8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 21, 2009

OPHTHALMIC IMAGING SYSTEMS

(Exact Name of Registrant as Specified in its Charter)

CALIFORNIA	1-11140	94-3035367
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

221 Lathrop Way, Suite I Sacramento, California	95815
(Address of Principal Executive)	(Zip Code)

(Registrant’s telephone number, including area code): (916) 646-2020

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

	Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On October 21, 2009, Ophthalmic Imaging Systems (the “Company”) acquired substantially all of the assets of MediVision Medical Imaging Systems Inc. (“MediVision”), which held 35.4% of the Company’s issued and outstanding common stock at that time.  As payment for these assets, the Company agreed to assume certain liabilities and forgive certain intercompany indebtedness.  The acquisition was reported in Items 1.01, 2.01 and 2.03 of a Report on Form 8-K filed by the Company with the Securities and Exchange Commission on October 27, 2009 (the “Report”).  In Items 9.01(a) and 9.01(b) of the Report, the Company undertook to file the required consolidated financial statements and pro forma financial inf ormation by amendment to the Report as permitted by Items 9.01(a)(4) and 9.01(b)(2) of Form 8-K.  This Amendment No. 1 to the Report is to file the required consolidated financial statements of MediVision and the required pro forma financial information regarding the acquisition.

Item 9.01                      Financial Statements and Exhibits

(a)           Financial Statements of Businesses Acquired

(i)           Attached hereto as Exhibit 99.1, and incorporated herein by reference, is the audited consolidated balance sheet of MediVision as of December 31, 2008 and the related consolidated statements of operations, changes in equity and cash flows for the year then ended and related footnotes, together with an auditor’s report thereon of Perry-Smith LLP.

(ii)           Attached hereto as Exhibit 99.2, and incorporated herein by reference, are the unaudited consolidated balance sheets of MediVision as of September 30, 2009 and 2008 and the related consolidated statements of operations and cash flows for the three and nine month periods then ended and the consolidated statements of changes in equity for the nine month periods then ended and related footnotes.

(b)           Pro forma Financial Information

Attached hereto as Exhibit 99.3, and incorporated herein by reference, are the unaudited pro forma condensed combined financial statements of the Company and MediVision as of and for the nine months ended September 30, 2009 and unaudited pro forma condensed combined statements of operations of the Company and MediVision for the year ended December 31, 2008 and related introduction and footnotes.

(d)           Exhibits

Exhibit No. Description

23.1 Consent of Perry-Smith LLP, Independent Auditor.

99.1 Audited consolidated financial statements of MediVision Medical Imaging Ltd. as of and for the year ended December 31, 2008 and related footnotes, together with report thereon of Perry-Smith LLP.

99.2 Unaudited consolidated financial statements of MediVision Medical Imaging Ltd. as of and for the nine months ended September 30, 2009 and 2008 and related footnotes.

99.3 Unaudited pro forma condensed combined financial statements of the Company and MediVision Medical Imaging Ltd. as of and for the nine months ended September 30, 2009 and unaudited pro forma condensed combined statements of operations of the Company and MediVision Medical Imaging Ltd. for the year ended December 31, 2008 and related introduction and footnotes.

 

SIGNATURES

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

Date: September 28, 2010

OPHTHALMIC IMAGING SYSTEMS
By:	/s/ Ariel Shenhar
Name:	Ariel Shenhar
Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit No. Description

23.1 Consent of Perry-Smith LLP, Independent Auditor.

99.1 Audited consolidated financial statements of MediVision Medical Imaging Ltd. as of and for the year ended December 31, 2008 and related footnotes, together with report thereon of Perry-Smith LLP.

99.2 Unaudited consolidatedfinancial statements of MediVision Medical Imaging Ltd. as of and for the nine months ended September 30, 2009 and 2008 and related footnotes.

99.3 Unaudited pro forma condensed combined financial statements of the Company and MediVision Medical Imaging Ltd. as of and for the nine months ended September 30, 2009 and unaudited pro forma condensed combined statements of operations of the Company and MediVision Medical Imaging Ltd. for the year ended December 31, 2008 and related introduction and footnotes.

