LNOP Lanoptics Ltd. (MM)

     On April 1, 2005 an amendment to the Investment Law came into effect, which
revised the criteria for investments qualified to receive tax benefits. An
eligible investment program under the amendment will qualify for benefits as a
Privileged Enterprise (rather than the previous terminology of Approved
Enterprise). Among other things, the amendment provides tax benefits to both
local and foreign investors and simplifies the approval process. The amendment
does not apply to investment programs approved prior to December 31, 2004. The
new tax regime will apply to new investment programs only.

     As a result of the amendment, tax-exempt income generated under the
provisions of the new law will subject us to taxes upon distribution or
liquidation and we may be required to record deferred tax liability with respect
to such tax-exempt income. As of March 31, 2007, we did not generate income
under the provision of the new law.

THE GOVERNMENT GRANTS WE HAVE RECEIVED FOR RESEARCH AND DEVELOPMENT EXPENDITURES
LIMIT OUR ABILITY TO TRANSFER TECHNOLOGIES OUTSIDE OF ISRAEL AND REQUIRE US TO
SATISFY SPECIFIED CONDITIONS. IF WE FAIL TO SATISFY THESE CONDITIONS, WE MAY BE
REQUIRED TO REFUND GRANTS PREVIOUSLY RECEIVED TOGETHER WITH INTEREST AND
PENALTIES, AND MAY BE SUBJECT TO CRIMINAL CHARGES.

     Since April 2006, our research and development efforts have been financed,
in part, through grants from the Office of the Chief Scientist of the Israeli
Ministry of Industry, Trade and Labor, or OCS. We therefore must comply with the
requirements of the Israeli Law for the Encouragement of Industrial Research and
Development, 1984 and related regulations, or the Research Law. In recent years,
the Government of Israel has accelerated the rate of repayment of OCS grants and
may further accelerate them in the future. In addition, if we fail to comply
with any of the requirements imposed by the OCS, such as change of control
notices and annual reporting requirements, we may be required to refund any
grants previously received together with interest and penalties, and a person
who transferred OCS-funded technology may be subject to criminal charges and up
to three years in prison.

     Technology developed by OCS funding may not be transferred and any transfer
of technology generally requires the approval of an OCS committee. A transfer,
for the purpose of OCS rules, means an actual sale of the technology, any
exclusive license to develop, market, and manufacture products resulting from
the technology or any other transaction which in essence constitutes a transfer
of the technology and does not include the worldwide sale of products that are
based on technology developed with OCS funding. There is no assurance that we
will receive the required approvals should we wish to transfer this technology
in the future. These restrictions may impair our ability to sell our technology
assets, and the restrictions will continue to apply even after we have repaid
the full amount of royalties payable for the grants. In addition, the
restrictions may impair our ability to consummate a merger or similar
transaction in which the surviving entity is not an Israeli company.

IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US OR OUR OFFICERS AND
DIRECTORS, TO ASSERT U.S. SECURITIES LAWS CLAIMS IN ISRAEL OR SERVE PROCESS ON
SUBSTANTIALLY ALL OF OUR OFFICERS AND DIRECTORS.

     We are organized under the laws of the State of Israel. Substantially all
of our executive officers and directors and a substantial portion of our assets
and the assets of these persons are located outside the United States.
Therefore, it may be difficult for an investor, or any other person or entity,
to collect a judgment obtained in the United States against us or any of these
persons, or to effect service of process upon these persons in the United
States. Furthermore, it may be difficult to assert U.S. securities law claims in
original actions instituted in Israel.

THE RIGHTS AND RESPONSIBILITIES OF OUR SHAREHOLDERS ARE GOVERNED BY ISRAELI LAW
AND DIFFER IN SOME RESPECTS FROM THE RIGHTS AND RESPONSIBILITIES OF SHAREHOLDERS
UNDER U.S. LAW.

     We are incorporated under Israeli law. The rights and responsibilities of
holders of our ordinary shares are governed by our articles of association and
by Israeli law. These rights and responsibilities differ in some respects from
the rights and responsibilities of shareholders in typical U.S. corporations. In
particular, a shareholder of an Israeli company has a duty to act in good faith
toward the company and other shareholders and to refrain from abusing his power
in the company, including, among other things, in voting at the general meeting
of shareholders on certain matters. Israeli law provides that these duties are
applicable in shareholder votes on, among other things, amendments to a
company's articles of association, increases in a company's authorized share
capital, mergers and interested party transactions requiring shareholder
approval. In addition, a shareholder who knows that it possesses the power to
determine the outcome of a shareholder vote or to appoint or prevent the
appointment of a director or executive officer in the company has a duty of
fairness toward the company. The Israeli Companies Law also provides that a
breach of the duty of fairness will be governed by the laws governing breach of
contract; however, Israeli law does not define the substance of this duty of
fairness. There is little case law available to assist in understanding the
implications of these provisions that govern shareholder behavior.


                                       10

PROVISIONS OF ISRAELI LAW MAY DELAY, PREVENT OR MAKE DIFFICULT A CHANGE OF
CONTROL AND THEREFORE DEPRESS THE PRICE OF OUR SHARES.

     Some of the provisions of Israeli law could:

     o    discourage potential acquisition proposals;

     o    delay or prevent a change in control; and

     o    limit the price that investors might be willing to pay in the future
          for our ordinary shares.

     Israeli corporate law regulates mergers and acquisitions of shares through
tender offers, requires approvals for transactions involving significant
shareholders and regulates other matters that may be relevant to these types of
transactions. Furthermore, Israel tax law treats stock-for-stock acquisitions
between an Israeli company and a foreign company less favorably than does U.S.
tax law. For example, Israeli tax law may subject a shareholder who exchanges
his ordinary shares for shares in a foreign corporation to immediate taxation or
to taxation before his investment in the foreign corporation becomes liquid.
These provisions may adversely affect the price of our shares.

