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Exhibit 99.1

Financial Statements of

OPHTHALMIC TECHNOLOGIES INC.

April听30, 2007 and 2006

Deloitte & Touche LLP
5140 Yonge Street
Suite听1700
Toronto ON M2N 6L7
Canada

Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca

Independent Auditors聮 Report

To the Board of Directors and Shareholders of
Ophthalmic Technologies Inc.

We have audited the balance sheets of Ophthalmic Technologies Inc.,(the 聯Company聰) as at April听30, 2007 and 2006 and the statements of operations and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company聮s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company聮s internal control over financial reporting. Accordingly, we express no such opinion. 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 audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at April听30, 2007 and 2006 and the results of its operations and its cash flows for each of the years then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
Chartered Accountants
Licensed Public Accountants

Toronto, Ontario
June听28, 2007

OPHTHALMIC TECHNOLOGIES INC.
Table of Contents
April听30, 2007 and 2006

听	听	听	听	听
听	听	Page		听
Balance Sheets	听	听	1	听
听	听	听	听	听
Statements of Operations and Deficit	听	听	2	听
听	听	听	听	听
Statements of Cash Flows	听	听	3	听
听	听	听	听	听
Notes to the Financial Statements	听	听	4-17	听

OPHTHALMIC TECHNOLOGIES INC.
Balance Sheets
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

OPHTHALMIC TECHNOLOGIES INC.
Statements of Operations and Deficit
Years ended April听30, 2007 and 2006
(Expressed in Canadian Dollars)

听

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
SALES (Note 14)	听	$	9,654,008	听	听	$	12,363,803	听
听	听	听	听	听	听	听	听	听
COST OF SALES (Note 14)	听	听	8,206,378	听	听	听	9,062,451	听
听	听	听		听	听	听		听
GROSS MARGIN	听	听	1,447,630	听	听	听	3,301,352	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
EXPENSES	听	听	听	听	听	听	听	听
Amortization 聴 capital and intangible assets	听	听	37,114	听	听	听	38,025	听
Bad debts	听	听	83,297	听	听	听	91,074	听
Consulting fees (Note 14)	听	听	100,000	听	听	听	100,000	听
Insurance	听	听	142,882	听	听	听	117,590	听
Interest and bank charges (Note 10)	听	听	148,322	听	听	听	115,666	听
Office and general	听	听	68,096	听	听	听	166,825	听
Professional fees	听	听	184,451	听	听	听	144,222	听
Rent	听	听	116,928	听	听	听	88,454	听
Research and experimental development	听	听	1,511,538	听	听	听	1,051,473	听
Salaries and benefits	听	听	608,301	听	听	听	917,064	听
Trade shows and promotion	听	听	299,327	听	听	听	443,966	听
Travel	听	听	458,665	听	听	听	401,503	听
听	听	听		听	听	听		听
听	听	听	3,758,921	听	听	听	3,675,862	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
LOSS BEFORE THE UNDERNOTED	听	听	(2,311,291	)	听	听	(374,510	)
听	听	听	听	听	听	听	听	听
OTHER EXPENSE (INCOME)	听	听	听	听	听	听	听	听
Gain on foreign exchange	听	听	(46,040	)	听	听	(23,880	)
Miscellaneous income	听	听	(65,205	)	听	听	(25,175	)
听	听	听		听	听	听		听
LOSS BEFORE INCOME TAXES	听	听	(2,200,046	)	听	听	(325,455	)
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
INCOME TAXES (Note 13)	听	听	听	听	听	听	听	听
Current income taxes	听	听	聴	听	听	听	318,240	听
Recovery due to research and experimental development tax credits (Note 5)	听	听	(514,989	)	听	听	(492,733	)
Recovery due to application of prior years聮 losses	听	听	聴	听	听	听	(292,000	)
听	听	听		听	听	听		听
听	听	听	(514,989	)	听	听	(466,493	)
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
NET (LOSS)听INCOME	听	听	(1,685,057	)	听	听	141,038	听
听	听	听	听	听	听	听	听	听
ACCUMULATED DEFICIT, BEGINNING OF YEAR	听	听	(2,939,632	)	听	听	(3,080,670	)
听	听	听		听	听	听		听
ACCUMULATED DEFICIT, END OF YEAR	听	$	(4,624,689	)	听	$	(2,939,632	)
听	听	听		听	听	听		听

