase, lease or otherwise acquire (in one or more transactions) any material asset or more;

                                                 (ii)     Authorize, offer, sell or issue any (a) security or security converted into equity for a
purchase price or exercise price, as the case may be, lower than the average purchase price to be paid by the Purchaser for the two installments
(or lower than the 1 st Installment purchase price, if the 2 nd Installment was not paid), and (b) debt security, provided that following two years
from the Closing, the Company may issue debt security in an aggregate amount lower than $2,000,000 per year without the Purchaser’s
consent, and in any event, excluding the issuance of options to employees, including directors;

                                                 (iii)   Incur indebtedness for borrowed money or guarantee or act as a surety for any debt from
financial institutions in excess of $100,000 other then in the ordinary course of business;

                                                (iv)  Grant a security interest in an asset or combination of assets of the Company valued
individually or in the aggregate at $250,000 or more;

                                              (v)    Sell, lease, sublease, license or otherwise transfer any of the rights, title and interest in
any Company intellectual property valued individually or in the aggregate at $250,000 or more;

                                                 (vi)   Purchase, license or otherwise acquire any of the rights, title or interest in any
intellectual property of any third party valued individually or in the aggregate at $250,000 or more;

                                                 (vii) Any deviation of $250,000 or more from the Company’s budget for 2009 and 2010 as
disclosed to the Purchaser prior to the Closing (the 2010 budget can only be approved with the Purchaser’s consent); or

                                                 (viii)   Hire or terminate any executive officer of the Company, including the Chief Executive
Officer and Chief Financial Officer; or

                                                  (ix)    Approval of interested parties transaction(s) (excluding grant of options), to include
without limitation, transactions, directly or indirectly, between the



                                                                         32
Company and any of its directors and officers and any transaction with MediVision (including its directors and officers).

                         8.14     Participation Rights . The Purchaser, for so long as it holds a number of shares of Common Stock equal to
15% or more of the 1 st Installment Shares it purchased pursuant to this Agreement, will have the right to purchase its pro rata share (based on
the Purchaser’s beneficial ownership of the Company’s outstanding shares of Common Stock on a fully diluted basis, including the Warrant(s)
or the Warrant(s) Shares (as the case may be) of any future equity offering by the Company.

                          8.15     Most Favorite Nation . In the event that any current or future investor in the Company shall be granted more
favorable rights than or in preference over the Purchaser (including but not limited to issuance of superior type of shares or rights for
liquidation preference, anti dilution protection, board nomination, voting, registration of securities, approval rights, participation rights, or
management fee), the purchaser shall receive rights or parity with such rights and the terms applicable to the Securities shall be amended
accordingly, only for so long as the Purchaser beneficially owns at least 20% of the Company’s issued and outstanding Common Stock on a
fully diluted basis (including the Warrant Shares). This Section 8.15 will not apply if the terms granted to a future investor were agreed by the
Purchaser in its capacity as a stockholder, and the Purchaser waived its Most Favorite Nation right in connection therewith.

                         8.16     Access Rights . From the date hereof until the Closing, the Company will permit access to, and will make
available to the Purchaser’s representatives, consultants and their respective counsels for inspection, such information and documents as the
Purchaser reasonably request, and will make available at reasonable times and to a reasonable extent officers and employees of the Company to
discuss the business and affairs of the Company.

                         8.17      Abraxas Options . All options promised to Gil Allon and/or Ariel Shenhar for shares of Abraxas shall be
re-discussed at the compensation committee of the Board of Directors of the Company at its first meeting of the compensation committee
following the Closing and in any event no later than thirty days following the Closing Date, with the participation of the Purchaser Directors. It
is agreed that the Purchaser shall have a veto right with regards to any such issuance of Abraxas options.

                        8.18    Company’s Auditors . The Company shall appoint, no later than thirty days following the Closing Date, Ernst
& Young (Israel office) as channel II accountant for the Company and its subsidiaries.

               SECTION 9. Notices . All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed
by first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and
shall be deemed given when so mailed and shall be delivered as addressed as follows:




                                                                        33
               (a)     if to the Company, to:

                              Ophthalmic Imaging Systems
                              221 Lathrop Way, Suite 1
                              Sacramento, CA 95815
                              Attention: Gil Allon
                              Facsimile: 916-646-0207
                              Email: Info@oisi.com

                              with a copy to:

                              Troutman Sanders LLP
                              405 Lexington Avenue
                              New York, New York 10174
                              Attention: Henry I. Rothman
                              Facsimile: 212-704-5950
                              E-mail: Henry.rothman@troutmansanders.com


or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

                                  (b)     if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or
addresses as may have been furnished to the Company in writing.

              SECTION 10. Changes . This Agreement may not be modified or amended except pursuant to an instrument in writing signed by
the Company and the Purchaser. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding, each future holder of all such securities, and the Company.

             SECTION 11. Headings . The headings of the various sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be part of this Agreement.

              SECTION 12. Severability . In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired
thereby.

              SECTION 13. Governing Law; Venue . This Agreement is to be construed in accordance with and governed by the federal law
of the United States of America and the internal laws of the State of California without giving effect to any choice of law rule that would cause
the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Each
of the Company and the Purchaser submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of
California, for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. Each of
the Company and the Purchaser irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to
the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.



                                                                         34
             SECTION 14. Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed
by each party hereto and delivered to the other parties. Facsimile signatures shall be deemed original signatures.

              SECTION 15. Entire Agreement . This Agreement and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. Each party expressly represents and
warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

              SECTION 16. Fees and Expenses . The Company shall reimburse the Purchaser, at the Closing Date, for all expenses incurred
by the Purchaser in connection with this Agreement, including financial and legal due diligence and negotiation of the transaction, financial and
legal due diligence and negotiation of the MediVision Assets Transaction, and other professional services retained by the Purchaser, in an
aggregate amount equal to $100,000 plus VAT (to the extent applicable); provided, however , that the Purchaser hereby acknowledges that as
of the date of this Agreement, the Company has reimbursed the Purchaser $40,000 pursuant to this Section 16 and at the Closing Date, the
Company is only required to reimburse the Purchaser $60,000 plus VAT (to the extent applicable) for all expenses incurred by the Purchaser in
connection with this Agreement.

              SECTION 17. Parties . This Agreement is made solely for the benefit of and is binding upon the Purchaser and the Company and
to the extent provided in Section 7.4, any person controlling the Company or the Purchaser, the officers and directors of the Company, and their
respective executors, administrators, successors and assigns and subject to the provisions of Section 7.4, no other person shall acquire or have
any right under or by virtue of this Agreement. The term ―successor and assigns‖ shall not include any subsequent purchaser, as such
purchaser, of the Shares sold to the Purchaser pursuant to this Agreement. Notwithstanding the foregoing, the obligation of the Company to
register the Shares and the Warrant Shares granted to the Purchaser under this Agreement may be assigned in full by the Purchaser in
connection with a valid transfer by the Purchaser of its Shares and the Company agrees to promptly file any required prospectus supplement
electing such transfer and naming the transferee as a selling stockholder therein, if applicable, enabling the transferee to sell all Shares required
by it; provided , however , that (i) such transfer may otherwise be expected in accordance with applicable securities laws; (ii) such Holder gives
prior written notice to the Company; and (iii) such transferee agrees to comply with the terms and provisions of this Agreement to the extent
applicable, and such transfer is otherwise in compliance with this Agreement.

             SECTION 18. Further Assurances . Each party agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written assurance as may be reasonably requested by any other party to
evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this
Agreement.


                                                   [Remainder of Page Left Intentionally Blank]




                                                                         35
             IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of
the day and year first above written.

                                                                   OPHTHALMIC IMAGING SYSTEMS
                                                                   By: /s/ Gil Allon
                                                                       Name:         Gil Allon
                                                                       Title:        Chief Executive Officer



                                                                   By:     /s/ Ariel Shenhar
                                                                           Name:          Ariel Shenhar
                                                                           Title:         Chief Financial Officer




U. M. ACCELMED, LIMITED PARTNERSHIP

by A.M ACCELMED MANAGEMENT G(2009) LTD.,
its General Partner
By:       /s/ Uri Geiger
          Name:          Uri Geiger
          Title:         Chairman


6 Hachoshlim St.
Herzliya Pituach
46120, Israel
P.O.Box 12006
Attention: Dr. Uri Geiger
Facsimile: 972-9-9588594
E-mail: Uri@accelmed.co.il
with a copy to (which shall not constitute a notice):
Shenhav & Co. Law Offices
4 Ha’nechoshet St., Ramat Ha’chayal, Tel Aviv 69710, Israel
Attention: Dr. Ayal Shenhav, Adv.
Facsimile: 972-3-6110788
E-mail: ayal@shenhavlaw.co.il


                                                  Signature Page to Purchase Agreement




                                                                  36
                                               List of Exhibits, Appendices and Schedules

Exhibits

Exhibit A-1 and Exhibit A-2 – Form of Warrants

Exhibit B – Legal Opinion

Exhibit C-1 and Exhibit C-2 – Officer Certificates

Exhibit D – Form of Irrevocable Proxy by MediVision

Exhibit E – Form of Irrevocable Proxy by MediVision shareholders

Exhibit F-1 and Exhibit F-2 – Secretary Certificates

Exhibit G – List of Subsidiaries

Exhibit H – Director Indemnification Agreements

Exhibit I – Escrow Agreement



Appendices

Appendix I – Stock Certificate Questionnaire

Appendix II – Certificate of Subsequent Sale



Schedules

Schedule 4.3(i) – Outstanding Capitalization

Schedule 4.3(ii) – Outstanding Options to Purchase, Preemptive Rights and Other Rights

Schedule 4.19 – Company Budget and Strategic Work Plan




                                                                    37
                                                                 EXHIBIT A-1

                                                         FORM OF 1st WARRANTS



       NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED (A) EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE
SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM
REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH
OTHER APPLICABLE LAWS, OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT. NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

                                                   OPHTHALMIC IMAGING SYSTEMS

                                                                  WARRANT

         Warrant No. [__] Dated: [_______ __], 2009

         Ophthalmic Imaging Systems , a California corporation (the ― Company ‖), hereby certifies that, for value received, U.M.
Accelmed, Limited Partnership or its registered assigns (the ― Holder ‖), is entitled to purchase from the Company up to a total of 3,211,076
shares of common stock, no par value (the ― Common Stock ‖), of the Company (each such share, a ― Warrant Share ‖ and all such shares,
the ― Warrant Shares ‖) at an exercise price equal to $1.00 per share (as adjusted from time to time as provided in Section 9, the ― Exercise
Price ‖), at any time and on or after the date hereof (the ― Initial Exercise Date ‖ ) and through and including the date that is 36 (thirty-six)
months from the date hereof (being June [ l ], 2012) (the ― Expiration Date ‖), subject to the following terms and conditions. This Warrant
(this ― Warrant ‖) was issued pursuant to that certain Purchase Agreement, dated as of June [ l ], 2009, by and among the Company and the
Holder (the ― Purchase Agreement ‖).