EX-23.1

Exhibit 23.1

EX-99.1

    ex99_1-f8ka10212009.htm
    
    
    

EX-99.2

Exhibit 99.2

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED BALANCE SHEET

	US dollars (thousands)
	September 30,					December 31,
		2009		2008		2008
		Unaudited				Audited
A S S E T S
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.

1

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.

2

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	US dollars (thousands except per share data)
	Nine month period ended September 30,					Three month period ended September 30,					Year ended December 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.

3

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	US dollars (thousands)
	Attributable to owners of the parent
	Share Capital		Additional paid-in capital			Capital reserve			Foreign currency translation differences			Accumulated deficit			Total attributable to owners of the parent			Minority interests			Total 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 (unaudited)		215		9,295			(311	)		120			(5,617	)(*)		3,702	(*)		3,927	(*)		7,629

(*)           Restated – see Note 2C.

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

4

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (cont.)

	US dollars (thousands)
	Attributable to owners of the parent
	Share Capital		Additional paid-in capital		Capital reserve			Foreign currency translation differences			Accumulated deficit			Total attributable to owners of the parent			Minority interests			Total 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.

5

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	US dollars (thousands)
	Nine month period ended September 30,						Three month period ended September 30,						Year ended December 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.

6

MEDIVISION MEDICAL IMAGING LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.)

APPENDIX A – COMPANY NO LONGER CONSOLIDATED:

	US dollars (thousands)
	Nine month period ended September 30,			Three month period ended September 30,		Year ended December 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)
	Nine month period ended September 30,		Three month period ended September 30,		Year ended December 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.

7

MEDIVISION MEDICAL IMAGING LTD.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  -	GENERAL
	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 O IS'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.

8

MEDIVISION MEDICAL IMAGING LTD.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 1  -	GENERAL (cont.)
	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 CompanyR 17;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	)

9

MEDIVISION MEDICAL IMAGING LTD.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2  -	SIGNIFICANT ACCOUNTING POLICIES
	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.

10

MEDIVISION MEDICAL IMAGING LTD.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2  -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	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.

11

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
		Before restatement			Effect of the restatement			After 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
		Before restatement			Effect of the restatement			After 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
		Before restatement			Effect of the restatement			After 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
		Before restatement			Effect of the restatement			After 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
		Before restatement			Effect of the restatement			After restatement
Other expenses			(1	)		(177	)		(178	)
Loss for the period			(648	)		(177	)		(825	)

12

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 4 -	SEGMENT REPORTING
	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 software			Ophthalmic 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	)

13

MEDIVISION MEDICAL IMAGING LTD.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 4 -	SEGMENT REPORTING (cont.)
	2.	Ophthalmic application (cont.).

	US dollars (thousands)
	Three month period ended September 30, 2009 (Unaudited)
	Electronic record and practice management software		Ophthalmic 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 software			Ophthalmic 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 Conversi on, 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.

14

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

15

EX-99.3

Exhibit 99.3

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 adju stments 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.

1

OPHTHALMIC IMAGING SYSTEMS

UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET

September 30, 2009

(in thousands of U.S. Dollars)

	Historical OIS			Historical MediVision			Adjustments to reclassify and consolidate financial statements				Consolidated MediVision and OIS			Adjustments to reconcile to U.S. GAAP				OIS and MediVision after conversion to U.S. GAAP			Pro forma adjustments				Pro forma 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

2

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)

	OIS Three Months Ended 9/30/09			MediVision Nine Months Ending 9/30/09			Adjustments to reclassify and consolidate financial statements				Consolidated MediVision and OIS			Adjustments to reconcile to U.S. GAAP		OIS and MediVision after conversion to U.S. GAAP			Pro forma adjustments				Pro forma 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		$	(2,497	)	$	366			$	(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

3

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)

	Historical OIS			Historical MediVision Stand Alone			Adjustments to reclassify and consolidate financial statements				Consolidated MediVision and OIS			Adjustments to reconcile to U.S. GAAP				OIS and MediVision after conversion to U.S. GAAP			Pro forma adjustments				Pro forma 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

4

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 fina ncial statements.

J.   On October 23, 2009, inconnection 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.

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