OPHTHALMIC TECHNOLOGIES INC.
Statements of Cash Flows
Years ended April听30, 2007 and 2006
(Expressed in Canadian Dollars)

听

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
NET INFLOW (OUTFLOW)听OF CASH RELATED TO THE FOLLOWING ACTIVITIES	听	听	听	听	听	听	听	听
OPERATING	听	听	听	听	听	听	听	听
Net (loss)听income	听	$	(1,685,057	)	听	$	141,038	听
Items not affecting cash	听	听	听	听	听	听	听	听
Amortization of capital and intangible assets	听	听	37,114	听	听	听	38,025	听
Capital assets written off	听	听	聴	听	听	听	53,257	听
Stock based compensation	听	听	聴	听	听	听	480,804	听
听	听	听		听	听	听		听
听	听	听	(1,647,943	)	听	听	713,124	听
Changes in non-cash operating working capital items	听	听	听	听	听	听	听	听
Accounts receivable	听	听	592,287	听	听	听	(1,073,769	)
Investment tax credits recoverable	听	听	907,271	听	听	听	(466,493	)
Inventory	听	听	(255,235	)	听	听	(1,485,794	)
Prepaids and sundry assets	听	听	(92,456	)	听	听	10,772	听
Accounts payable and accrued liabilities	听	听	(764,404	)	听	听	2,135,428	听
Deposits from customers	听	听	983,921	听	听	听	(1,329,534	)
听	听	听		听	听	听		听
听	听	听	(276,559	)	听	听	(1,496,266	)
听	听	听		听	听	听		听
INVESTING	听	听	听	听	听	听	听	听
(Purchase) redemption of short term investments	听	听	(4,773,430	)	听	听	1,259,935	听
Purchase of capital assets	听	听	(3,005	)	听	听	(273	)
Patents	听	听	聴	听	听	听	(100,000	)
听	听	听		听	听	听		听
听	听	听	(4,776,435	)	听	听	1,159,662	听
听	听	听		听	听	听		听
FINANCING	听	听	听	听	听	听	听	听
Bank loan	听	听	(270,000	)	听	听	285,000	听
Proceeds from issuance of Common shares	听	听	5,590,000	听	听	听	聴	听
Related party loans payable	听	听	72,416	听	听	听	54,642	听
听	听	听		听	听	听		听
听	听	听	5,392,416	听	听	听	339,642	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
NET CASH INFLOW	听	听	339,422	听	听	听	3,038	听
听	听	听	听	听	听	听	听	听
CASH POSITION, BEGINNING OF YEAR	听	听	217,044	听	听	听	214,006	听
听	听	听		听	听	听		听
CASH POSITION, END OF YEAR	听	$	556,466	听	听	$	217,044	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
CASH FLOW SUPPLEMENTARY INFORMATION	听	听	听	听	听	听	听	听
Interest paid	听	$	29,104	听	听	$	25,851	听
Investment tax credits received	听	$	1,428,052	听	听	$	10,954	听

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

1.	听	NATURE OF BUSINESS
听
听	听	Ophthalmic Technologies Inc. (the 聯Company聰) is incorporated under the laws of the Province of Ontario. The principal business activities of the Company are to provide technologically advanced, easy-to-use equipment for ophthalmology, including innovative systems with advance imaging capabilities.
听
2.	听	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
听
听	听	The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (聯US GAAP聰). The following is a summary of the significant accounting policies used in the preparation of these financial statements.