                         SECTION 1.                    Definitions . In addition to the terms defined below and elsewhere in this Warrant,
      capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.




                                                                       38
                  SECTION 2.             Registration of Warrant . The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the ― Warrant Register ‖), in the name of the record Holder hereof from time to
time. The Company may deem and treat the registered Holder of record of this Warrant as the absolute owner hereof for the purpose of
any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

                    SECTION 3.              Registration of Transfers . The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at its address specified in the Purchase Agreement. Upon any such registration of transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a ― New Warrant ‖), evidencing the portion
of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not
so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

                  SECTION 4.            Exercise and Duration of Warrants .

                   4.1.         This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after
the Initial Exercise Date and including the Expiration Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of
this Warrant not exercised prior thereto shall be and become void and of no value.

                   4.2.         A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form
attached hereto (the ― Exercise Notice ‖), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the
number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a ―cashless exercise‖ if so indicated
in the Exercise Notice), and the date such items are delivered to the Company (as determined in accordance with the notice provisions
hereof) is an ― Exercise Date .‖ The Holder shall not be required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

                  SECTION 5.            Delivery of Warrant Shares .

                  5.1.          Upon exercise of this Warrant, the Company shall promptly issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends unless a legend is required to be placed on the certificate pursuant to the
Purchase Agreement. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have
become the holder of record of such Warrant Shares as of the Exercise Date. The Company shall, upon the written request of the Holder
and provided that the Transfer Agent is participating in The Depository Trust Company (― DTC ‖) Fast Automated Securities Transfer
Program, use its




                                                                39
commercially reasonable efforts, to credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system (―
DWAC ‖); provided , that the Holder provides the Company the reasonably necessary details to effect the foregoing DWAC delivery.

                   5.2.        This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of
Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued,
at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

                    5.3.          If within three Trading Days after the Company's receipt of an Exercise Notice the Company shall fail to
issue and deliver a certificate to the Holder and register the shares of Common Stock issuable pursuant to the Exercise Notice on the
Company's share register or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the
Holder is entitled upon such exercise, and if on or after such Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such
exercise that the Holder anticipated receiving from the Company (a ― Buy-In ‖), then the Company shall, within three Trading Days
after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total
purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the ― Buy-In Price ‖), at which
point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder's balance
account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit such Holder's balance account with DTC and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on
the date of exercise. For purposes of this Warrant, ― Closing Bid Price ‖ shall mean, for any security as of any date, the last closing bid
price for such security on the Trading Market, as reported by the Bloomberg Financial Markets (― Bloomberg ‖), or, if the Trading
Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security
prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or
trading market for such security, the last closing bid price or last trade price, respectively, of such security on the Eligible Market where
such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as reported in the ―pink sheets‖ by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the
Holder. ― Principal Market ‖ means the OTC Bulletin Board ® or, at any time that the Common Stock is not quoted on the OTC
Bulletin Board, the Eligible Market on which the Common Stock is listed or quoted for trade. ― Eligible Market ‖ means the Principal
Market,




                                                                 40
the American Stock Exchange, The New York Stock Exchange, Inc., The NASDAQ Capital Market, The NASDAQ Global Market or
The NASDAQ Global Select Market.

                   5.4.          The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the
Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

                   SECTION 6.             Charges, Taxes and Expenses . Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any
transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The
Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

                   SECTION 7.             Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this
Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply
with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If
a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the
Company as a condition precedent to the Company’s obligation to issue the New Warrant.

                   SECTION 8.             Reservation of Warrant Shares . The Company covenants that it will at all times reserve and
keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any). The Company covenants that
all Warrant Shares so issuable and deliverable shall,




                                                                  41
upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Stock may be listed.

                  SECTION 9.            Certain Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

                   9.1.          Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding, (i) pays a
stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common
Stock (which for the avoidance of doubt, shall not include shares of Common Stock issued by the Company pursuant to this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.

                   9.2.            Fundamental Transactions . If any capital reorganization, reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially
all of the Company’s assets to another corporation shall be effected (each a ― Fundamental Transaction ‖), then, as a condition of such
Fundamental Transaction, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase
and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or
in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such Fundamental Transaction not taken place, and in any such case appropriate provision shall be made with respect
to the rights and interests of the Holder to the end that the provisions hereof (including, without limitations, provision for adjustment of
the Exercise Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities
or properties thereafter deliverable upon the exercise hereof. The Company shall not effect any such Fundamental Transaction unless
prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company (a copy of which shall be




                                                                 42
delivered to the Holder), the obligation to deliver to the holder of the Warrant such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to purchase and the other obligations under this Warrant. The provisions of
this paragraph (b) shall similarly apply to successive Fundamental Transactions.

                   9.3.          Subsequent Equity Sales . If the Company at any time while this Warrant is outstanding, shall sell or
grant any option to purchase, or sell or grant any right to reprice, or otherwise issue any Common Stock or Common Stock Equivalents
(as defined below) entitling any person to acquire shares of Common Stock, at an effective price per share less than $1.00 per share of
Common Stock (each such issuance, a ― Dilutive Issuance ‖) (if the holder of the Common Stock or Common Stock Equivalents so
issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to
receive shares of Common Stock at an effective price per share which is less than $1.00 per share of Common Stock, such issuance shall
be deemed to have occurred for less than $1.00 per share of Common Stock on such date of the Dilutive Issuance), then if such Dilutive
Issuance shall occur, the Exercise Price shall be reduced to be equal to the product of (A) the Exercise Price in effect immediately prior
to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise
Price in effect immediately prior to such Dilutive Issuance and the number of outstanding shares of Common Stock immediately prior to
such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product
derived by multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of
Common Stock outstanding immediately after such Dilutive Issuance.

The following formula illustrates the foregoing:

                                              NP = OP x (OP x CS + C) / (OP x CSA)

WHERE

NP = the adjusted Exercise Price (after the Dilutive Issuance)

OP = Exercise Price in effect immediately prior to such Dilutive Issuance

CS = the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance

C = the consideration, if any, received by the Company upon such Dilutive Issuance

CSA = the number of outstanding shares of Common Stock immediately after such Dilutive Issuance

Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 9(c) in respect of an Exempt
Issuance. For purposes of this Warrant: ― Common




                                                                  43
Stock Equivalents ‖ shall mean securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly,
shares of Common Stock, or Preferred Stock; and ― Exempt Issuance ‖ shall mean the issuance of: (a) shares of Common Stock or
Common Stock Equivalents to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for
such purpose by the Board of Directors or a majority of the members of a committee established for such purpose by the Board of
Directors; (b) securities upon the exercise of this Warrant (and any other securities issued pursuant to the Purchase Agreement) and/or
the exercise or conversion of Common Stock Equivalents issued and outstanding on the date of this Warrant (as set forth in Schedule
4.3(i) of the Purchase Agreement); provided , that such securities have not been amended since the date of this Warrant to increase the
number of such securities or to decrease the exercise, exchange or conversion price of such securities; or (c) securities issued in
connection with any stock split, stock dividend, recapitalization or similar transaction by the Company.

                   9.4.          Number of Warrant Shares . Simultaneously with any adjustment to the Exercise Price pursuant to
Section 9(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as
applicable, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

                   9.5.           Calculations . All calculations under this Section 9 shall be made to the nearest cent or the nearest
1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

                    9.6.         Notice of Adjustments . Upon the occurrence of each adjustment pursuant to this Section 9, the
Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate
setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or
other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of
each such certificate to the Holder and to the Transfer Agent.

                    9.7.          Notice of Corporate Events . If the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe
for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up
of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such
transaction, at least ten calendar days prior to the applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in
order to insure that the Holder is given




                                                                44
      the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction;
      provided , however , that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action
      required to be described in such notice.

                        SECTION 10.             Payment of Exercise Price . The Holder shall pay the Exercise Price (i) in cash in immediately
      available funds or (ii) through a ―cashless exercise,‖ in which event the Company shall issue to the Holder the number of Warrant Shares
      determined as follows:

                                                             X = Y [(A-B)/A]
                           where:
                                                             X = the number of Warrant Shares to be issued to the Holder.

                                                            Y = the number of Warrant Shares with respect to which this Warrant is being
                                                   exercised.

                                                            A = the average of the Closing Prices for the five Trading Days immediately prior
                                                   to (but not including) the Exercise Date.

                                                             B = the Exercise Price.

Notwithstanding anything in this Warrant to the contrary, the Holder may only exercise this Warrant through a cashless exercise if no
Registration Statement (as defined in the Purchase Agreement) is effective for more than 30 consecutive days that covers the Warrant Shares
issuable upon the exercise of this Warrant.

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in
a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

                       SECTION 11.            Fractional Shares . The Company shall not be required to issue or cause to be issued fractional
      Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be
      issuable




                                                                         45
upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

                   SECTION 12.            Notices . Any and all notices or other communications or deliveries hereunder (including
without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement
prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading
Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices or communications shall be as set forth in the Purchase Agreement with respect to the Company and, with
respect to the Holder, the Holder’s last address as shown on the Warrant Register.

                   SECTION 13.          Warrant Agent . The Company shall serve as warrant agent under this Warrant. Upon 10 days’
notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder
services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

                  SECTION 14.           Investment Intent; Limited Transferability .

