Note 2

Discontinued Operations:

On June 22, 2015, the Company closed on the asset sale of the XTRAC and VTRAC business for $42.5 million in cash. The Company realized net proceeds of approximately $41 million which amount is considered as the fair value less cost to sell this business. The sale was effective June 22, 2015. The domestic XTRAC business was considered a recurring revenue stream given its pay-per-use model, where the machines are provided to professionals who then pay us based on the number of treatments administered with the device. The domestic revenues from this business have historically been reported in our Physician Recurring business segment. Internationally, we sold our XTRAC-Velocity and VTRAC equipment to distributors which sales have been historically reported in our Professional Equipment segment. As this business was a substantial business unit of the Company, and as such the sale brings a shift in focus of management. The Company accordingly classified this former business as held for sale in accordance and discontinued operations with ASC Topic 360.

Revenues from the XTRAC and VTRAC business, reported as discontinued operations, for the three months ended June 30, 2015 and 2014 were $7,192 and $7,178, respectively. Loss from the XTRAC and VTRAC business, reported as discontinued operations, for the three months ended June 30, 2015 was $2,058, which includes interest expense of $395 and stock compensation of $1,609, related to the contractual acceleration of vesting of awards then outstanding to employees from the XTRAC and VTRAC business, included as the result of acceleration of vesting periods, due to the sale. Income from the XTRAC and VTRAC business, reported as discontinued operations, for the three months ended June 30, 2014 was $509.

Revenues from the XTRAC and VTRAC business, reported as discontinued operations, for the six months ended June 30, 2015 and 2014 was $14,669 and $13,239, respectively. Loss from the XTRAC and VTRAC business, reported as discontinued operations, for the six months ended June 30, 2015 was $5,042, which includes interest expense of $2,289 and stock compensation of $1,684 related to the contractual acceleration of vesting of awards then outstanding to employees from the XTRAC and VTRAC business, included as the result of acceleration of vesting periods, due to the sale.Income from the XTRAC and VTRAC business, reported as discontinued operations, for the six months ended June 30, 2014 was $1,877.

LCA, acquired by the Company on May 12, 2014, is a provider of fixed-site laser vision corrections services at its LasikPlus® vision centers. The vision centers provide the staff, facilities, equipment and support services for performing laser vision correction that employs advanced laser technologies to help correct nearsightedness, farsightedness and astigmatism. The vision centers are supported by independent ophthalmologists and credentialed optometrists, as well as other healthcare professionals. Substantially all of LCA's revenues are derived from the delivery of laser vision correction procedures performed in the vision centers. After preliminary investigations and discussions, the Board of Directors of the Company, with the aid of its investment banker, had reached a formal decision during December 2014 to enter into, substantive, confidential discussions with potential third-party buyers and began to develop plans for implementing a disposal of the assets and operations of the business. The Company accordingly classified this former segment as held for sale and discontinued operations in accordance with ASC Topic 360. On February 2, 2015, the Company closed on the sale transaction of 100% of the shares of LCA for $40 million in cash. Excluding estimated working capital adjustments and direct expenses (professional fees to third parties), the Company realized net proceeds of approximately $37.7 million which amount is considered as the fair value less cost to sell of LCA. The sale was effective January 31, 2015. No income tax benefit was recognized by the Company from the loss on the sale of discontinued operations.

The accompanying condensed consolidated financial statements reflect the operating results and balance sheet items of the discontinued operations separately from continuing operations. Also, as of December 31, 2014, balance sheet items related to LCA were presented as assets held for sale and as liabilities held for sale, respectively. The Company recognized an estimated loss of $44,598 on the sale of the discontinued operations during the fourth quarter and the year ended December 31, 2014, which included a decrease in the implied fair value of goodwill, related to LCA, of $43,091. The remaining loss of $1,507 represents the difference between the adjusted net purchase price and the carrying value of the disposal group. The impairment amount was categorized as level 3 measurements. For the three months ended March 31, 2015, the Company recorded an adjustment of $41 on the sale of the discontinued operations of LCA.

Revenues from LCA, reported as discontinued operations, for the three months ended March 31, 2015 were $9,158. Loss from LCA, reported as discontinued operations, for the three months ended March 31, 2015 was $1,667, which includes stock compensation of $2,363 related to the contractual acceleration of vesting of awards then outstanding to employees from LCA, included as a result of acceleration of vesting periods, due to the sale of LCA.

The following is a summary of assets and liabilities held for sale in the condensed consolidated balance sheet as of December 31, 2014:

	December 31, 2014
	XTRAC and VTRAC business		LCA-Vision			Total
Assets:
Cash and cash equivalents	$	255	$	4,514		$	4,769
Accounts receivable		4,336		2,759			7,095
Inventories		2,270		119			2,389
Deferred tax assets		-		1,930			1,930
Other current assets		269		2,492			2,761
Property & Equipment, net		-		14,519			14,519
Goodwill, net		-		6,491			6,491
Other intangible assets, net		-		38,331			38,331
Other assets		-		1,207			1,207
Current assets held for sale		7,130		72,362			79,492
Less: Impairment		-		(1,507	)		(1,507	)
Current assets held for sale, net		7,130		70,855			77,985

Property & Equipment, net		12,391		-			12,391
Goodwill, net		3,142		-			3,142
Patents and licensed technologies, net		4,859		-			4,859
Other intangible assets, net		2,574		-			2,574
Other assets		40		-			40
Long term assets held for sale		23,006		-			23,006

Liabilities:
Accounts payable	$	1,777	$	5,518		$	7,295
Other accrued liabilities		809		5,933			6,742
Deferred revenues		140		97			237
Long term debt		-		1,080			1,080
Other liabilities		-		6,870			6,870
Deferred tax liability		-		14,999			14,999
Current liabilities held for sale		2,726		34,497			37,223

Long term debt		82		-			82
Other liabilities		96		-			96
		178		-			178

Total net assets of discontinued operations	$	27,232	$	36,358		$	63,590

All such assets were disposed of, and the liabilities extinguished upon closing of the LCA-Vision sale transaction in February 2015 and the XTRAC and VTRAC business sale transaction in June 2015.