听	(a)	听	Use of estimates
听
听	听	听	The preparation of financial statements in conformity with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses and other disclosures during the reporting period. Actual results could differ from these estimates.
听
听	听	听	Estimates are included in the following: allowance for doubtful accounts, provision for inventory obsolescence, intangible assets, long lived assets, stock-based compensation, income tax valuation allowances and warranty provisions.
听
听	(b)	听	Revenue recognition
听
听	听	听	Revenue from the sale of products is recognized when a sale has been executed, the product has been shipped, the sales price is fixed and determinable and collection of the resulting receivable is probable.
听
听	(c)	听	Stock-based compensation
听
听	听	听	The Company follows SFAS 123(R) 聯Share-Based Payment聰). SFAS 123(R) establishes standards for the recognition, measurement and disclosure of stock-based compensation made in exchange for goods and services, and applies to transactions, including non-reciprocal transactions, in which an enterprise grants shares of common stock or other equity instruments, or incurs liabilities based on the price of common stock or other equity instruments. The Company records compensation expense over the vesting period for stock option grants based on the fair value method of accounting. The fair value at grant date of stock options is determined using a Black-Scholes option pricing model. Any consideration received by the Company on exercise of stock options is credited to share capital.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

2.

听

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

听	(d)	听	Foreign exchange
听
听	听	听	Assets and liabilities denominated in foreign currencies are translated into Canadian dollars at exchange rates prevailing at the balance sheet date for monetary items and at approximate exchange rates prevailing at the transaction date for non-monetary items. Income and expenses are translated at average exchange rates prevailing during the year at the time of the related transactions. Exchange gains or losses arising on the translation are included in operations.
听
听	(e)	听	Cash and cash equivalents
听
听	听	听	The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. As of April听30, 2007, cash consists of bank deposit accounts.
听
听	(f)	听	Inventory
听
听	听	听	Inventory is valued at the lower of cost or market value with cost being determined using the FIFO (first in first out) cost method.
听
听	(g)	听	Capital assets
听
听	听	听	Capital assets are recorded at cost less accumulated amortization. Rates and basis of amortization applied by the Company to amortize the costs of capital assets over their estimated useful lives are as follows:

听	听	听
Furniture and fixtures	听	30% declining-balance
Computer equipment	听	30% declining-balance
Leasehold improvements	听	Term of lease or shorter of useful life

听	(h)	听	Long-lived assets
听
听	听	听	Management routinely reviews capital assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For long-lived assets held and used, the Company recognizes an impairment loss only if the carrying amount of the asset is not recoverable from its undiscounted cash flows and measures an impairment loss as the difference between the carrying amount and the fair value of the asset. Long-lived assets considered held for sale are reported at lower of carrying amount or fair value (discounted cash flows) less cost to sell and are not depreciated.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

2.

听

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

听	(i)	听	Intangible assets
听
听	听	听	The Company accounts for intangible assets in accordance with the Statement of Financial Accounting Standards (聯SFAS聰) 142, 聯Goodwill and Other Intangible Assets聰, which it adopted effective May听1, 2002.
听
听	听	听	Intangible assets, consisting of patents are recorded at cost, which are amortized on a straight-line basis over their estimated useful lives. The Company reviews the carrying values of these assets annually for evidence of impairment.
听
听	(j)	听	Research and development costs
听
听	听	听	The Company expenses research and development costs when they are incurred.
听
听	(k)	听	Investment tax credits
听
听	听	听	Investment tax credits arising from qualifying scientific research and experimental development efforts are recorded as reductions of income tax expense when there is reasonable assurance the credits will be realized.
听
听	(l)	听	Income taxes
听
听	听	听	Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.
听
听	听	听	The most significant component of the Company聮s net deferred tax assets as of April听30, 2007 is its net operating loss carryforwards. A full valuation allowance was established for the deferred tax assets, as management of the Company does not believe realization of the tax benefits is more likely than not.
听
听	(m)	听	Comprehensive loss
听
听	听	听	Comprehensive income (loss)听includes net income (loss)听and other comprehensive income (loss). Other comprehensive loss refers to changes in net assets from transactions which are not included in net income (loss). These changes are recorded as a separate component of shareholder聮s equity.
听
听	听	听	The Company聮s comprehensive loss has no components other than its net loss.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

2.