                    14.1.          If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, this
Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder furnish to the
Company a legal opinion of counsel to the Holder to such effect, the substance of which shall be reasonably acceptable to the Company
and (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the
Company representing that they are acquiring such Warrant Shares for investment purposes and that they are an accredited investor as
defined in Rule 501(a) under the Securities Act. The Holder understands that it must bear the economic risk of its investment in this
Warrant and any securities obtainable upon exercise of this Warrant for an indefinite period of time, as this Warrant and such securities
have not been registered under Federal or state securities or blue sky laws.

                  14.2.         The Holder represents that it has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of this Warrant or the




                                                                46
exercise of the Warrant and the finance operations and business of the Company; and (ii) the opportunity to request such additional
information which the Company possesses or can acquire without unreasonable effort or expense. Nothing contained in this Section
14(b) shall alter, amend or change the Holder’s reliance on the representations, covenants or warranties contained herein.

                  14.3.          The Holder represents that it is an ―accredited investor‖ within the meaning of Regulation D
promulgated under the Securities Act and that it is acquiring the Warrants for its own account and not with a present view to, or for sale
in connection with, any distribution thereof in violation of the registration requirements of the Securities Act, without prejudice,
however, to such Holder’s right, subject to the provisions of this Warrant, at all times to sell or otherwise dispose of all or any part of the
Warrant and Warrant Shares.

                    14.4.          The Holder represents that it, either by reason of such Holder’s business or financial experience or the
business or financial experience of its professional advisors (who are unaffiliated with and who are not compensated by the Company or
any affiliate, finder or selling agent of the Company, directly or indirectly), has such sophistication, knowledge and experience in
financial and business matters as to be capable of evaluating the merits and risks of its investment in the Company and the capacity to
protect such Holder’s interests in connection with the transactions contemplated by this Warrant and the Purchase Agreement.

                  14.5.         The Holder represents that it has the ability to bear the economic risks of its investment for an indefinite
period of time and could afford a complete loss of its investment.

                   14.6.          The Holder agrees and acknowledges that the representations made by the Holder in this Section 14 are
conditions to the exercise of this Warrant.

                  SECTION 15.             Miscellaneous .

                   15.1.         Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by
the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction (subject
to the provisions of Section 9(b) hereof). This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person
other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be
amended only in writing signed by the Company and the Holder and their successors and assigns.

                    15.2.         The Company will not, by amendment of its governing documents or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against
impairment. Without limiting




                                                                  47
the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor
on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or
records in any manner which interferes with the timely exercise of this Warrant.

                   15.3.          All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the laws of the State of California. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of California, for the
adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under Section 12 hereof and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. The Company hereby waives all rights to a trial by jury.

                  15.4.          The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be
deemed to limit or affect any of the provisions hereof.

                   15.5.         In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

                                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                                            SIGNATURE PAGE FOLLOWS




                                                                   48
         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first
indicated above.


                      OPHTHALMIC IMAGING SYSTEMS


                               By:    ____________________________
                                     Name:
                                     Title:


                                                                   49
                                                        FORM OF EXERCISE NOTICE

                                          (To be executed by the Holder to exercise the right to purchase shares of
                                                       Common Stock under the foregoing Warrant)

         To   Ophthalmic Imaging Systems:

         The undersigned is the Holder of Warrant No. _______ (the ― Warrant ‖) issued by Ophthalmic Imaging Systems, a California
corporation (the ― Company ‖). As a condition to this exercise, the undersigned Holder hereby represents and warrants to the Company that
the representations and warranties set forth in Section 14 of the Warrant are true and correct as of the date hereof as if they had been made on
such date with respect to the Warrant Shares. The undersigned Holder further acknowledges that the sale, transfer, assignment or
hypothecation of the Warrant Shares to be issued upon exercise of this Warrant is subject to the terms and conditions contained in Section 14 of
this Warrant. Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

                                    (1)     The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

                                    (2)   The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares
                                    pursuant to the Warrant.

                                    (3)     The Holder intends that payment of the Exercise Price shall be made as (check one):

                                              ____        ―Cash Exercise‖ under Section 10

                                              ____        ―Cashless Exercise‖ under Section 10

                                    (4)  If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the
                                    Company in accordance with the terms of the Warrant.

                                    (5)    Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares
                                    in accordance with the terms of the Warrant.

                                    (6)  Following this exercise, the Warrant shall be exercisable to purchase a total of ______________
                                    Warrant Shares.



         Dated: ______________, ___________                                          Name of Holder:




                                                                        50
                                                       (Print)    ________________________________

                                                       By:        ________________________________
                                                       Name:      ________________________________
                                                       Title:     ________________________________

                                                        (Signature must conform in all respects to name of holder as
                                               specified on the face of the Warrant)

                                               __________________________________
                                               Taxpayer Identification Number
         ACKNOWLEDGED AND AGREED TO this ___
day of ___________, 20__

      OPHTHALMIC IMAGING SYSTEMS


      By:
      Name: ______________________
      Title: ______________________




                                                 51
                                                        FORM OF ASSIGNMENT

                                             [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right
represented by Warrant to purchase ____________ shares of Common Stock of Ophthalmic Imaging Systems to which the Warrant relates and
appoints ________________ attorney to transfer said right on the books of Ophthalmic Imaging Systems with full power of substitution in the
premises. As a condition to this assignment, the Holder acknowledges that its assignee must deliver a written instrument to the Company that
the representations and warranties of Section 14 of the Warrant are true and correct as of the date hereof as if they had been made by such
assignee on such date with respect to the Warrants.



        Dated:                 ,

                                                                     ______________________________________
                                                                 (Signature must conform in all respects to name of holder as specified on
                                                        the face of the Warrant)

                                                                  ______________________________________
                                                                 Address of Transferee

                                                                    ______________________________________

                                                                    ______________________________________


                                                                   ______________________________________
                                                                   Taxpayer Identification Number
        In the presence of:




                                                                     52
                                                                EXHIBIT A-2

                                                        FORM OF 2nd WARRANTS

       NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED (A) EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE
SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM
REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH
OTHER APPLICABLE LAWS, OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT. NOTWITHSTANDING THE FOREGOING, SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

                                                  OPHTHALMIC IMAGING SYSTEMS

                                                                 WARRANT

        Warrant No. [__] Dated: [_______ __], 2010

         Ophthalmic Imaging Systems , a California corporation (the ― Company ‖), hereby certifies that, for value received, U.M.
Accelmed, Limited Partnership or its registered assigns (the ― Holder ‖), is entitled to purchase from the Company up to a total of 1,193,696
shares of common stock, no par value (the ― Common Stock ‖), of the Company (each such share, a ― Warrant Share ‖ and all such shares,
the ― Warrant Shares ‖) at an exercise price equal to $1.00 per share (as adjusted from time to time as provided in Section 9, the ― Exercise
Price ‖), at any time and on or after the Initial Exercise Date (as defined below) and through and including the date that is 36 (thirty-six)
months from the date hereof (being June [ l ], 2012) (the ― Expiration Date ‖), subject to the following terms and conditions. This Warrant
(this ― Warrant ‖) was issued pursuant to that certain Purchase Agreement, dated as of June [ l ], 2009, by and among the Company and the
Holder (the ― Purchase Agreement ‖).

                         SECTION 16.           Definitions . In addition to the terms defined below and elsewhere in this Warrant, capitalized
      terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

― Initial Exercise Date ‖ shall mean the date that any of the following occurs: (i) the date that the Company consummates a merger with and
into another corporation or the date the Company consummates a sale, transfer or other disposition of all or substantially all of its assets,


                                                                      53
(ii) the date that the average closing price per share of the Company’s Common Stock on the OTC Bulletin Board (or wherever the Common
Stock is listed or quoted for trading on the date in question) for 10 consecutive Trading Days exceeds $2.00; (iii) the date the Company’s
Board of Directors authorizes a transaction pursuant to which the Company will raise at least $1,500,000 in capital raising transaction with
persons who are shareholders of MediVision Medical Imaging Ltd., the parent entity of the Company, on the date hereof; and (iv) March __,
2012.

                        SECTION 17.            Registration of Warrant . The Company shall register this Warrant, upon records to be
      maintained by the Company for that purpose (the ― Warrant Register ‖), in the name of the record Holder hereof from time to
      time. The Company may deem and treat the registered Holder of record of this Warrant as the absolute owner hereof for the purpose of
      any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

                          SECTION 18.             Registration of Transfers . The Company shall register the transfer of any portion of this
      Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and
      signed, to the Company at its address specified in the Purchase Agreement. Upon any such registration of transfer, a new warrant to
      purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a ― New Warrant ‖), evidencing the portion
      of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not
      so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be
      deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

                        SECTION 19.           Exercise and Duration of Warrants .

                         19.1.         This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after
      the Initial Exercise Date and including the Expiration Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of
      this Warrant not exercised prior thereto shall be and become void and of no value.

                         19.2.         A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form
      attached hereto (the ― Exercise Notice ‖), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the
      number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a ―cashless exercise‖ if so indicated
      in the Exercise Notice), and the date such items are delivered to the Company (as determined in accordance with the notice provisions
      hereof) is an ― Exercise Date .‖ The Holder shall not be required to deliver the original Warrant in order to effect an exercise
      hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance
      of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.




                                                                      54
                  SECTION 20.            Delivery of Warrant Shares .

                  20.1.          Upon exercise of this Warrant, the Company shall promptly issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends unless a legend is required to be placed on the certificate pursuant to the
Purchase Agreement. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have
become the holder of record of such Warrant Shares as of the Exercise Date. The Company shall, upon the written request of the Holder
and provided that the Transfer Agent is participating in The Depository Trust Company (― DTC ‖) Fast Automated Securities Transfer
Program, use its commercially reasonable efforts, to credit such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission
system (― DWAC ‖); provided , that the Holder provides the Company the reasonably necessary details to effect the foregoing DWAC
delivery.