AS A FOREIGN PRIVATE ISSUER WHOSE SHARES ARE LISTED ON THE NASDAQ CAPITAL
MARKET, WE MAY FOLLOW CERTAIN HOME COUNTRY CORPORATE GOVERNANCE PRACTICES
INSTEAD OF CERTAIN NASDAQ REQUIREMENTS.

     As a foreign private issuer whose shares are listed on The NASDAQ Capital
Market, we are permitted to follow certain home country corporate governance
practices instead of certain requirements of the NASDAQ Marketplace Rules. A
foreign private issuer that elects to follow a home country practice instead of
such requirements, must submit to NASDAQ in advance a written statement from an
independent counsel in such issuer's home country certifying that the issuer's
practices are not prohibited by the home country's laws. In addition, a foreign
private issuer must disclose in its annual reports filed with the Securities and
Exchange Commission each such requirement that it does not follow and describe
the home country practice followed by the issuer instead of any such
requirement. As a foreign private issuer listed on The NASDAQ Capital Market, we
may follow home country practice with regard to, among other things, composition
of the board of directors, director nomination procedure, compensation of
officers, and quorum at shareholders' meetings. In addition, we may follow our
home country law, instead of the NASDAQ Marketplace Rules, which require that we
obtain shareholder approval for certain dilutive events, such as for the
establishment or amendment of certain equity based compensation plans, an
issuance that will result in a change of control of the company, certain
transactions other than a public offering involving issuances of a 20% or more
interest in the company and certain acquisitions of the stock or assets of
another company.


                                       11

                         CAPITALIZATION AND INDEBTEDNESS

     The table below sets forth the capitalization of our company as of March
31, 2007.

                                                      As of March 31, 2007
                                                   ---------------------------
                                                   (U.S. dollars in thousands)

Cash, cash equivalents and marketable securities              16,330
Short-term debt                                                    0
Long-term loan                                                 3,398
Preferred shares in a subsidiary                              23,770
     Total shareholders' equity                               31,141
     Total liabilities and shareholders' equity               65,726





                                 USE OF PROCEEDS

     We estimate that we will receive net proceeds of approximately $37.46
million from the sale by us of 2,500,000 ordinary shares in this offering based
on an assumed offering price of $15.00 per ordinary share, which is the market
price of the ordinary shares on July 27, 2007.

     We intend to use the net proceeds from the sale of the ordinary shares in
this offering for general corporate purposes and to increase our ownership
interest in EZchip, including through the purchase of EZchip ordinary shares
issued upon exercise of employee stock options of such company.


                                       12

                                MARKET PRICE DATA

     Our ordinary shares are quoted on the NASDAQ Capital Market (prior to April
14, 2003, our ordinary shares were traded on the NASDAQ National Market) and on
the Tel Aviv Stock Exchange under the symbol "LNOP." On July 27, 2007, the last
reported sale price of our ordinary shares on the NASDAQ Capital Market was
$15.00 and the last reported sale price of our ordinary shares on the Tel Aviv
Stock Exchange was NIS 59.81.

     Set forth below for each of the periods indicated are the range of high and
low NASDAQ sales prices for our ordinary shares as reported by NASDAQ, and the
high and low sales prices (in U.S. dollars) on the Tel-Aviv Stock Exchange.
Share prices on the Tel Aviv Stock Exchange are quoted in New Israeli Shekels
(NIS); the share prices set forth below in U.S. dollars reflect the translation
into U.S. dollars based on the rate of exchange published by the Bank of Israel
on the dates in question.



QUARTERLY SHARE PRICE INFORMATION

     The following table sets forth, for each of the full financial quarters for
the two most recent full financial years and any subsequent period, the high and
low market prices of our ordinary shares on the NASDAQ Capital Market and the
Tel-Aviv Stock Exchange:

                                                 NASDAQ               TEL AVIV STOCK EXCHANGE
                                          -------------------           --------------------
                                          HIGH            LOW           HIGH             LOW
                                          ----            ---           ----             ---
                                                           (U.S. dollars)

2005
First quarter                             14.90           6.62          14.41           7.60
Second quarter                             9.49           6.60           9.37           6.86
Third quarter                              8.69           6.04           8.41           6.94
Fourth quarter                             7.34           4.56           7.05           4.93

2006
First quarter                              9.59           5.02           9.16           5.25
Second quarter                            10.84           8.21          10.88           8.55
Third quarter                             10.09           6.65          10.07           7.63
Fourth quarter                            15.24           9.70          15.26           9.85

2007
First quarter                             15.57          11.20          15.11          11.43
Second quarter                            16.99          12.74          16.69          13.05
Third quarter (through July 27)           16.70          14.13          16.61          13.84




MONTHLY SHARE PRICE INFORMATION

     The following table sets forth, for the most recent six months, the high
and low market prices of our ordinary shares on the NASDAQ Capital Market and
the Tel Aviv Stock Exchange:

                                         NASDAQ            TEL AVIV STOCK EXCHANGE
                                    ----------------         -----------------
                                    HIGH         LOW         HIGH          LOW
                                    ----         ---         ----          ---
                                                  (U.S. dollars)

January 2007                       14.39        11.70        14.26        12.09
February 2007                      14.28        11.40        14.44        11.77
March 2007                         15.57        11.20        15.11        11.43
April 2007                         14.33        12.74        14.45        13.25
May 2007                           16.99        12.95        16.69        13.05
June 2007                          15.98        13.83        16.10        14.04
July 2007 (through July 27)        16.70        14.13        16.61        13.84



                                       13

                              PLAN OF DISTRIBUTION

     We may sell the ordinary shares offered by us under this prospectus, from
time to time, in or outside of the United States, to underwriters or dealers,
through agents, directly to purchasers or through a combination of these
methods. The applicable prospectus supplement will contain specific information
relating to the terms of the offering, including:

     o    the name or names of any underwriters, dealers or agents;

     o    the purchase price of the ordinary shares;

     o    our net proceeds from the sale of the ordinary shares;

     o    any underwriting discounts and other items constituting underwriters'
          compensation; and

     o    the initial public offering price and any discounts or concessions
          allowed or re-allowed or paid to dealers.