听

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

听	(n)	听	Financial instruments
听
听	听	听	Concentration of credit risk
听
听	听	听	Accounts receivable are due from commercial entities to whom credit is granted based on an evaluation of the customers聮 financial condition.
听
听	听	听	Financial risk
听
听	听	听	Financial risk is the risk that the value of the Company聮s financial instruments will vary due to fluctuations in interest rates and foreign currency exchange rates, and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to interest rate and foreign currency exchange risks.
听
听	听	听	Fair values
听
听	听	听	The fair values of the Company聮s cash and cash equivalents, short term investments, accounts receivable, investment tax credits recoverable, bank loan, accounts payable and accrued liabilities and loans payable approximate their carrying values due to the immediate or short-term maturity of these financial instruments.
听
听	(o)	听	Recent accounting pronouncements

听	(i)	听	In February听2006, the FASB issued SFAS No.听155, 聯Accounting for Certain Hybrid Financial Instruments 聴 an amendment to FASB Statements No.听133 and 140 (聯SFAS 155聰). SFAS 155 simplifies the accounting for certain hybrid financial instruments that contains an embedded derivative that otherwise would require bifurcation under SFAS 133. In addition, it amends SFAS No.听140, 聯Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities聰 (聯SFAS 140聰), to eliminate certain restrictions on passive derivative financial instruments that a qualifying special-purpose entity can hold. SFAS 155 is effective for all financial instruments acquired, issued or subject to a re-measurement event occurring after the beginning of an entity聮s first fiscal year that begins after September听15, 2006. The implementation of SFAS 155 is not expected to have a material impact on the company聮s results of operations and financial position.
听
听	(ii)	听	In March听2006, the FASB issued SFAS No.听156, 聯Accounting for Servicing of Financial Assets 聴 an amendment of FASB Statement No.听140聰. SFAS 156 simplifies the accounting for assets and liabilities arising from loan servicing contracts. SFAS 156 requires that servicing rights be valued initially at fair value and subsequently either (i)听accounted for at fair value or (ii)听amortized over the period of estimated net servicing income (loss), with an assessment for impairment or increased obligation each reporting period,. SFAS 156 is effective for fiscal years beginning after September听15, 2006. The implementation of SFAS 156 is not expected to have a material impact on the Company聮s results of operations and financial position.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

2.

听

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

听

(o)

听

Recent accounting pronouncements (continued)

听	(iii)	听	In June听2006, the FASB issued FASB Interpretation No.听48, 聯Accounting for Uncertainty in Income Taxes 聴 An Interpretation of FASB Statement No.听149聰 (聯FIN 48聰), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken, in a tax return. FIN 48 is effective for fiscal years beginning on or after December听15, 2006. The implementation of is not expected to have a material impact on the Company聮s results of operations and financial position.
听
听	(iv)	听	In May听2005, the FASB issued SFAS No.听154, which replaces APB Opinion No. 20, 聯Accounting Changes聰, and SFAS No.听3, 聯Reporting Accounting Changes in Interim Financial Statements 聴 An Amendment of APB Opinion No.听28聰. SFAS No.听154 provides guidance on the accounting for and reporting of changes in accounting principles and error corrections. SFAS No.听154 requires retrospective application to prior period financial statements of voluntary changes in accounting principle and changes required by new accounting standards when the standard does not include specific transition provisions, unless it is impracticable to do so. SFAS No.听154 also requires certain disclosures for restatements due to corrections of an error. For the Company, SFAS No.听154 is effective for accounting changes and corrections of errors made in its fiscal year beginning on May听1, 2006. There was no impact on the adoption of SFAS No.听154 to the Company聮s financial statements.
听
听	(v)	听	In September听2006, the United States Securities Exchange Commission issued Staff Accounting Bulletin No.听108, 聯Considering the effects of prior year misstatements when quantifying current year misstatements聰 (聯SAB 108聰). SAB 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach in assessing materiality and provides for a one-time cumulative effect transition adjustment. The provisions of SAB 108 will be effective for the Company as of May听1, 2007. The Company is currently evaluating the impact of adopting SAB 108.
听
听	(vi)	听	In June听2006, the EITF reached a consensus on EITF Issue No.听06-2 聯Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No.听43, Accounting for Compensated Absences聰 (聯EITF 06-2聰). EITF 06-2 provides clarification surrounding the accounting for benefits in the form of compensated absences, whereby an employee is entitled to paid time off after working for a specified period of time. EITF 06-2 is effective for fiscal years beginning after December听15, 2006. The Company will adopt the provisions of EITF 06-2 on May 1, 2007. The Company does not expect the adoption of EITF 06-2 to have a material impact on its results of operations and financial position.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

2.