                   20.2.        This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of
Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued,
at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

                    20.3.          If within three Trading Days after the Company's receipt of an Exercise Notice the Company shall fail to
issue and deliver a certificate to the Holder and register the shares of Common Stock issuable pursuant to the Exercise Notice on the
Company's share register or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the
Holder is entitled upon such exercise, and if on or after such Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such
exercise that the Holder anticipated receiving from the Company (a ― Buy-In ‖), then the Company shall, within three Trading Days
after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total
purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the ― Buy-In Price ‖), at which
point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder's balance
account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit such Holder's balance account with DTC and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on
the date of exercise. For purposes of this Warrant, ― Closing Bid Price ‖ shall mean, for any security as of any date, the last closing bid
price for such security on the Trading Market, as reported by the Bloomberg Financial Markets (― Bloomberg ‖), or, if the Trading
Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security
prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or
trading market for such security, the last closing bid price or last trade price, respectively, of such security on the Eligible Market where
such security is listed or traded as reported by Bloomberg, or if the foregoing




                                                                 55
do not apply, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the ―pink
sheets‖ by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. ― Principal Market ‖ means the OTC Bulletin Board ® or, at any time that the
Common Stock is not quoted on the OTC Bulletin Board, the Eligible Market on which the Common Stock is listed or quoted for
trade. ― Eligible Market ‖ means the Principal Market, the American Stock Exchange, The New York Stock Exchange, Inc., The
NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market.

                   20.4.          The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the
Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

                   SECTION 21.            Charges, Taxes and Expenses . Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any
transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The
Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

                   SECTION 22.            Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this
Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply
with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If
a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the
Company as a condition precedent to the Company’s obligation to issue the New Warrant.




                                                                  56
                   SECTION 23.            Reservation of Warrant Shares . The Company covenants that it will at all times reserve and
keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any). The Company covenants that
all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with
the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be
listed.

                  SECTION 24.           Certain Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

                   24.1.          Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding, (i) pays a
stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common
Stock (which for the avoidance of doubt, shall not include shares of Common Stock issued by the Company pursuant to this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.

                   24.2.            Fundamental Transactions . If any capital reorganization, reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation, or sale, transfer or other disposition of all or substantially
all of the Company’s assets to another corporation shall be effected (each a ― Fundamental Transaction ‖), then, as a condition of such
Fundamental Transaction, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase
and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or
in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such Fundamental Transaction not taken place, and in any such case appropriate provision shall be made with respect
to the rights and interests of the Holder to the end that the provisions hereof




                                                                 57
(including, without limitations, provision for adjustment of the Exercise Price) shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise hereof. The Company
shall not effect any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise
acquiring such assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the
Company (a copy of which shall be delivered to the Holder), the obligation to deliver to the holder of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to purchase and the other obligations
under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive Fundamental Transactions.

                   24.3.           Subsequent Equity Sales . If the Company at any time while this Warrant is outstanding, shall sell or
grant any option to purchase, or sell or grant any right to reprice, or otherwise issue any Common Stock or Common Stock Equivalents
(as defined below) entitling any person to acquire shares of Common Stock, at an effective price per share less than $1.00 per share of
Common Stock (each such issuance, a ― Dilutive Issuance ‖) (if the holder of the Common Stock or Common Stock Equivalents so
issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to
receive shares of Common Stock at an effective price per share which is less than $1.00 per share of Common Stock, such issuance shall
be deemed to have occurred for less than $1.00 per share of Common Stock on such date of the Dilutive Issuance), then if such Dilutive
Issuance shall occur, the Exercise Price shall be reduced to be equal to the product of (A) the Exercise Price in effect immediately prior
to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise
Price in effect immediately prior to such Dilutive Issuance and the number of outstanding shares of Common Stock immediately prior to
such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product
derived by multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of
Common Stock outstanding immediately after such Dilutive Issuance.

The following formula illustrates the foregoing:

                                              NP = OP x (OP x CS + C) / (OP x CSA)

WHERE

NP = the adjusted Exercise Price (after the Dilutive Issuance)

OP = Exercise Price in effect immediately prior to such Dilutive Issuance

CS = the number of outstanding shares of Common Stock immediately prior to such Dilutive Issuance




                                                                 58
C = the consideration, if any, received by the Company upon such Dilutive Issuance

CSA = the number of outstanding shares of Common Stock immediately after such Dilutive Issuance

Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 9(c) in respect of an Exempt
Issuance. For purposes of this Warrant: ― Common Stock Equivalents ‖ shall mean securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, shares of Common Stock, or Preferred Stock; and ― Exempt Issuance ‖ shall mean the
issuance of: (a) shares of Common Stock or Common Stock Equivalents to employees, officers or directors of the Company pursuant to
any stock or option plan duly adopted for such purpose by the Board of Directors or a majority of the members of a committee
established for such purpose by the Board of Directors; (b) securities upon the exercise of this Warrant (and any other securities issued
pursuant to the Purchase Agreement) and/or the exercise or conversion of Common Stock Equivalents issued and outstanding on the
date of this Warrant (as set forth in Schedule 4.3(i) of the Purchase Agreement); provided , that such securities have not been amended
since the date of this Warrant to increase the number of such securities or to decrease the exercise, exchange or conversion price of such
securities; or (c) securities issued in connection with any stock split, stock dividend, recapitalization or similar transaction by the
Company.

                   24.4.           Number of Warrant Shares . Simultaneously with any adjustment to the Exercise Price pursuant to
Section 9(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as
applicable, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

                   24.5.           Calculations . All calculations under this Section 9 shall be made to the nearest cent or the nearest
1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

                    24.6.         Notice of Adjustments . Upon the occurrence of each adjustment pursuant to this Section 9, the
Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate
setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or
other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of
each such certificate to the Holder and to the Transfer Agent.

                   24.7.           Notice of Corporate Events . If the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe




                                                                 59
      for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
      or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up
      of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such
      transaction, at least ten calendar days prior to the applicable record or effective date on which a Person would need to hold Common
      Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in
      order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote
      with respect to such transaction; provided , however , that the failure to deliver such notice or any defect therein shall not affect the
      validity of the corporate action required to be described in such notice.

                        SECTION 25.             Payment of Exercise Price . The Holder shall pay the Exercise Price (i) in cash in immediately
      available funds or (ii) through a ―cashless exercise,‖ in which event the Company shall issue to the Holder the number of Warrant Shares
      determined as follows:

                                                            X = Y [(A-B)/A]
                          where:
                                                            X = the number of Warrant Shares to be issued to the Holder.

                                                            Y = the number of Warrant Shares with respect to which this Warrant is being
                                                   exercised.

                                                            A = the average of the Closing Prices for the five Trading Days immediately prior
                                                   to (but not including) the Exercise Date.

                                                            B = the Exercise Price.

Notwithstanding anything in this Warrant to the contrary, the Holder may only exercise this Warrant through a cashless exercise if no
Registration Statement (as defined in the Purchase Agreement) is effective for more than 30 consecutive days that covers the Warrant Shares
issuable upon the exercise of this Warrant.

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in
a cashless exercise transaction shall be deemed




                                                                        60
to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this
Warrant was originally issued pursuant to the Purchase Agreement.

                       SECTION 26.             Fractional Shares . The Company shall not be required to issue or cause to be issued fractional
      Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be
      issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

                         SECTION 27.            Notices . Any and all notices or other communications or deliveries hereunder (including
      without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of
      transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement
      prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading
      Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
      nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The
      address for such notices or communications shall be as set forth in the Purchase Agreement with respect to the Company and, with
      respect to the Holder, the Holder’s last address as shown on the Warrant Register.

                         SECTION 28.          Warrant Agent . The Company shall serve as warrant agent under this Warrant. Upon 10 days’
      notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant
      agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a
      party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder
      services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall
      promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
      last address as shown on the Warrant Register.

                        SECTION 29.           Investment Intent; Limited Transferability .

                          29.1.          If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, this
      Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state
      securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder furnish to the
      Company a legal opinion of counsel to the Holder to such effect, the substance of which shall be reasonably acceptable to the Company
      and (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the
      Company representing that they are acquiring such Warrant Shares for investment purposes and that they are an accredited investor as
      defined in Rule 501(a) under the Securities Act. The Holder understands that it must bear the economic risk of its




                                                                      61
investment in this Warrant and any securities obtainable upon exercise of this Warrant for an indefinite period of time, as this Warrant
and such securities have not been registered under Federal or state securities or blue sky laws.

                    29.2.        The Holder represents that it has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of this Warrant or the
exercise of the Warrant and the finance operations and business of the Company; and (ii) the opportunity to request such additional
information which the Company possesses or can acquire without unreasonable effort or expense. Nothing contained in this Section
14(b) shall alter, amend or change the Holder’s reliance on the representations, covenants or warranties contained herein.

                  29.3.          The Holder represents that it is an ―accredited investor‖ within the meaning of Regulation D
promulgated under the Securities Act and that it is acquiring the Warrants for its own account and not with a present view to, or for sale
in connection with, any distribution thereof in violation of the registration requirements of the Securities Act, without prejudice,
however, to such Holder’s right, subject to the provisions of this Warrant, at all times to sell or otherwise dispose of all or any part of the
Warrant and Warrant Shares.

                    29.4.          The Holder represents that it, either by reason of such Holder’s business or financial experience or the
business or financial experience of its professional advisors (who are unaffiliated with and who are not compensated by the Company or
any affiliate, finder or selling agent of the Company, directly or indirectly), has such sophistication, knowledge and experience in
financial and business matters as to be capable of evaluating the merits and risks of its investment in the Company and the capacity to
protect such Holder’s interests in connection with the transactions contemplated by this Warrant and the Purchase Agreement.

                  29.5.         The Holder represents that it has the ability to bear the economic risks of its investment for an indefinite
period of time and could afford a complete loss of its investment.

                   29.6.          The Holder agrees and acknowledges that the representations made by the Holder in this Section 14 are
conditions to the exercise of this Warrant.

                  SECTION 30.             Miscellaneous .

                   30.1.         Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by
the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction (subject
to the provisions of Section 9(b) hereof). This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person
other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be
amended only in writing signed by the Company and the Holder and their successors and assigns.




                                                                  62
                    30.2.         The Company will not, by amendment of its governing documents or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares
above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii)
will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

                   30.3.          All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the laws of the State of California. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Sacramento, State of California, for the
adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under Section 12 hereof and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. The Company hereby waives all rights to a trial by jury.

                  30.4.          The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be
deemed to limit or affect any of the provisions hereof.

                   30.5.         In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

                                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                                            SIGNATURE PAGE FOLLOWS




                                                                   63
         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first
indicated above.