BY UNDERWRITERS

     If underwriters are used in the sale, the ordinary shares will be acquired
by the underwriters for their own account. Underwriters may offer the ordinary
shares directly or through underwriting syndicates represented by one or more
managing underwriters. The underwriters may resell the ordinary shares in one or
more transactions, including negotiated transactions, at a fixed public offering
price, which may be changed, or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the ordinary shares will
be subject to certain conditions. The initial public offering price and any
discounts or concessions allowed or re-allowed or paid to dealers may be changed
from time to time.

BY DEALERS

     If dealers are used in the sale, unless otherwise specified in the
applicable prospectus supplement, we will sell the ordinary shares to the
dealers as principals. The dealers may then resell the ordinary shares to the
public at varying prices to be determined by the dealers at the time of resale.
The applicable prospectus supplement will contain more information about the
dealers, including the names of the dealers and the terms of our agreement with
them.

BY AGENTS AND DIRECT SALES

     We may sell the ordinary shares directly to the public, without the use of
underwriters, dealers or agents. We may also sell the ordinary shares through
agents we designate from time to time. The applicable prospectus supplement will
contain more information about the agents, including the names of the agents and
any commission we agree to pay the agents.

GENERAL INFORMATION

     Underwriters, dealers and agents that participate in the distribution of
the ordinary shares may be deemed underwriters as defined in the Securities Act
of 1933, and any discounts or commissions we pay to them and any profit made by
them on the resale of the ordinary shares may be treated as underwriting
discounts and commissions under the Securities Act of 1933. In accordance with
NASD Rules, underwriting commissions or discounts will not exceed 8%. Any
underwriters or agents will be identified and their compensation from us will be
described in the applicable prospectus supplement.


                                       14

     We may agree with the underwriters, dealers and agents to indemnify them
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or to contribute with respect to payments which the underwriters,
dealers or agents may be required to make.

     Underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for, us in the ordinary course of their
businesses.


                                       15

                          DESCRIPTION OF SHARE CAPITAL

SHARE CAPITAL

     Our authorized share capital consists of 30,000,000 ordinary shares, par
value NIS 0.02 per share. Holders of ordinary shares have one vote per share,
and are entitled to participate equally in the payment of dividends and share
distributions and, in the event of our liquidation, in the distribution of
assets after satisfaction of liabilities to creditors. No preferred shares are
currently authorized. All outstanding ordinary shares are validly issued and
fully paid. The rights of our ordinary shares may be cancelled, added to,
restricted, amended or otherwise altered with a vote of the holders of at least
75% of the outstanding ordinary shares voting at a duly convened shareholders'
meeting.

TRANSFER OF SHARES AND NOTICES

     Fully paid ordinary shares are issued in registered form and may be freely
transferred under our articles of association unless the transfer is restricted
or prohibited by another instrument. Under Israeli law and our articles of
association, each shareholder of record is entitled to receive at least 21 days'
prior notice of any shareholders' meeting. For purposes of determining the
shareholders entitled to notice and to vote at such meeting, the Board of
Directors may fix the record date, which shall be not more than forty nor less
than four days prior to the date of the meeting.

DIVIDEND AND LIQUIDATION RIGHTS

     We may declare a dividend to be paid to the holders of ordinary shares
according to their rights and interests in our profits. In the event of our
liquidation, after satisfaction of liabilities to creditors, our assets will be
distributed to the holders of ordinary shares in proportion to the nominal value
of their holdings. This right may be affected by the grant of preferential
dividend or distribution rights to the holders of a class of shares with
preferential rights that may be authorized in the future. Pursuant to Israel's
securities laws, a company registering its shares for trade on the Tel Aviv
Stock Exchange may not have more than one class of shares for a period of one
year following registration, after which it is permitted to issue preferred
shares, if the preference of those shares is limited to a preference in the
distribution of dividends and these preferred shares have not voting rights.
Under the Israeli Companies Law, the declaration of a dividend does not require
the approval of the shareholders of the company, unless the company's articles
of association require otherwise. Our articles of association provide that the
board of directors may declare and distribute interim dividends without the
approval of the shareholders, but the payment of a final dividend requires
shareholder approval.

ANNUAL AND EXTRAORDINARY GENERAL MEETINGS

     We must hold our annual general meeting of shareholders each year no later
than fifteen months from the last annual meeting, at a time and place determined
by the board of directors. Depending on the matter to be voted upon, notice of
at least 21 days or 35 days prior to the date of the meeting is required. A
special meeting may be convened by request of two directors, one quarter of the
directors in office, or by written request of one or more shareholders holding
at least 5% of our issued share capital and 1% of the voting rights or one or
more shareholders holding at least 5% of the voting rights. Shareholders
requesting a special meeting must submit their proposed resolution with their
request.

     The quorum required for a meeting of shareholders consists of at least two
shareholders present in person or by proxy who hold at least 50% of the issued
share capital. A meeting adjourned for lack of a quorum generally is adjourned
to the same day in the following week at the same time and place or any time and
place as the Chairman may determine with the consent of the holders of a
majority of the voting power represented at the meeting in person or by proxy
and voting on the question of adjournment. At the reconvened meeting, the
required quorum consists of any two members present in person or by proxy.


                                       16

VOTING RIGHTS

     Our ordinary shares do not have cumulative voting rights in the election of
directors. As a result, the holders of ordinary shares that represent more than
50% of the voting power represented at a shareholders meeting have the power to
elect all of our directors, except the outside directors whose election requires
a special majority.