听

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

听

(o)

听

Recent accounting pronouncements (continued)

听	(vii)	听	In June听2006, the EITF reached a consensus on EITF Issue No.听06-3 聯How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (that is, gross versus net presentation)聰 (聯EITF 06-3聰). EITF 06-3 provides guidance on how taxes directly imposed on revenue producing transactions between a seller and customer that are remitted to government authorities should be presented in the income statement (i.e. gross revenue versus net presentation). EIFT 06-3 is effective for interim and annual reporting periods beginning after December听15, 2006. The Company does not expect the adoption of SFAS 156 to have a material impact on its results of operations and financial position.
听
听	(viii)	听	In September听2006, the FASB issued SFAS No.听157 聯Fair Measurements聰 (SFAS 157), which provides accounting guidance on the definition of fair value and establishes a framework for measuring fair value in U.S. GAAP and requires expanded disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November听15, 2007. The Company is currently assessing the impact of the adoption of SFAS 157 on its results of operations and financial position.
听
听	(ix)	听	In September听2006, the EITF reached a consensus on EITF Issue No.听06-1 聯Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider (聯EITF 06-1聰). EITF 06-1 provides accounting guidance on the consideration given by a service provider to a manufacturer or reseller of specialized equipment for the reduction of the price of such equipment to an end-customer which is necessary for an end-customer to receive service from the service provider. EITF 06-1 is effective for fiscal years beginning after June听15, 2007. The Company does not expect the adoption of EITF 06-1 to have a material impact on its results of operations and financial position.
听
听	(x)	听	In February of 2007, the FASB issued SFAS No.听159, 聯The Fair Value Option for Financial Assets and Financial Liabilities 聴 Including an amendment of FASB Statement No.听115, (聯SFAS NO. 159聰), which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for fiscal years beginning after November听15, 2007. The Company has not completed its evaluation of the effects of SFAS 159.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

3.	听	ACCOUNTS RECEIVABLE
听
听	听	Accounts receivable are comprised of the following:

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
Trade accounts receivable	听	$	1,673,760	听	听	$	2,321,530	听
Other accounts receivable	听	听	86,596	听	听	听	46,789	听
Allowance for doubtful accounts	听	听	(184,645	)	听	听	(200,321	)
听	听	听		听	听	听		听
Total	听	$	1,575,711	听	听	$	2,167,998	听
听	听	听		听	听	听		听

4.	听	INVENTORY
听
听	听	The components of inventory, stated at the lower of cost or market with cost determined on the specific identified cost method, are as follows:

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
Raw materials	听	$	1,867,476	听	听	$	1,551,726	听
Finished goods	听	听	536,689	听	听	听	597,204	听
听	听	听		听	听	听		听
Total	听	$	2,404,165	听	听	$	2,148,930	听
听	听	听		听	听	听		听

5.	听	INVESTMENT TAX CREDITS RECOVERABLE
听
听	听	The Company has made claims for investment tax credits on scientific research and development expenditures incurred in Canada during the year and in previous years. Management is of the opinion that there is reasonable assurance that the credits will be realized. The determination of reasonable assurance of realization is subject to management estimates based on an ongoing evaluation of existing conditions. These claims are subject to audit by the income tax authorities and any adjustments that result could reduce or increase the tax credits recorded.
听
6.	听	CAPITAL ASSETS