                            OPHTHALMIC IMAGING SYSTEMS


                                    By: ___________________________
                                        Name:
                                        Title:


                                                                   64
                                                        FORM OF EXERCISE NOTICE

                                          (To be executed by the Holder to exercise the right to purchase shares of
                                                       Common Stock under the foregoing Warrant)

         To   Ophthalmic Imaging Systems:

         The undersigned is the Holder of Warrant No. _______ (the ― Warrant ‖) issued by Ophthalmic Imaging Systems, a California
corporation (the ― Company ‖). As a condition to this exercise, the undersigned Holder hereby represents and warrants to the Company that
the representations and warranties set forth in Section 14 of the Warrant are true and correct as of the date hereof as if they had been made on
such date with respect to the Warrant Shares. The undersigned Holder further acknowledges that the sale, transfer, assignment or
hypothecation of the Warrant Shares to be issued upon exercise of this Warrant is subject to the terms and conditions contained in Section 14 of
this Warrant. Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

                                    (1)     The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

                                    (2)   The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares
                                    pursuant to the Warrant.

                                    (3)     The Holder intends that payment of the Exercise Price shall be made as (check one):

                                              ____        ―Cash Exercise‖ under Section 10

                                              ____        ―Cashless Exercise‖ under Section 10

                                    (4)  If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the
                                    Company in accordance with the terms of the Warrant.

                                    (5)    Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares
                                    in accordance with the terms of the Warrant.

                                    (6)  Following this exercise, the Warrant shall be exercisable to purchase a total of ______________
                                    Warrant Shares.



         Dated: ______________, ___________                                          Name of Holder:




                                                                        65
                                                       (Print)    ________________________________

                                                       By:        ________________________________
                                                       Name:      ________________________________
                                                       Title:     ________________________________

                                                        (Signature must conform in all respects to name of holder as
                                               specified on the face of the Warrant)

                                               __________________________________
                                               Taxpayer Identification Number
         ACKNOWLEDGED AND AGREED TO this ___
day of ___________, 20__

      OPHTHALMIC IMAGING SYSTEMS


      By:
      Name: ______________________
      Title: ______________________




                                                 66
++
                                                        FORM OF ASSIGNMENT

                                             [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right
represented by Warrant to purchase ____________ shares of Common Stock of Ophthalmic Imaging Systems to which the Warrant relates and
appoints ________________ attorney to transfer said right on the books of Ophthalmic Imaging Systems with full power of substitution in the
premises. As a condition to this assignment, the Holder acknowledges that its assignee must deliver a written instrument to the Company that
the representations and warranties of Section 14 of the Warrant are true and correct as of the date hereof as if they had been made by such
assignee on such date with respect to the Warrants.




        Dated:                 ,

                                                                     ______________________________________
                                                                 (Signature must conform in all respects to name of holder as specified on
                                                        the face of the Warrant)

                                                                  ______________________________________
                                                                 Address of Transferee

                                                                    ______________________________________

                                                                    ______________________________________


                                                                   ______________________________________
                                                                   Taxpayer Identification Number
        In the presence of:




                                                                     67
                                                                   EXHIBIT B

                                                         FORM OF LEGAL OPINION

         1.        The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of
California, with authority to own, lease and operate its properties and conduct its business as described in the SEC Reports. The Company is
duly qualified to transact business as a foreign corporation and to own, lease and operate its properties in such states as required, except for
such jurisdictions where the failure to so qualify would not, individually or in the aggregate, have a Material Adverse Effect.

         2.       The Transaction Documents have been duly authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company.

      3.        The Company has the corporate power and authority to enter into and perform its obligations under the Transaction
Documents, including, without limitation, to issue, sell and deliver the Securities as contemplated by the Transaction Documents.

          4.       The Shares and Warrants have been duly authorized and, when paid for as provided in the Purchase Agreement, will be
validly issued, fully paid and nonassessable free of any preemptive or similar rights contained in (i) the Articles of Incorporation or Bylaws of
the Company or (ii) in any agreement filed as an exhibit to the SEC Reports. The Warrant Shares have been duly authorized, and when issued
and delivered in accordance with the terms of the respective Warrants, will be validly issued, fully paid, non-assessable and free of any
preemptive or similar rights contained in (a) the Articles of Incorporation or Bylaws of the Company or (b) in any agreement filed as an exhibit
to the SEC Reports.

         5.       The Company has an authorized capitalization as set forth in Section ___of the Purchase Agreement.

        6.       The Common Stock of the Company, including the Shares, conform in all material respects to the description thereof
contained under the Company’s Form 8-A filed with the Commission on May 13, 1993.

         7.        The execution and delivery of the Purchase Agreement by the Company and the performance by the Company of its
obligations thereunder: (i) will not result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company; (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of any agreement filed as an exhibit to the SEC Reports, or (iii) any federal,
New York or California law, applicable to the Company and applicable for transactions of the type contemplated by the Purchase Agreement.




                                                                        68
          8.      The execution and delivery of the Purchase Agreement by the Company and the performance by the Company of its
obligations thereunder will not require any authorization, approval or consent of any court or governmental authority or agency or filing with
any federal, New York or California government or regulatory commission, board, authority or agency, or with any self-regulatory organization
or other non-governmental regulatory authority, or approval of the stockholders of the Company, except (i) the filing of the Registration
Statements pursuant to Section 7 of the Purchase Agreement, (ii) the filing of a Current Report on Form 8-K with the Commission, (iii) the
filing of a Form D in accordance with Regulation D under the Securities Act and (iv) as required by state securities laws.

        9.        Assuming the continued accuracy and completeness of the representations, warranties and covenants of the Company and the
Purchaser contained in the Purchase Agreement at the time of issuance of the relevant securities, the Company’s offer, sale and issuance of the
Shares, Warrants and Warrant Shares in the manner contemplated by the Transaction Documents, will be exempt from the registration
requirements of the Securities Act.

       10.       The Company is not, and, immediately after giving effect to the offering and sale of the Shares, will not be an ―investment
company‖ as such term is defined in the Investment Company Act.

          11.       To our knowledge, there are no rights to have securities of the Company registered under the Registration Statement
contemplated by the Purchase Agreement which have not been waived by the holders of such rights or which have not expired by reason of
lapse of time or otherwise.




                                                                      69
                                                             EXHIBIT C-1

                                                 FORM OF OFFICER CERTIFICATE



                                                OPHTHALMIC IMAGING SYSTEMS

                                                     OFFICER’S CERTIFICATE

The undersigned, Chief Executive Officer and Chief Financial Officer of Ophthalmic Imaging Systems, a California corporation (the ―
Company ‖), pursuant to Section 3.1(c)(ii) of the Purchase Agreement, dated as of June ___, 2009 (the " Purchase Agreement "), by and
between the Company and U.M. AccelMed, Limited Partnership. (the ― Purchaser ‖), hereby represents, warrants and certifies to the
Purchaser as follows (capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement):


1.     Each of the representations and warranties of the Company set forth in the Purchase Agreement were true and correct in all respects
when made and are true and correct in all respects as of the date hereof as though made at that time; and

2.     The Company has complied in all respects with all the agreements and satisfied in all respects all the conditions in the Purchase
Agreement on its part to be performed or satisfied on or prior to the Closing Date


        IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of June, 2009.




                                                                Gil Allon
                                                                Chief Executive Officer




                                                                Ariel Shenhar
                                                                Chief Financial Officer


                                                                   70
                                                                 EXHIBIT C-2

                                                   FORM OF OFFICER CERTIFICATE



                                                        OPHTHALMIC IMAGING SYSTEMS

                                                             OFFICER’S CERTIFICATE


The undersigned, Chief Executive Officer and Chief Financial Officer of Ophthalmic Imaging Systems, a California corporation (the ―
Company ‖), pursuant to Section 3.2(c)(iii) of the Purchase Agreement, dated as o ___, 2010 (the " Purchase Agreement "), by and between
the Company and U.M. AccelMed, Limited Partnership (the ― Purchaser ‖), hereby represents, warrants and certifies to the Purchaser as
follows (capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement):


1.       Each of the representations and warranties of the Company set forth in the Purchase Agreement are true and correct in all material
respects (except for those representations and warranties that are qualified by Material Adverse Effect, which shall be true and correct in all
respects) as of the Deferred Closing Date as though made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date).

2.     The Company has complied in all respects with all the agreements and satisfied in all respects all the conditions in the Purchase
Agreement on its part to be performed or satisfied on or prior to the Deferred Closing Date.


         IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of __________, 20___.


                                                                   ____________________________________
                                                                   Gil Allon
                                                                         Chief Executive Officer




                                                                   ____________________________________
                                                                   Ariel Shenhar
                                                                          Chief Financial Officer




                                                                       71
                                                                  EXHIBIT D

                                                            FORM OF MV PROXY

                                                           IRREVOCABLE PROXY

MediVision Medical Imaging Ltd. (the ― Stockholder ‖), an Israeli corporation and a stockholder of Ophthalmic Imaging Systems, a California
corporation (the ― Company ‖), hereby irrevocably (to the fullest extent permitted by law) appoints and constitutes Gil Allon (the “Proxy
Holder ‖), a resident of the State of California, as a true and lawful attorney-in-fact and proxy of the Stockholder, with full power and authority
to act, including full power of substitution, in the name, place and stead of the Stockholder, and on behalf and for the use and benefit of the
Stockholder, to the full extent of the Stockholder’s rights with respect to __________ shares of the Company’s common stock, no par value
(the ― Common Stock ‖), owned by the Stockholder as of the date of this proxy and with respect to any and all shares of the Common Stock
hereafter and prior to the 2010 Annual Meeting (as defined below) purchased by the Stockholder (the ― Shares ‖).

Upon the execution hereof, all prior proxies given by the Stockholder with respect to any of the Shares are hereby revoked, and no subsequent
proxies will be given with respect to any of the Shares so long as this proxy is in full force and effect.