     Holders of ordinary shares have one vote for each ordinary share held on
all matters submitted to a vote of shareholders. Shareholders may vote in person
or by proxy. These voting rights may be affected by the grant of any special
voting rights to the holders of a class of shares with preferential rights that
may be authorized in the future.

     Our articles of association provide that most decisions may be made by a
simple majority, although certain resolutions, referred to as special
resolutions (for example, changes to the articles of association) require
approval of at least 75% of the shares present and voting on the matter.

LIMITATIONS ON THE RIGHTS TO OWN SECURITIES

     The ownership or voting of ordinary shares by non-residents of Israel is
not restricted in any way by our articles of association or the laws of the
State of Israel, except that nationals of countries which are, or have been, in
a state of war with Israel may not be recognized as owners of ordinary shares.

ANTI-TAKEOVER PROVISIONS UNDER ISRAELI LAW

     The Israeli Companies Law provides that an acquisition of shares in a
public company must be made by means of a tender offer if as a result of the
acquisition the purchaser would hold more than 25% of the voting rights in the
company, unless there is already another shareholder of the company with 25% or
more of the voting rights. Similarly, the Israeli Companies Law provides that an
acquisition of shares in a public company must be made by means of a tender
offer if as a result of the acquisition the purchaser would hold more than 45%
of the voting rights in the company, unless there is a shareholder with 45% or
more of the voting rights in the company. These rules do not apply if the
acquisition is made by way of a merger. Regulations promulgated under the
Companies Law provide that these tender offer requirements do not apply to
companies whose shares are listed for trading outside of Israel if, according to
the law in the country in which the shares are traded, including the rules and
regulations of the stock exchange or which the shares are traded, either:

     o    there is a limitation on acquisition of any level of control of the
          company; or

     o    the acquisition of any level of control requires the purchaser to do
          so by means of a tender offer to the public.

     The Israeli Companies Law requires the parties to a proposed merger to file
a merger proposal with the Israeli Registrar of Companies, specifying certain
terms of the transaction. Each merging company's board of directors and
shareholders must approve the merger. Shares in one of the merging companies
held by the other merging company or certain of its affiliates are
disenfranchised for purposes of voting on the merger. A merging company must
inform its creditors of the proposed merger. Any creditor of a party to the
merger may seek a court order blocking the merger, if there is a reasonable
concern that the surviving company will not be able to satisfy all of the
obligations of the parties to the merger. Moreover, a merger may not be
completed until at least 50 days have passed from the time that the merger
proposal was filed with the Israeli Registrar of Companies and at least 30 days
have passed from the approval of the shareholders of each of the merging
companies.

     Finally, in general, Israeli tax law treats stock-for-stock acquisitions
less favorably than does U.S. tax law. Israeli tax law has been amended to
provide for tax deferral in specified acquisitions, including transactions where
the consideration for the sale of shares is the receipt of shares of the
acquiring company. Nevertheless, Israeli tax law may subject a shareholder who
exchanges his ordinary shares for shares in a foreign corporation to immediate
taxation or to taxation before his investment in the foreign corporation becomes
liquid.


                                       17

                           MATERIAL TAX CONSIDERATIONS

ISRAELI TAX CONSIDERATIONS

     The following is a summary of the principal Israeli tax laws applicable to
us, of the Israeli Government programs from which we benefit, and of Israeli
foreign exchange regulations. This section also contains a discussion of
material Israeli tax consequences to our shareholders who are not residents or
citizens of Israel. This summary does not discuss all aspects of Israeli tax law
that may be relevant to a particular investor in light of his or her personal
investment circumstances, or to some types of investors subject to special
treatment under Israeli law. Examples of investors subject to special treatment
under Israeli law include residents of Israel, traders in securities, or persons
who own, directly or indirectly, 10% or more of our outstanding voting capital,
all of whom are subject to special tax regimes not covered in this discussion.
Some parts of this discussion are based on new tax legislation that has not been
subject to judicial or administrative interpretation. The discussion should not
be construed as legal or professional tax advice and does not cover all possible
tax consequences.

     YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE ISRAELI AND OTHER
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY
SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY NON-ISRAELI, STATE OR LOCAL
TAXES.

GENERAL CORPORATE TAX STRUCTURE IN ISRAEL

     Israeli companies were generally subject to corporate tax at the rate of
31% of their taxable income in 2006. Pursuant to tax reform legislation that
came into effect in 2003, the corporate tax rate is to undergo further staged
reductions to 25% by the year 2010. In order to implement these reductions, the
corporate tax rate is scheduled to decline to 29% in 2007, 27% in 2008, and 26%
in 2009.

     As discussed below, however, the rate is effectively reduced for income
derived from an Approved Enterprise and Privileged Enterprise.

LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959

     EZchip's facilities in Israel have been granted Approved Enterprise status
under the Law for the Encouragement of Capital Investments, 1959, commonly
referred to as the Investment Law. The Investment Law provides that capital
investments in a production facility (or other eligible assets) may be
designated as an Approved Enterprise and Privileged Enterprise. Until recently,
the designation required advance approval from the Investment Center of the
Israel Ministry of Industry, Trade and Labor. Each certificate of approval for
an Approved Enterprise relates to a specific investment program, delineated both
by the financial scope of the investment and by the physical characteristics of
the facility or the asset.

     On April 1, 2005 an amendment to the Investment Law came into effect, in
which it revised the criteria for investments qualified to receive tax benefits.
An eligible investment program under the amendment will qualify for benefits as
a Privileged Enterprise (rather than the previous terminology of Approved
Enterprise). Among other things, the amendment provides tax benefits to both
local and foreign investors and simplifies the approval process. The amendment
does not apply to investment programs approved prior to December 31, 2004. The
new tax regime will apply to new investment programs only.

