For the second quarter of fiscal 2009, the Company realized revenue of $13.7 million compared to $11.6 million in the corresponding fiscal 2008 period, an increase of approximately 17.3%. Net income for the 2009 second quarter increased to $389,000, or $0.02 per share, as compared to a net loss of $54,000 for the comparable 2008 quarter.

Cash and cash equivalents at February 3, 2009, totaled $349,000, a decrease of approximately $151,000 as compared to July 31, 2008. The Company had a working capital surplus of approximately $13.4 million at the end of the second fiscal 2009 quarter, compared to a surplus of approximately $12.7 million as of July 31, 2008. The Company's long term liabilities were $9.4 million at the end of the fiscal 2009 second quarter, an 8.0% reduction compared to approximately $10.2 million at the end of fiscal 2008. Stockholders' equity as of February 3, 2009 increased to approximately $37.5 million as compared to $36.4 million at the end of fiscal 2008. The Company reports that its borrowing availability was $4.4 million under its various lines of credit as of February 3, 2009.

Second Quarter Fiscal 2009 Background Financial Information:

Ophthalmic sales grew 8.8% in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. Domestic ophthalmic sales decreased 2.5%, while international sales increased by 31.5%. Additionally, the Company expects that the VitraTM laser and the initial shipments of the SupraTM laser, which shipments commenced in the second quarter of fiscal 2009, will have positive impacts on net sales for the remainder of fiscal 2009.

Neurosurgery sales growth for the three months ended February 3, 2009, increased 14.9% as compared to the three months ended January 31, 2008. Domestic neurosurgery sales increased 10.9% due to higher disposable sales, partially offset by weaker capital equipment sales. International sales increased 30.8%. The Company expects that sales of its neurosurgical disposables will continue to have a positive impact on net sales for the remainder of fiscal 2009.

OEM sales during the second fiscal quarter of 2009 increased 86.6% compared to the second fiscal quarter of 2008. Sales to Codman increased 26.2% compared to the second fiscal quarter of 2008. Sales to Stryker of the new generator have positively impacted revenue for the current fiscal quarter and are expected to continue this trend for the remainder of fiscal 2009 and fiscal 2010. Sales to Iridex Corporation of $129,000 added to the OEM sales growth.

Operating income increased by $674,000 to $907,000 for the second quarter of fiscal 2009, from $233,000 for the same period in fiscal 2008.

Net income increased by $443,000 to $389,000 for the second quarter of fiscal 2009, from a $54,000 loss for the same period in fiscal 2008. Basic and diluted earnings per share for the second quarter of fiscal 2009 increased to $0.02 from $0.00 for the second quarter of fiscal 2008.

Six Months Ended February 3, 2009 Background Financial Information:

The Company reported an increase of approximately 17.2% in revenue as compared to the same period last year, driven primarily by a 12.3% increase in ophthalmology sales, a 13.4% increase in neurosurgery sales and a 62.5% increase in OEM sales.

Domestic sales for the first six months of fiscal 2009 compared to the same period of fiscal 2008 increased 12.4% as sales of domestic ophthalmology have increased due to higher capital equipment and disposable sales. Sales of domestic neurosurgery have increased primarily due to higher disposable sales partially offset by weaker capital equipment sales. Both the ophthalmology and neurosurgery product lines contributed to the international sales growth of 29.4% for the first six months of fiscal 2009 compared to the first six months of fiscal 2008.

Operating income increased by $1.1 million to $2.1 million for the first six months of fiscal 2009, from $1.0 million for the same period in fiscal 2008.