At the 2010 annual meeting of the stockholders of the Company (the ― 2010 Annual Meeting ‖), to be held at 221 Lathrop Way, Suite I,
Sacramento, California 95815, or at any other location selected by the Company’s Board of Directors, the Proxy Holder has the full power and
authority to and is hereby instructed to act, in the name, place and stead of the Stockholder, and on behalf and for the use and benefit of the
Stockholder, to vote the Shares FOR the approval of an amendment to the Company’s restated articles of incorporation providing for an
increase in the amount of authorized Common Stock equal to 100,000,000 shares (the ― Proposal ‖).

This proxy shall terminate immediately following the later of (x) the conclusion of the meeting at which the Company acts with respect to the
Proposal and in which the Proposal has been approved by the Company’s stockholders or (y) any adjournments thereof.

This proxy shall be binding upon the heirs, estate, executors, personal representatives and assigns of the Stockholder (including any transferee
of any of the Shares). No Shares shall be transferred, assigned or pledged by the Stockholder prior to the termination of this Proxy unless such
transferee or assignee has executed and delivered to the U.M. Accelmed, Limited Partnership (the ― Purchaser ‖) a duly executed proxy in the
form and substance set forth herein with respect to the purchased Shares.

         The Stockholder, the Company’s largest stockholder, hereby affirms that this power of attorney is given in consideration for, among
other things, the Purchaser’s execution and delivery of the Purchase Agreement. THIS PROXY IS COUPLED WITH AN INTEREST
AND IS IRREVOCABLE.




                                                                        72
This proxy shall be interpreted in accordance with the internal laws of the State of California, without giving effect to principles or conflicts of
law.


                                                                         MEDIVISION MEDICAL IMAGING LTD.

DATED: June ___, 2009                                                    By:
                                                                               Name
                                                                               Title




                                                                        73
                                                                  EXHIBIT E

                                      Exhibit E –Form of Irrevocable Proxy by MediVision shareholders




                                                           IRREVOCABLE PROXY

         The Undersigned does hereby irrevocably make, constitute and appoint any one of Messrs, Yigal Berman and/or Noam Allon, (in any
such case, the ―Proxyholder‖), as the attorney and proxy of the Undersigned, with full power of substitution, including to receive notice on
behalf of the Undersigned, to attend on behalf of the Undersigned, represent and vote, on his sole discretion, and/or to execute, on behalf of the
Undersigned, any written resolution of MediVision Medical Imaging Ltd’s (the ―Company‖) shareholders, for all shares of the Company that
the Undersigned holds of record, as indicted in the Company’s shareholders convened in order to approve the signing of the Asset Purchase
Agreement between the Company and Ophthalmic Imaging Systems (the ―APA‖) and all schedules of an ancillary documents to the APA (the
―Meeting‖).

         Proxyholder shall cast the votes which the Shares are entitled in favor of approval of the abovementioned APA and schedules.

         The Undersigned agrees that this Irrevocable Proxy is made irrevocable by him and coupled with an interest by the Proxyholder in the
Shares, all in accordance with the provisions of Israeli law.

         The receipt of notice, attendance, vote and signature of the Proxy shall be deemed, for all intent and purpose, receipt of notice by,
attendance of, vote and signature by the Undersigned, and shall have full force and effect as if received, attended, voted and executed by the
Undersigned.

         This Irrevocable Proxy shall automatically terminate in its entirety and be of no further force or effect immediately following the
conclusion of the Meeting.

         The Undersigned executes this Irrevocable Proxy this ____ day of June 2009.




                                                           Print Name _______________________


                                                                        74
                                                                EXHIBIT F-1

                                                 FORM OF SECRETARY CERTIFICATE



                                                    OPHTHALMIC IMAGING SYSTEMS

                                                      SECRETARY’S CERTIFICATE

         The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of OPHTHALMIC IMAGING SYSTEMS,
a California corporation (the ― Company ‖), and that as such he is authorized to execute and deliver this certificate in the name and on behalf
of the Company and in connection with the Purchase Agreement, dated as of___, 2009 (the ― Purchase Agreement ‖), by and between the
Company and ACCELMED L.P., and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth
below. Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement.

(b)      Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the
         Company at a meeting of the Board of Directors held on May ___, 2010. Such resolutions have not in any way been amended,
         modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in
         full force and effect.

(c)      Attached hereto as Exhibit B is a true, correct and complete copy of the Restated Articles of Incorporation of the Company, together
         with any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Restated Articles of
         Incorporation, the same being in full force and effect in the attached form as of the date hereof.

(d)      Attached hereto as Exhibit C is a true, correct and complete copy of the Amended and Restated Bylaws of the Company and any and
         all amendments thereto, and no action has been taken to further amend, modify or repeal such Amended and Restated Bylaws, the
         same being in full force and effect in the attached form as of the date hereof.

(e)      The following persons are the duly elected officers of the Company occupying the offices set forth opposite their respective names,
         each such officer is authorized to execute on behalf of the Company the Transaction Documents and any other documents required to
         be executed or delivered in connection therewith, and the signature set forth opposite each such officer’s respective name is his true
         signature.

Name                                       Office                                           Signature

Ariel Shenhar                              Chief Financial Officer and Secretary            ________________________


Gil Allon                                  Chief Executive Officer                          ________________________




                                                                      75
        IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.




                                                                      _______________________________
                                                                      Name: Ariel Shenhar
                                                                         Title: Secretary


I, Gil Allon, in my capacity as Chief Executive Officer of Ophthalmic Imaging Systems, a California corporation (the ― Company ‖), hereby
certify that Ariel Shenhar is the duly elected, qualified and acting Secretary of the Company and that the signature appearing above is his
genuine signature.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.


                                                                      _______________________________
                                                                      Name: Gil Allon
                                                                         Title: Chief Executive Officer




                                                                     76
                                                                EXHIBIT F-2

                                                 FORM OF SECRETARY CERTIFICATE



                                                    OPHTHALMIC IMAGING SYSTEMS

                                                      SECRETARY’S CERTIFICATE

         The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of OPHTHALMIC IMAGING SYSTEMS,
a California corporation (the ― Company ‖), and that as such he is authorized to execute and deliver this certificate in the name and on behalf
of the Company and in connection with the Purchase Agreement, dated as of___, 2009 (the ― Purchase Agreement ‖), by and between the
Company and ACCELMED L.P., and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth
below. Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement.

(f)      Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions duly adopted by the Board of Directors of the
         Company at a meeting of the Board of Directors held on May ___, 2010. Such resolutions have not in any way been amended,
         modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in
         full force and effect.

(g)      Attached hereto as Exhibit B is a true, correct and complete copy of the Restated Articles of Incorporation of the Company, together
         with any and all amendments thereto, and no action has been taken to further amend, modify or repeal such Restated Articles of
         Incorporation, the same being in full force and effect in the attached form as of the date hereof.

(h)      Attached hereto as Exhibit C is a true, correct and complete copy of the Amended and Restated Bylaws of the Company and any and
         all amendments thereto, and no action has been taken to further amend, modify or repeal such Amended and Restated Bylaws, the
         same being in full force and effect in the attached form as of the date hereof.

(i)      The following persons are the duly elected officers of the Company occupying the offices set forth opposite their respective names,
         each such officer is authorized to execute on behalf of the Company the Transaction Documents and any other documents required to
         be executed or delivered in connection therewith, and the signature set forth opposite each such officer’s respective name is his true
         signature.

Name                                       Office                                           Signature

Ariel Shenhar                              Chief Financial Officer and Secretary


Gil Allon                                  Chief Executive Officer                          ________________________




                                                                      77
        IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.



                                                                      _______________________________
                                                                      Name: Ariel Shenhar
                                                                         Title: Secretary


I, Gil Allon, in my capacity as Chief Executive Officer of Ophthalmic Imaging Systems, a California corporation (the ― Company ‖), hereby
certify that Ariel Shenhar is the duly elected, qualified and acting Secretary of the Company and that the signature appearing above is his
genuine signature.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day of May 2010.




                                                                      _______________________________
                                                                      Name: Gil Allon
                                                                         Title: Chief Executive Officer




                                                                     78
                                      EXHIBIT G

                                 LIST OF SUBSIDIARIES



     Name of Subsidiary                        State or Other Jurisdiction of Incorporation/Organization

Abraxas Medical Solutions Ltd.                                         Delaware

       OIS Global Ltd.                                                  Israel




                                          79
                                                                  EXHIBIT H

                                              FORM OF INDEMNIFICATION AGREEMENT

                                                    INDEMNIFICATION AGREEMENT

         THIS INDEMNIFICATION AGREEMENT (the ― Agreement ‖), is made and entered into as of the ____ day of ____________,
2009, between Ophthalmic Imaging Systems, Inc., a California corporation (― Corporation ‖), and __________________ (― Director ‖).

        WHEREAS, Director will be a member of the Board of Directors of Corporation, and in such capacity, will perform a valuable service
for Corporation;

         WHEREAS, in accordance with the authorization provided by subsections (a)(10) and (a)(11) of Section 204 of the California General
Corporation Code, as amended (―Code‖), Article Four and Five of the Corporation’s Amended and Restated Articles of Incorporation (the
―Articles‖) provides that the liability of directors of Corporation for monetary damages shall be eliminated to the fullest extent permissible
under California law and authorizes Corporation to provide indemnification to members of its Board of Directors through agreements with such
members in excess of the indemnification otherwise permitted by Section 317 of the Code;

         WHEREAS, Corporation recognizes that the indemnification provided by this Agreement is of great importance in attracting highly
qualified individuals, such as Director, to serve as members of its Board of Directors; and

        WHEREAS, in order to induce Director to serve as a member of the Board of Directors of Corporation, Corporation has determined
and agreed to enter into this Agreement with Director for the purpose of fully implementing the provisions of Section 204 and Section 317 of
the Code and Article Four and Five of the Articles.

         NOW, THEREFORE, in consideration of Director’s service as a director after the date hereof, the parties hereto agree as follows:

                  Section 1.      Indemnity of Director . Corporation hereby agrees to hold harmless and indemnify Director to the fullest
extent authorized by the provisions of Section 317 of the Code, as it may be amended from time to time.

                   Section 2.     Additional Indemnity . Subject only to the limitations set forth in Section 3 hereof, Corporation hereby
further agrees to hold harmless and indemnify Director:

                   (a)       against any and all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by Director in connection with any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the right of Corporation) to which Director is, was or at any time becomes
a party, or is threatened to be made a party, by reason of the fact that Director is, was or at any time becomes a director, officer, employee or
agent of Corporation, or is or was serving or at any time serves at the request of Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise; and

                   (b)       otherwise to the fullest extent as indemnification may be provided to Director by Corporation under the provisions
of Article V of the Articles and Sections 204(a)(11) and 317 of the Code.