     Under the Approved/Privileged Enterprise programs, a company is eligible
for governmental grants, but may elect to receive an alternative package
comprised of tax benefits (Alternative Track). Under the alternative package, a
company's undistributed income derived from an Approved/Privileged Enterprise is
exempt from corporate tax for an initial period (two to ten years, depending on
the geographic location of the Approved/Privileged Enterprise within Israel).
The exemption begins in the first year that the company realizes taxable income
from the Approved/Privileged Enterprise.

     If a company distributes dividends from tax-exempt Approved/Privileged
Enterprise income, the company will be taxed on the otherwise exempt income at
the same corporate tax rate that applies to it.


                                       18

     Currently, EZchip has one Approved Enterprise program under the alternative
track of the Investment Law. EZchip has derived, and expects to continue to
derive, a substantial portion of its operating income from its Approved
Enterprise facilities. In addition, EZchip recently applied to the tax
authorities to qualify for benefits as a Privileged Enterprise under the
Investment Law, as amended, with 2006 as the election year for the program.
EZchip is therefore eligible for a tax exemption for a period of ten years on
undistributed Approved Enterprise income. We and EZchip intend to continue to
elect our investments in productive assets as Privileged Enterprise programs,
but we cannot assure you that we will do so or that we will be successful. We
intend to reinvest the entire amount of our tax-exempt income and not to
distribute this income as a dividend.

     The benefits available to an Approved/Privileged Enterprise are conditioned
upon terms stipulated in the Investment Law and the related regulations (which
include making specified investments in property and equipment, and financing a
percentage of these investments with share capital), and the criteria set forth
in the applicable certificate of approval. If EZchip does not fulfill these
conditions in whole or in part, the benefits can be cancelled and it may be
required to refund the amount of the benefits, linked to the Israeli consumer
price index plus interest. We believe that EZchip's Approved Enterprise program
currently operates in compliance with all applicable conditions and criteria,
but we cannot assure you that they will continue to do so.

     As a result of the amendment to the Investment Law in April 2005,
tax-exempt income generated under the provisions of the amended law will subject
us to taxes upon distribution or liquidation and we may be required to record
deferred tax liability with respect to such tax-exempt income. As of March 31,
2007, we had not generated any income under the provisions of the new law.

LAW FOR ENCOURAGEMENT OF RESEARCH AND DEVELOPMENT IN THE INDUSTRY, 1984

     Since April 2006, our research and development efforts have been financed,
in part, through grants from the Office of the Chief Scientist, or the OCS,
under our approved plans in accordance with the Israeli Law for Encouragement of
Research and Development in the Industry, 1984, or the R&D Law. Through
March 31, 2007, we had applied and received approval for grants totaling $2.0
million from the OCS. Under Israeli law and the approved plans, royalties on the
revenues derived from sales of all of our products are payable to the Israeli
government, generally at the rate of 3.0% during the first three years and 3.5%
beginning with the fourth year, up to the amount of the received grants as
adjusted for fluctuation in the U.S. dollar/NIS exchange rate. The grants also
bear interest equal to the 12-month London Interbank Offered Rate applicable to
dollar deposits that is published on the first business day of each calendar
year. Royalties are paid on our consolidated revenues.

     The government of Israel does not own proprietary rights in knowledge
developed using its funding and there is no restriction related to such funding
on the export of products manufactured using the know-how. The know-how is,
however, subject to other legal restrictions, including the obligation to
manufacture the product based on the know-how in Israel and to obtain the OCS's
consent to transfer the know-how to a third party, whether in or outside Israel.
These restrictions may impair our ability to outsource manufacturing or enter
into similar arrangements for those products or technologies and they continue
to apply even after we have paid the full amount of royalties payable for the
grants.

     The R&D Law provides that the consent of the OCS for the transfer
outside of Israel of know-how derived out of an approved plan may only be
granted under special circumstances and subject to fulfillment of certain
conditions specified in the R&D Law as follows:

     o    the grant recipient pays to the OCS a portion of the sale price paid
          in consideration for such OCS-funded know-how (according to certain
          formulas), except if the grantee receives from the transferee of the
          know-how an exclusive, irrevocable, perpetual unlimited license to
          fully utilize the know-how and all related rights;

     o    the grant recipient receives know-how from a third party in exchange
          for its OCS funded know-how; or


                                       19

     o    such transfer of OCS funded know-how arises in connection with certain
          types of cooperation in research and development activities.

     As of March 31, 2007, we had an outstanding contingent obligation to pay
royalties in the amount of approximately $2.0 million.

LAW FOR THE ENCOURAGEMENT OF INDUSTRY (TAXES), 1969

     We believe that we currently qualify as an Industrial Company within the
meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the
Industrial Encouragement Law). The Industrial Encouragement Law defines an
Industrial Company as a company that is resident in Israel and that derives at
least 90% of its income in any tax year, other than income from defense loans,
capital gains, interest and dividends, from an enterprise whose major activity
in a given tax year is industrial production.

     The following are the principal corporate tax benefits that are available
to Industrial Companies:

     o    amortization of the cost of purchased know-how and patents over an
          eight-year period for tax purposes,

     o    accelerated depreciation rates on equipment and buildings,

     o    under specified conditions, an election to file consolidated tax
          returns with related Israeli Industrial Companies, and

     o    expenses related to a public offering are deductible in equal amounts
          over three years.

     Eligibility for the benefits under the Industry Encouragement Law is not
subject to receipt of prior approval from any governmental authority. We cannot
assure you that we qualify or will continue to qualify as an Industrial Company
or that the benefits described above will be available in the future.

SPECIAL PROVISIONS RELATING TO TAXATION UNDER INFLATIONARY CONDITIONS

     We measure our taxable income in accordance with the Income Tax Law
(Inflationary Adjustments), 1985, or the Inflationary Adjustments Law, which
represents an attempt to overcome the problems presented to a traditional tax
system by an economy undergoing rapid inflation. Our results for tax purposes
are measured in terms of earning in NIS after certain adjustments for changes in
the Israeli consumer price index.