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

2007

听

听

2006

听

听

听

听

听

听

听

Accumulated

听

听

Net Book

听

听

Net Book

听

听

听

Cost

听

听

Amortization

听

听

Value

听

听

Value

听

Computer equipment

听

$

50,607

听

听

听

43,563

听

听

$

7,044

听

听

$

6,013

听

Furniture and fixtures

听

听

37,294

听

听

听

35,624

听

听

听

1,670

听

听

听

2,386

听

Leasehold improvements

听

听

12,131

听

听

听

4,852

听

听

听

7,279

听

听

听

9,703

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

$

100,032

听

听

$

84,039

听

听

$

15,993

听

听

$

18,102

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

听

Amortization during the year ended April听30, 2007 was $5,114 (2006 聴 $6,025).

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

7.

听

INTANGIBLE ASSETS

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
Patents 聴 at cost	听	$	160,000	听	听	$	160,000	听
Accumulated amortization	听	听	(76,000	)	听	听	(44,000	)
听	听	听		听	听	听		听
Net book value	听	$	84,000	听	听	$	116,000	听
听	听	听		听	听	听		听

听

听

Amortization of intangibles assets during the years ended April听30, 2007 and April听30, 2006 was $32,000 and $32,000, respectively. Amortization for intangible assets for the next three fiscal years is as follows:

听	听	听	听	听
2008	听	$	32,000	听
2009	听	听	32,000	听
2010	听	听	20,000	听
听	听	听		听
听	听	$	84,000	听
听	听	听		听

8.	听	BANK LOAN
听
听	听	The bank loan is due on demand, bears interest at the bank聮s prime rate plus 1/4% per annum and is fully secured by a corporate guarantee by a shareholder of the Company, Grall Corporation Limited.
听
9.	听	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
Accounts payable Trade	听	$	2,062,939	听	听	$	2,968,786	听
Other	听	听	25,735	听	听	听	51,160	听
Accruals Trade payables	听	听	789,099	听	听	听	622,231	听
听	听	听		听	听	听		听
听	听	$	2,877,773	听	听	$	3,642,177	听
听	听	听		听	听	听		听

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

10.

听

RELATED PARTY LOANS PAYABLE

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
1161983 Ontario Limited, demand loan, interest- bearing at chartered bank聮s prime rate, with no specific repayment terms and secured by a general security agreement on all the assets of the Company	听	$	1,170,688	听	听	$	1,103,661	听
听	听	听	听	听	听	听	听	听
L & R Medical Inc., demand loan, interest-bearing at Canadian prime rate, unsecured, with no specified repayment terms	听	听	94,165	听	听	听	88,776	听
听	听	听		听	听	听		听
听	听	$	1,264,853	听	听	$	1,192,437	听
听	听	听		听	听	听		听

听	听	Included in interest and bank charges is $72,417 (2006 聴 $54,643) relating to the above loans.
听
听	听	1161983听Ontario Limited is a shareholder of the Company. L & R Medical Inc. and the Company have a common shareholder.
听
11.	听	SHAREHOLDERS聮 EQUITY
听
听	听	The Company聮s authorized share capital consists of the following:
听
听	听	Authorized Unlimited number of common shares
听
听	听	The following is a summary of the stated and issued share capital of the Company:

听	听	听	听	听	听	听	听	听
听	听	Number		听	听	Book		听
听	听	of shares		听	听	Value		听
Balance, April听30, 2005 and 2006	听	听	132.48	听	听	$	1,837,893	听
Shares issued on private placement (a)	听	听	67.94	听	听	听	5,590,000	听
听	听	听		听	听	听		听
Balance, April听30, 2007	听	听	200.42	听	听	$	7,427,893	听
听	听	听		听	听	听		听

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

12.	听	SHARE BASED COMPENSATION
听
听	听	During the year-ended April听30, 2006, the Company granted an option to an employee as follows:

听	听	听
Number of options	听	option to purchase 3.4 shares
Exercise price	听	$110,294.12 per share
Vesting	听	immediate
Life of option	听	10听years if employee remains employed by the Company

听

听

The fair value of this option grant was estimated on the date of grant using the Black-Scholes option pricing model, with the following assumptions:

听	听	听	听	听
Dividend yield	听	听	0	%
Expected volatility	听	听	117	%
Risk free rate of return	听	听	4	%
Expected life	听	10 years

听	听	In fiscal year 2006 stock-based compensation expense was recognized in the amount of $480,804 with a corresponding amount being recognized as additional paid in capital.
听
听	听	In addition, the option agreement contains a provision which allows the employee to immediately require the Company to repurchase the options from the employee if a Material Event, as defined in the Option agreement, occurs, at a price equal to the increase in value, if any, of the option over the original fair value. In addition, the Company is also obligated to pay an amount not exceeding $500,000 to the employee in respect of this option if certain conditions are met. No amounts have been recorded with respect to these potential obligations as they have been determined by management to be not determinable as the requirement to pay these amounts depends on the achievement of future events.
听
听	听	The Black-Scholes option valuation model used by the Company to determine fair values was developed for use in estimating the fair value of freely traded options, which are fully transferable. The Company estimated expected volatility based upon historical industry data and expected life based on management聮s best estimate. The Company聮s stock options are not transferable, cannot be traded and are subject to investing restrictions, which would tend to reduce the fair value of the Company聮s stock options. Changes to subjective input assumptions used in the model can cause a significant variation in the estimate of the fair value of options.
听
听	听	SFAS 123R requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised (excess tax benefits) be classified as financing cash flows. The Company has sufficient net operating losses to generally eliminate cash payments for income taxes to date.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

13.	听	INCOME TAXES
听
听	听	The Company聮s basic tax rate approximated 19% on income eligible for the small business deduction and approximately 36% on the excess. However, because the statement of operations and retained earnings includes items which are non-deductible for income tax purposes, the provision for income taxes does not reflect the basic tax rate.
听
听	听	As at April听30, 2007 the Company has non-capital losses of approximately $896,000, which can be applied against future taxable income. These carryforwards will expire at various times between 2008 and 2026.
听
听	听	In addition, the Company has available scientific research and experimental development expenditures of approximately $3,500,000 (Federal) and $5,500,000 (Ontario) which can be applied against future taxable income.
听
听	听	A reconciliation of expected income tax at the statutory federal rate with the actual income tax provision is as follows for the years ended April听30 (in thousands):

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
Expected income tax benefit at statutory rate (36%)	听	$	(609	)	听	$	51	听
Effect of change in valuation allowance	听	听	630	听	听	听	(70	)
Non-deductible expenses	听	听	1	听	听	听	175	听
Recovery due to ITC	听	听	(514	)	听	听	(493	)
Other	听	听	(23	)	听	听	(129	)
听	听	听		听	听	听		听
听	听	$	(515	)	听	$	(466	)
听	听	听		听	听	听		听

听

听

Significant components of the net deferred tax asset (liability)听at December听31 were as follows:

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
Noncurrent assets:	听	听	听	听	听	听	听	听
Loss carryforwards	听	$	298,943	听	听	$	11,001	听
Capital and intangible assets	听	听	29,326	听	听	听	5,473	听
SR&ED expenditures	听	听	1,325,851	听	听	听	854,675	听
听	听	听		听	听	听		听
Deferred tax asset	听	听	1,654,120	听	听	听	871,149	听
听	听	听	听	听	听	听	听	听
Less: Valuation allowance	听	听	(1,654,120	)	听	听	(871,149	)
听	听	听		听	听	听		听
听	听	$	聴	听	听	$	聴	听
听	听	听		听	听	听		听

听

听

The Company has provided a full valuation allowance on the total amount of its deferred tax assets at April听30, 2007 and 2006 since management does not believe that it is more likely than not that these assets will be realized.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

14.	听	RELATED PARTY TRANSACTIONS
听
听	听	The Company had certain transactions with various shareholders during the year.
听
听	听	The amounts included in the balance sheet of the Company from these related parties not disclosed elsewhere are as follows:

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
Accounts receivable	听	$	69,348	听	听	$	48,102	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
Accounts payable and accrued liabilities	听	$	233,121	听	听	$	35,667	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
Deposits from customers	听	$	732,666	听	听	$	聴	听
听	听	听		听	听	听		听