                                                                        80
                 Section 3.       Limitations on Additional Indemnity .

                 (a)       No indemnification pursuant to Section 2 hereof shall be paid by Corporation for any of the following:

                  (i)       to the extent that Director is or has been indemnified or reimbursed pursuant to Section 1 hereof or any Directors
and Officers Liability Insurance purchased and maintained by Corporation;

                   (ii)    with respect to remuneration paid to Director if it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of applicable law;

                  (iii)     on account of any suit pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, and amendments thereto or similar provisions of any federal, state or local statutory law in which judgment is rendered against
Director for an accounting of profits made from the purchase or sale by Director of securities of Corporation;

                  (iv)      if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not
lawful under applicable law; or

                  (v)       on account of any action, suit or proceeding (other than a proceeding referred to in Section 8(b) hereof) commenced
by the Director against Corporation or against any officer, director or shareholder of Corporation unless authorized in the specific case by
action of the Board of Directors;

                  (b)       In addition to those limitations set forth above in paragraph (a) of this Section 3, no indemnification pursuant to
Section 2 hereof in an action brought by or in the right of Corporation for breach of the Directors duties to Corporation and its shareholders
shall be paid by Corporation for any of the following:

                  (i)       on account of Director’s acts or omissions that involve intentional misconduct or a knowing and culpable violation
of law, unless Director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful;

                  (ii)      on account of acts or omissions that Director believes to be contrary to the best interests of Corporation or its
shareholders or that involve the absence of good faith on the part of Director;

                 (iii)        to the extent prohibited by Section 310 of the Code (contracts in which a director has material financial interest);

                    (iv)       to the extent prohibited by Section 316 of the Code (corporate actions subjecting directors to joint and several
liability for prohibited distributions, loans and guarantees); or,

                 (v)       in any circumstances in which indemnity is expressly prohibited by Section 317 of the Code;

                     (c)        Notwithstanding the foregoing, Corporation hereby acknowledges that Director may have certain rights to
indemnification, advancement of expenses and/or insurance provided by AccelMed, L.P. or its affiliates (―AccelMed‖) Corporation hereby
agrees that it (i) is, relative to AccelMed, the indemnitor of first resort (i.e., Corporation’s obligations to Director under this Agreement




                                                                         81
are primary and any duplicative, overlapping or corresponding obligations of AccelMed are secondary), (ii) shall be required to make all
advances and other payments under this Agreement, and shall be fully liable therefor, without regard to any rights Director may have against
AccelMed, and (iii) irrevocably waives, relinquishes and releases AccelMed from any and all claims against AccelMed for contribution,
subrogation or any other recovery of any kind in respect thereof. Corporation further agrees that no advancement or payment by AccelMed on
behalf of Director with respect to any claim for which Director has sought indemnification from Corporation shall affect the foregoing and
AccelMed shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery
of Director against Corporation. Corporation and Director agree that AccelMed is an express third party beneficiary of the terms of this
Section 3(c).

                   Section 4.     Contribution . If the indemnification provided in Sections 1 and 2 is unavailable and may not be paid to
Director for any reason other than those set forth in Section 3 (excluding Section 3(b)(v)), then in respect of any threatened, pending or
completed action, suit or proceeding in which Corporation is jointly liable with Director (or would be if joined in such action, suit or
proceeding), Corporation shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Director in such proportion as is appropriate to reflect (i) the relative
benefits received by Corporation on the one hand and Director on the other hand from the transaction from which such action, suit or
proceeding arose, and (ii) the relative fault of Corporation on the one hand and of Director on the other in connection with the events which
resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of
Corporation on the one hand and of Director on the other shall be determined by reference to, among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro
rata allocation or any other method of allocation that does not take account of the foregoing equitable considerations.

                   Section 5.      Continuation of Obligations . All agreements and obligations of Corporation contained herein shall continue
during the period Director is a director of Corporation (or is or was serving at the request of Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Director shall be
subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason
of the fact that Director was a director of Corporation or serving in any other capacity referred to herein.

             Section 6.           Notification and Defense of Claim . Promptly after receipt by Director of notice of the commencement of
any action, suit or proceeding, Director will, if a claim in respect thereof is to be made against Corporation under this Agreement, notify
Corporation of the commencement thereof; but the omission so to notify Corporation will not relieve it from any liability which it may have to
Director otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Director notifies Corporation of
the commencement thereof:

             (a)    Corporation will be entitled to participate therein at its own expense;

              (b)    Except as otherwise provided below, to the extent that it may wish, Corporation jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Director (such consent not to be unreasonably
withheld). After notice from Corporation to Director of its election to assume the defense thereof, Corporation will not be liable to Director
under this Agreement for any legal or other expenses subsequently incurred by Director in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided


                                                                       82
below. Director shall have the right to employ counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred
after notice from Corporation of its assumption of the defense thereof shall be at the expense of Director unless (i) the employment of counsel
by Director has been authorized by Corporation, (ii) Director shall have reasonably concluded that there may be a conflict of interest between
Corporation and Director in the conduct of the defense of such action, or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of Corporation. Corporation shall not
be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of Corporation or as to which Director shall have
made the conclusion provided for in (ii) above; and

              (c)    Corporation shall not be liable to indemnify Director under this Agreement for any amounts paid in settlement of any
action or claim effected without its written consent. Corporation shall not settle any action or claim in any manner that would impose any
penalty or limitation on Director without Director’s written consent. Neither Corporation nor Director will unreasonably withhold or delay its
consent to any proposed settlement.

             Section 7.            Advancement and Repayment of Expenses .

              (a)     In the event that Director employs his or her own counsel pursuant to Section 6(b)(i) through (iii) above, Corporation shall
advance to Director, prior to any final disposition of any threatened or pending action, suit or proceeding, whether civil, criminal,
administrative or investigative, any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any
such action, suit or proceeding within ten (10) days after receiving copies of invoices presented to Director for such expenses; and

              (b)     Director agrees that Director will reimburse Corporation for all reasonable expenses paid by Corporation in defending any
civil or criminal action, suit or proceeding against Director in the event and only to the extent it shall be ultimately determined by a final
judicial decision (from which there is no right of appeal) that Director is not entitled, under applicable law, the Articles or the Corporation’s
Bylaws or this Agreement, to be indemnified by Corporation for such expenses.

             Section 8.            Enforcement

            (a)    Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on
Corporation hereby in order to induce Director to serve as a director of Corporation, and acknowledges that Director is relying upon this
Agreement in serving in such capacity.

              (b)    In the event Director is required to bring any action to enforce rights or to collect moneys due under this Agreement and is
successful in such action, Corporation shall reimburse Director for all of Director’s reasonable fees and expenses in bringing and pursuing such
action.

               Section 9.            Severability . Each of the provisions of this Agreement is a separate and distinct agreement and independent
of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall
not affect the validity or enforceability of the other provisions hereof.

             Section 10.           Non-Exclusivity of Rights . The rights conferred on Director by this Agreement shall not be exclusive of
any other right which Director may have or hereafter acquire under any statute, provision of the Articles, Corporation’s Bylaws, agreement,
vote of shareholders or directors, or otherwise, both as to action in Director’s official capacity and as to action in another capacity while


                                                                         83
holding office; provided, that this Agreement shall supersede any prior agreements or understandings, both written and oral, between Director
and Corporation, with respect to the subject matter hereof; provided, further, that, notwithstanding the foregoing proviso, and in light of the
fact that this Agreement is generally intended to provide for indemnification to the fullest extent possible except as prohibited by law, this
Agreement shall not be construed to deprive Director of any indemnification permitted by applicable law with respect to an act or omission to
which Director would otherwise have been entitled under any such prior agreement. To the extent that a change in the California Code permits
greater indemnification by agreement than would be afforded currently under Corporation’s Articles of Incorporation and Bylaws and this
Agreement, it is the intent of the parties hereto that Director shall enjoy by this Agreement the greater benefits so afforded by such
change. Corporation will not adopt any amendment to any of the corporate documents the effect of which would be to deny, diminish or
encumber Directors’s right to indemnification under this Agreement.

             Section 11.          E ffective Date . This Agreement shall apply beginning on Director’s first date of being elected as a director
of Corporation.

                 Section 12.     Governing Law . This Agreement shall be interpreted and enforced in accordance with the laws of the State
of California.

             Section 13.          Binding Effect . This Agreement shall be binding upon Director and upon Corporation, and their respective
successors and assigns, and shall inure to the benefit of Director, his or her heirs, personal representatives and assigns and to the benefit of
Corporation, its successors and assigns.

              Section 14.           Amendment and Termination . No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.

             Section 15.       Subrogation . In the event of payment under this Agreement, Corporation shall be subrogated to the extent
of such payment to any right Director may have for recovery of the amounts so paid from any third party. Director agrees to execute all
documents required and do all other acts necessary to effect the foregoing provisions and permit Corporation to enforce the rights so
subrogated..




                                                                      84
       IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.



                                                                 OPHTHALMIC IMAGING SYSTEMS , INC.
                                                                 By:
                                                                      Name: Gil Allon
                                                                      Title: Chief Executive Officer


                                                                 By:
                                                                         Name: Ariel Shenhar
                                                                         Title: Chief Financial Officer


DIRECTOR:


_________________________
 Name:




                                                                85
                                                                   APPENDIX I

                                            SUMMARY INSTRUCTION SHEET FOR PURCHASER

                                                      (to be read in conjunction with the entire
                                                         Purchase Agreement which follows)

A.       Complete the following items on BOTH Purchase Agreements (Sign two originals):

         1.         Signature Page:

                    (i)      Name of Purchaser (Individual or Institution)

                    (ii)     Name of Individual representing Purchaser (if an Institution)

                    (iii)    Title of Individual representing Purchaser (if an Institution)

                    (iv)     Signature of Individual Purchaser or Individual representing Purchaser

         2.         Appendix I - Stock Certificate Questionnaire/Registration Statement Questionnaire:

                    Provide the information requested by the Stock Certificate Questionnaire and the Registration Statement Questionnaire.