TAXATION OF NON-ISRAELI SHAREHOLDERS ON RECEIPT OF DIVIDENDS

     Under Israeli tax law, a distribution of dividends from income attributable
to an Approved/Privileged Enterprise will be subject to tax in Israel at the
rate of 15%, which is withheld and paid by the company paying the dividend, if
the dividend is distributed during the benefits period or within the following
12 years (but the 12-year limitation does not apply to a Foreign Investors
Company). Any distribution of dividends from income that is not attributable to
an Approved/Privileged Enterprise will be subject to tax in Israel at the rate
of 25%, except that dividends distributed on or after January 1, 2006 to an
individual who is deemed "a non-substantial shareholder" are subject to tax at
the rate of 20%.

     Under the United States-Israel tax treaty, the maximum tax on dividends
paid to a holder of the ordinary shares who is a United States resident is 25%.
Dividends received by a United States company that holds at least 10% of our
voting rights will be subject to withholding tax at the rate of 12.5%, provided
certain other conditions in the tax treaty are met (or at the tax rate of 15% in
respect of dividends paid from income attributable to our Approved Enterprises).

CAPITAL GAINS TAXES APPLICABLE TO NON-ISRAELI SHAREHOLDERS

     Capital gains from the sale of our ordinary shares by non-Israeli
shareholders are exempt from Israeli taxation, provided that the capital gain is
not derived from a permanent establishment in Israel. In addition, the United
States-Israel tax treaty exempts United States residents who hold less than 10%
of our voting rights, and who held less than 10% of our voting rights during the
12 months prior to a sale of their shares, from Israeli capital gains tax in
connection with such sale.


                                       20

FOREIGN EXCHANGE REGULATIONS

     Dividends, if any, paid to the holders of our ordinary shares, and any
amounts payable upon our dissolution, liquidation or winding up, as well as the
proceeds of any sale in Israel of our ordinary shares to an Israeli resident,
may be paid in non-Israeli currency. If these amounts are paid in Israeli
currency, they may be converted into freely repatriable U.S. dollar at the rate
of exchange prevailing at the time of conversion. In addition, the statutory
framework for the potential imposition of exchange controls has not been
eliminated, and may be restored at any time by administrative action.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     The following summary sets forth the material U.S. federal income tax
consequences applicable to the following persons who purchase, hold or dispose
of ordinary shares ("U.S. Shareholders"): (i) citizens or residents (as defined
for U.S. federal income tax purposes) of the United States; (ii) corporations,
or other entities taxable as corporations for U.S. federal income tax purposes,
created or organized in or under the laws of the United States or any political
subdivision thereof; (iii) estates, the income of which is subject to U. S.
federal income taxation regardless of its source; and (iv) trusts, if (a) a U.S.
court is able to exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of its substantial decisions
or (b) a valid election is in effect under applicable Treasury regulations to be
treated as a U.S. person. This discussion is based on the provisions of the U.
S. Internal Revenue Code of 1986, as amended, or the Code, U.S. Treasury
Regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as in effect as of the date hereof, and all of
which are subject to change either prospectively or retroactively. This
discussion generally considers only U.S. Shareholders that will hold the
ordinary shares as capital assets for U.S. federal income tax purposes and does
not consider (a) all aspects of U.S. federal income taxation that may be
relevant to particular U.S. Shareholders by reason of their particular
circumstances (including potential application of the alternative minimum tax),
(b) U.S. Shareholders subject to special treatment under the U.S. federal income
tax laws, such as financial institutions, insurance companies, broker-dealers
and tax-exempt organizations, (c) U.S. Shareholders owning, directly or by
attribution, 10% or more of the LanOptics' outstanding voting shares, (d) U.S.
Shareholders who hold the ordinary shares as part of a hedging, straddle or
conversion transaction, or appreciated financial position, (e) U.S. Shareholders
who acquire their ordinary shares in a compensatory transaction, (f) U.S.
Shareholders whose functional currency is not the U.S. dollar, or (g) any aspect
of state, local or non-U. S. tax law.

     If a partnership or an entity treated as a partnership for U.S. federal
income tax purposes owns ordinary shares, the U.S. federal income tax treatment
of a partner in such a partnership will generally depend upon the status of the
partner and the activities of the partnership. A partnership that owns ordinary
shares and the partners in such partnership should consult their tax advisors
about the U.S. federal income tax consequences of holding and disposing of
ordinary shares.

     THE FOLLOWING SUMMARY DOES NOT ADDRESS THE IMPACT OF A U.S. SHAREHOLDER'S
INDIVIDUAL TAX CIRCUMSTANCES. ACCORDINGLY, EACH U.S. SHAREHOLDER SHOULD CONSULT
HIS OR HER TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF AN
INVESTMENT IN THE ORDINARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE,
LOCAL OR NON-U.S. TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.

DISTRIBUTIONS PAID ON THE ORDINARY SHARES

     Subject to the discussion of the passive foreign investment company rules
below, a U.S. Shareholder generally will be required to include in gross income
as dividend income, the amount of any distributions paid in respect of the
ordinary shares (including the amount of any Israeli taxes withheld therefrom)
to the extent that such distributions are paid out of the LanOptics' current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes. Distributions in excess of such earnings and profits will be treated
first as a non-taxable return of capital reducing the U.S. Shareholder's tax
basis in the ordinary shares to the extent of the distributions, and then as
capital gain from a sale or exchange of such ordinary shares. Such dividends
will generally not qualify for the dividends received deduction available to
corporations. The amount of any cash distribution paid in NIS will equal the
U.S. dollar value of the distribution, calculated by reference to the spot
exchange rate in effect on the date of the distribution, regardless of whether
the payment is in fact converted into U.S. dollars on that day. A U.S.
Shareholder generally will recognize foreign currency gain or loss (which is
treated as ordinary income or loss from sources within the United States) upon
the subsequent disposition of NIS.