听

听

The following transactions not disclosed elsewhere, which are recorded at the exchange amount, are reflected in the statement of operations and deficit of the Company:

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
听	听	听	听	听	听	听	听	听
听Sales	听	$	1,449,770	听	听	$	4,121,929	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
Purchases	听	$	234,780	听	听	$	545,344	听
听	听	听		听	听	听		听
听	听	听	听	听	听	听	听	听
Consulting fees	听	$	100,000	听	听	$	100,000	听
听	听	听		听	听	听		听

15.	听	COMMITMENTS
听
听	听	Lease commitments
听
听	听	The Company is committed to the following minimum lease payments under operating leases for its vehicle and equipment:

听	听	听	听	听
2008	听	$	18,295	听
2009	听	听	17,000	听
2010	听	听	17,000	听
听	听	听		听
听	听	$	52,295	听
听	听	听		听

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

15.	听	COMMITMENTS (continued)
听
听	听	Licensing agreement
听
听	听	The Company has entered into a licensing agreement. Under the terms of the agreement, the Company is committed to make the following minimum royalty payments during the next five years:

听	听	听	听	听
2008	听	$	15,000	听
2009	听	听	15,000	听
2010	听	听	15,000	听
2011	听	听	15,000	听
2012	听	听	15,000	听
听	听	听		听
听	听	$	75,000	听
听	听	听		听

听	听	As at April听2007, $13,138 (2006 聴 $27,762) is included in accounts payable.
听
16.	听	FINANCIAL INSTRUMENTS
听
听	听	Credit risk
听
听	听	The Company is subject to the risk of non-payment of its accounts receivable. The Company mitigates this risk by checking the credit worthiness of its customers and by requiring significant deposits from its customers. As at April听30, 2007 approximately 29% of the accounts receivable balance is from one customer (2006 聴 17% from two customers) and 27% of the sales balance is from two customers (2006 聴 36% from one customer).
听
听	听	Interest rate risk
听
听	听	The Company has interest-bearing borrowings for which general interest rate fluctuations apply. The Company does not use derivative instruments to reduce its exposure to interest rate risk.
听
听	听	Foreign currency risk
听
听	听	The Company undertakes revenue and purchase transactions in foreign currencies, and therefore is subject to gains and losses due to fluctuations in foreign currency exchange rates. The Company does not use derivative financial instruments to reduce its exposure to foreign currency risk.

OPHTHALMIC TECHNOLOGIES INC.
Notes to the Financial Statements
April听30, 2007 and 2006
(Expressed in Canadian Dollars)

17.	听	GUARANTEES
听
听	听	The Company has entered into agreements that include indemnities in favour of third parties, such as confidentiality agreements, engagement letters with advisors and consultants, outsourcing agreements and leasing contracts. These indemnification agreements may require the Company to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulations or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The nature of these indemnification agreements prevent the Company from making a reasonable estimate of the maximum exposure due to the difficulties in assessing the amount of liability which stems from the unpredictability of future events and the unlimited coverage offered to counterparties. Historically the Company has not made any significant payments under such or similar indemnification agreements and therefore no amount has been accrued in the financial statements with respect to these agreements.
听
18.	听	SEGMENT INFORMATION
听
听	听	The Company operates and manages its business in one industry segment 聴 the supply of equipment for ophthalmology including innovative systems with advance imaging capabilities which is also the principal product family.
听
听	听	Sales by Country of Origin (in $ millions)

听	听	听	听	听	听	听	听	听
听	听	2007		听	听	2006		听
North America	听	$	1.71	听	听	$	2.47	听
Europe	听	听	3.69	听	听	听	3.53	听
Middle East	听	听	2.48	听	听	听	0.98	听
South America	听	听	0.24	听	听	听	0.07	听
Asia and Australia	听	听	1.58	听	听	听	5.35	听
听	听	听		听	听	听		听
听	听	$	9.70	听	听	$	12.40	听
听	听	听		听	听	听		听