         3.         Return BOTH properly completed and signed Purchase Agreements including the properly completed Appendix I to
                    (initially by facsimile with original by overnight delivery):

[Street Address]
[City, State ZIP]
Attention:
Facsimile:

B.        Instructions regarding the transfer of funds for the purchase of Shares will be sent by facsimile to the Purchaser by the Company at a
later date.

C.      Upon the resale of the Shares by the Purchaser after the Registration Statement covering the Shares is effective, as described in the
Purchase Agreement, the Purchaser:

                    (i)      must deliver a current prospectus of the Company to the buyer (prospectuses must be obtained from the Company
                             at the Purchaser’s request); and

                    (ii)     must send a letter in the form of Appendix II to the Company so that the Shares may be properly transferred.




                                                                          86
                                                                                             Appendix I
                                                                                             (Page 1 of 3)


                                      OPHTHALMIC IMAGING SYSTEMS

                                   STOCK CERTIFICATE QUESTIONNAIRE

     Pursuant to Section 3 of the Agreement, please provide us with the following information:

1.      The exact name that your Shares are to be registered in (this is the name
        that will appear on your stock certificate(s)). You may use a nominee
        name if appropriate:
                                                                                    _____________________________

2.      The relationship between the Purchaser of the Shares and the Registered
        Holder listed in response to item 1 above:
                                                                                    _____________________________

3.      The mailing address of the Registered Holder listed in response to item 1
        above:                                                                      _____________________________
                                                                                    _____________________________
                                                                                    _____________________________
                                                                                    _____________________________

4.      The Social Security Number or Tax Identification Number of the
        Registered Holder listed in response to item 1 above:
                                                                                    _____________________________




                                                                  87
                                                                                                    Appendix I
                                                                                                    (Page 2 of 3)


                                                     OPHTHALMIC IMAGING SYSTEMS

                                             REGISTRATION STATEMENT QUESTIONNAIRE

         In connection with the preparation of the Registration Statement, please provide us with the following information:

        SECTION 1.        Pursuant to the ―Selling Stockholder‖ section of the Registration Statement, please state your or your organization’s
name exactly as it should appear in the Registration Statement:




         SECTION 2.      Please provide the number of shares that you or your organization will own immediately after Closing, including
those Shares purchased by you or your organization pursuant to this Purchase Agreement and those shares purchased by you or your
organization through other transactions and provide the number of shares that you have or your organization has the right to acquire within 60
days of Closing:




       SECTION 3.         Have you or your organization had any position, office or other material relationship within the past three years with
the Company or its affiliates?

                           _____ Yes        _____ No

         If yes, please indicate the nature of any such relationships below:




        SECTION 4.       Are you (i) FINRA Member (see definition), (ii) a Controlling (see definition) shareholder of FINRA Member, (iii) a
Person Associated with a Member of FINRA (see definition), or (iv) an Underwriter or a Related Person (see definition) with respect to the




                                                                        88
proposed offering; or (b) do you own any shares or other securities of any FINRA Member not purchased in the open market; or (c) have you
made any outstanding subordinated loans to any FINRA Member?

        Answer:  Yes         No                                      If ―yes,‖ please describe below




        SECTION 5.       If the Selling Stockholder is an entity, please disclose:

(i)     who for the entity has the sole or shared power to vote or direct the vote of any such securities?

        ________________________________

(ii)    who for the entity has the sole or shared power the dispose or direct the disposition of any such securities?

        ________________________________

(iii)   do any of the foregoing persons disclaim beneficial ownership of such securities

Answer:  Yes        No                     If so, who?




                                                                        89
                                                                                                      Appendix I
                                                                                                      (Page 3 of 3)



        FINRA Member . The term ―FINRA member‖ means either any broker or dealer admitted to membership in the Financial Industry
Regulatory Authority, Inc. (―FINRA‖). (FINRA Manual, By-laws of FINRA Regulation, Inc. Article I, Definitions)

         Control . The term ―control‖ (including the terms ―controlling,‖ ―controlled by‖ and ―under common control with‖) means the
possession, direct or indirect, of the power, either individually or with others, to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract, or otherwise. (Rule 405 under the Securities Act of 1933, as
amended)

          Person Associated with a member of FINRA . The term ―person associated with a member of FINRA‖ means every sole proprietor,
partner, officer, director, branch manager or executive representative of any FINRA Member, or any natural person occupying a similar status
or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly
controlling or controlled by a FINRA Member, whether or not such person is registered or exempt from registration with FINRA pursuant to its
bylaws. (FINRA Manual, By-laws of FINRA Regulation, Inc. Article I, Definitions)

         Underwriter or a Related Person . The term ―underwriter or a related person‖ means, with respect to a proposed offering,
underwriters, underwriters’ counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all
other persons associated with or related to any of such persons. (FINRA Interpretation)




                                                                         90
                                                                   APPENDIX II

                                                CERTIFICATE OF SUBSEQUENT SALE


[Transfer Agent]

[Address]

Attention:



                                    PURCHASER’S CERTIFICATE OF SUBSEQUENT SALE




                             The undersigned, [an officer of, or other person duly authorized by]
                   _____________________________________________________________ hereby
                   certifies
                   [fill in official name of individual or institution ]
                   that he/she [said institution] is the Purchaser of the shares evidenced by the attached
                   certificate,
                   and as such, sold such shares on _______________ in accordance with the terms of
                   the
                   [date]
                   Purchase Agreement and in accordance with Registration Statement
                   number ____________________________________________ or otherwise in
                   accordance with
                             [ fill in the number of or otherwise identify Registration Statement]
                   the Securities Act of 1933, as amended, and, in the case of a transfer pursuant to the
                   Registration
                   Statement, the requirement of delivering a current prospectus by the Company has
                   been
                   complied with in connection with such sale.


                   Print or Type:


                   Name of Purchaser
                   (Individual or
                    Institution):

                   Name of Individual
                   representing
                   Purchaser (if an
                   Institution)

                   Title of Individual
                   representing
                   Purchaser (if an
                   Institution):
                   Signature by:
                   Individual Purchaser
                   or Individual repre-
                   senting Purchaser:
91
                                                                                                     SCHEDULE 4.3(i) and 4.3(ii)

                                                                  OUTSTANDING CAPITALIZATION
                                                                              AND
                                                    OUTSTANDING OPTIONS TO PURCHASE RIGHTS AND OTHER RIGHTS

                                                                                   Ophthalmic Imaging Systems
                                                      Outstanding Capitalization & Outstanding Options to Purchase Rights and Other Rights
                                                                                     Schedule 4.3 (i) & 4.3 (ii)

                                                                                                                                                   Options                                                                               Agreements
                                                               Exercise                      Issue       Expiration    Current                    & Warrants         Available                 Convertible                                Pending
    Form                Source                                  Price                         Date         Date        Issued           %          Granted           For Grant                   Note                                     Approval



Shares        Currently                                                                                                      9,380,843 55.6%
              outstanding-MediVIsion
              Currently outstanding -                                                                                        7,485,988 44.4%
              Open market



Options       2000 Non Statutory Stock      $                                     0.4060      9/6/2001      9/6/2011                                    150,000
              Option Plan
                                            $                                     0.4060    10/23/2002   10/23/2012                                      80,000
                                            $                                     0.4060     4/10/2003    4/10/2013                                     590,000
                                            $                                     0.1000      1/2/2002     1/2/2012                                      20,000
                                            $                                     2.8300      3/7/2007     3/7/2017                                       8,000
                                            $                                     0.1600      1/6/2009     1/6/2019                                     312,836

Options       2003 Stock Option Plan        $                                     0.6810 10/24/2004      10/24/2014                                     284,167
                                            $                                     1.9600   3/3/2006        3/3/2016                                      20,000
                                            $                                     1.8300  6/14/2006       6/14/2016                                     103,000
                                            $                                     0.1600   1/6/2009        1/6/2019                                     144,664

Options       2005 Stock Option Plan        $                                     0.8200 12/19/2007      12/19/2015                                     335,000
                                            $                                     1.0500 12/19/2007      12/19/2015                                     335,000
                                            $                                     0.1600   1/6/2009        1/6/2019                                      80,000

Options       2009 Stock Option Plan            No options granted from this plan to date                                                                                   750,000

Warrants      The Tail Wind Fund          $                                       1.8700 10/29/2007      12/10/2012                                     526,973
Warrants      Solomon Strategic Holdings, $                                       1.8700 10/29/2007      12/10/2012                                      89,698
              Inc.
Ratchet on    The Tail Wind Fund          $                                       1.1528 10/29/2007      12/10/2012                                     244,452
Warrants
Ratchet on    Solomon Strategic Holdings, $                                       1.1528 10/29/2007      12/10/2012                                       41,609
Warrants      Inc.

Convertible   The Tail Wind Fund            $                                     1.6500    10/29/2007                                                                                                        712,121
note
Convertible   Solomon Strategic Holdings, $                                       1.6500    10/29/2007                                                                                                        121,212
note          Inc.
Ratchet on    The Tail Wind Fund          $                                       0.9220    10/29/2007                                                                                                        468,082
Convertible
note
Ratchet on    Solomon Strategic Holdings, $                                       0.9220    10/29/2007                                                                                                         79,674
Convertible   Inc.
note

Warrants      The Tail Wind Fund            $                                     1.0000 No signed agreement yet                                                                                                                                      427,2
Warrants      Solomon Strategic Holdings,   $                                     1.0000 No signed agreement yet                                                                                                                                       72,7
              Inc.
Warrants      United Mizrahi Bank           $                                     1.0000 No signed agreement yet                                                                                                                                      350,0
Warrants      Broker                        $                                     0.0100 No signed agreement yet                                                                                                                                      123,4




              Totals                                                                                                        16,866,831 100.0%         3,365,399             750,000                          1,381,089                                973,4

                                                                                                                                                                                                                         AccelMed
                                                                                                                                                                                                                         AccelMed warrants

              Extra 25% for tailwind                                             362,501
                                                                                                                                                                                                                         Fully Diluted

                                                                                                                                                Reduce cap limitation as Tailwind caped at 1.4M shares