                                       21

     Subject to certain conditions and complex limitations, any Israeli tax
withheld or paid with respect to dividends on the ordinary shares will generally
be eligible for credit against a U.S. Shareholder's U.S. federal income tax
liability at such U.S. Shareholder's election. The Code provides limitations on
the amount of foreign tax credits that a U.S. Shareholder may claim, including
extensive separate computation rules under which foreign tax credits allowable
with respect to specific categories of income cannot exceed the U.S. federal
income taxes otherwise payable with respect to each such category of income.
U.S. Shareholders that do not elect to claim a foreign tax credit may instead
claim a deduction for Israeli income tax withheld or paid, but only for a year
in which such U.S. Shareholders elect to do so for all non-U.S. income taxes.
Dividends with respect to the ordinary shares will generally be classified as
foreign source "passive category income" or, in the case of certain U.S.
Shareholders "general category income" for the purpose of computing a U.S.
Shareholder's foreign tax credit limitations for U.S. foreign tax credit
purposes. Further, there are special rules for computing the foreign tax credit
limitation of a taxpayer who receives dividends subject to a reduced tax rate,
see discussion below. The rules relating to foreign tax credits are complex, and
each U.S. Shareholder should consult his or her tax advisor to determine whether
he or she would be entitled to this credit.

     Subject to certain limitations, "qualified dividend income" received by a
noncorporate U.S. Holder in tax years beginning on or before December 31, 2010
will be subject to tax at a reduced maximum tax rate of 15 percent.
Distributions taxable as dividends paid on the ordinary shares should qualify
for the 15 percent rate provided that either: (i) LanOptics is entitled to
benefits under the income tax treaty between the United States and Israel (the
"Treaty") or (ii) the ordinary shares are readily tradable on an established
securities market in the United States and certain other requirements are met.
We believe that LanOptics is entitled to benefits under the Treaty and that the
ordinary shares currently are readily tradable on an established securities
market in the United States. However, no assurance can be given that the
ordinary shares will remain readily tradable. The rate reduction does not apply
unless certain holding period requirements are satisfied. With respect to the
ordinary shares, the U.S. Holder must have held such shares for at least 61 days
during the 121-day period beginning 60 days before the ex-dividend date. The
rate reduction also does not apply to dividends received from passive foreign
investment companies, see discussion below, or in respect of certain hedged
positions or in certain other situations. The legislation enacting the reduced
tax rate contains special rules for computing the foreign tax credit limitation
of a taxpayer who receives dividends subject to the reduced tax rate. U.S.
Holders of ordinary shares should consult their own tax advisors regarding the
effect of these rules in their particular circumstances.

SALE, EXCHANGE OR OTHER DISPOSITION OF THE ORDINARY SHARES

     Subject to the discussion of the passive foreign investment company rules
below, the sale, exchange or other disposition of ordinary shares will generally
result in the recognition of capital gain or loss in an amount equal to the
difference between the amount realized on the sale or exchange and the U.S.
Shareholder's tax basis in the ordinary shares (determined in U.S. dollars).
Such gain or loss generally will be long-term capital gain or loss if the U.S.
Shareholder's holding period of the ordinary shares exceeds one year at the time
of the disposition. Gain or loss recognized by a U.S. Shareholder on a sale or
exchange of ordinary shares generally will be treated as U.S. source gain or
loss for U.S. foreign tax credit purposes. Under the Treaty, gain derived from
the sale, exchange or other disposition of ordinary shares by a holder who is a
resident of the United States for purposes of the Treaty and who sells the
ordinary shares within Israel may be treated as foreign source income for U.S.
foreign tax credit purposes.

     In the case of a cash basis U.S. Shareholder who receives NIS in connection
with the sale or disposition of ordinary shares, the amount realized will be
based on the U.S. dollar value of the NIS received with respect to the ordinary
shares as determined on the settlement date of such exchange. A U.S. Shareholder
who receives payment in NIS and converts NIS into United States dollars at a
conversion rate other than the rate in effect on the settlement date may have a
foreign currency exchange gain or loss that would be treated as ordinary income
or loss.


                                       22

     An accrual basis U.S. shareholder may elect the same treatment required of
cash basis taxpayers with respect to a sale or disposition of ordinary shares,
provided that the election is applied consistently from year to year. Such
election may not be changed without the consent of the Internal Revenue Service.
In the event that an accrual basis U.S. Shareholder does not elect to be treated
as a cash basis taxpayer (pursuant to the Treasury regulations applicable to
foreign currency transactions), such U.S. Shareholder may have a foreign
currency gain or loss for U.S. federal income tax purposes because of
differences between the U.S. dollar value of the currency received prevailing on
the trade date and the settlement date. Any such currency gain or loss would be
treated as ordinary income or loss and would be in addition to gain or loss, if
any, recognized by such U.S. Shareholder on the sale or disposition of such
ordinary shares.

PASSIVE FOREIGN INVESTMENT COMPANY STATUS

     For U.S. federal income tax purposes, a foreign corporation will be
classified as a passive foreign investment company, or a PFIC, if, for any
taxable year, either (i) 75% or more of its gross income in the taxable year is
passive income, or (ii) 50% or more of the average value of its gross assets in
the taxable year, calculated quarterly by value, produce or are held for the
production of passive income. For this purpose, passive income includes
dividends, interest, royalties, rents, annuities and the excess of gain over
losses from the disposition of assets which produce passive income.

     Although not free from doubt, based on our current and projected income,
assets and activities, we believe that we are not currently a PFIC nor do we
expect to become a PFIC in the foreseeable future. However, there can be no
assurance that we will not in fact be considered to be a PFIC for our current
taxable year or any other subsequent year because (i) the determination of
whether or not we are a PFIC will be based on the composition of our income and
assets and can be definitively made only after the end of each taxable year,
(ii) the value of our stock has been volatile historically, (iii) we own
substantial amount of assets such as cash and marketable securities which are
considered a passive asset for purposes of the PFIC rules and (iv) the legal and
financial analysis to determine whether a company is a PFIC is not entirely
clear. Therefore, there is no assurance that our belief regarding PFIC status
will not be challenged by the U.S. Internal Revenue Service, or the IRS, or that
a court will not sustain such challenge.

     If we were a PFIC for any taxable year during a U.S. Shareholder's holding
period, dividends would not qualify for the reduced maximum tax rate, discussed
above, and, if the U.S. Shareholder did not timely elect to treat the Company as
a "qualified electing fund" under Section 1295 of the Code or elect to "mark to
market" the ordinary shares (each as discussed below), the U.S. Shareholder
would be subject to special tax rules on the receipt of an "excess distribution"
on the ordinary shares (generally, a distribution to the extent it exceeds 125%
of the average annual distributions in the prior three years) and on gain from
the disposition of the ordinary shares. Under these rules, the excess
distribution and any gain would be allocated ratably over the U.S. Shareholder's
holding period in the ordinary shares, the amount allocated to the current
taxable year and any taxable year prior to the first taxable year in which we
are a PFIC would be taxed as ordinary income, the amount allocated to each of
the other taxable years would be subject to tax at the highest marginal rate in
effect for the applicable class of taxpayer for that year, and an interest
charge for the deemed deferral benefit would be imposed on the resulting tax
allocated to such other taxable years. The tax liability with respect to amounts
allocated to years prior to the year of the disposition or "excess distribution"
would not be offset by any net operating losses. Additionally, if we are deemed
to be a PFIC, a U.S. Shareholder who acquires our ordinary shares from a
decedent generally will be denied the normally available step-up in tax basis to
fair market value for the ordinary shares at the date of the death, and instead
will have a tax basis equal to the decedent's tax basis if lower than fair
market value.

     U.S. Shareholders may avoid taxation under the rules described above by
making (i) a "qualified electing fund" election for the first taxable year in
which we are a PFIC to include such U.S. Shareholder's share of our ordinary
earnings and net capital gain on a current basis or (ii) a "deemed sale"
election in a subsequent year, along with a qualified electing fund election, if
we are still classified as a PFIC. A qualified electing fund election remains in
effect until revoked by the IRS. You will not be able to make a qualified
electing fund election unless we comply with certain applicable information
reporting requirements.


                                       23

     U.S. Shareholders holding "marketable stock" (which we consider our
ordinary shares to be) in a PFIC may make an election to "mark-to-market" the
ordinary shares annually, rather than be subject to the above-described rules.
Under such election, the U.S. Shareholder will include in income each year any
excess of the fair market value of the PFIC stock at the close of each taxable
year over the U.S. Shareholder's adjusted basis in such stock. The U.S.
Shareholder will generally be allowed an ordinary deduction for the excess, if
any, of the adjusted basis of the PFIC stock over its fair market value as of
the close of the taxable year, or the amount of any net mark-to-market gains
recognized for prior taxable years, whichever is less. A U.S. Shareholder's
adjusted tax basis in the ordinary shares will generally be adjusted to reflect
the amounts included or deducted under the mark-to-market election.
Additionally, any amounts included in income pursuant to a mark-to-market
election, as well as gain on the actual sale or other disposition of the PFIC
stock, are treated as ordinary income. Ordinary loss treatment also applies to
any loss recognized on the actual sale or disposition of PFIC stock to the
extent that the amount of such loss does not exceed the net mark-to-market gains
previously included with respect to such stock. Gain or loss from the
disposition of ordinary shares (as to which a "mark-to-market" election was
made) in a year in which we are no longer a PFIC, will be capital gain or loss.
An election to mark-to-market generally will apply to the taxable year in which
the election is made and all subsequent taxable years.

     If a U.S. Shareholder makes one of these two elections, distributions and
gain generally will not be recognized ratably over the U.S. Shareholder's
holding period or be subject to an interest charge as described above. Further,
the denial of basis step-up at death described above generally will not apply. A
U.S. Shareholder making one of these two elections may experience current income
recognition, even if no cash is distributed by us.

     We will notify U.S. Shareholders in the event that we conclude that we will
be treated as a PFIC for any taxable year.

     BOTH ELECTIONS ARE SUBJECT TO A NUMBER OF SPECIFIC RULES AND REQUIREMENTS,
AND U.S. SHAREHOLDERS ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THESE ELECTIONS IF WE BECOME A PFIC.

BACKUP WITHHOLDING AND INFORMATION REPORTING

     Under certain circumstances, U.S information reporting and/or backup
withholding of U.S. federal income tax (currently at the rate of 28%) on
dividends received on, and the proceeds of the dispositions of, the ordinary
shares may apply to U.S. Shareholders. A backup withholding tax may apply to
such payments if the beneficial owner fails to provide a correct taxpayer
identification number to the paying agent and to comply with certain
certification procedures or otherwise establish an exemption from backup
withholding. Backup withholding tax will be allowed as a refund or credit
against the U.S. Shareholder's U.S. federal income tax liability, provided that
certain required information is furnished to the IRS.


                                       24

                    EXPENSES ASSOCIATED WITH THE REGISTRATION

     The expenses of the issuance and distribution of the shares being
registered hereby, other than selling discounts and commissions, are estimated
as follows:

SEC registration fee                                  $ 1,093
EDGARization and photocopying fees                      2,000
Legal fees and expenses                                25,000
Accounting fees and expenses                           10,000
Transfer agent and registrar fees and expenses          2,000
Miscellaneous expenses                                  4,907
         Total Expenses                               $45,000


                 FOREIGN EXCHANGE CONTROLS AND OTHER LIMITATIONS

     Non-residents of Israel who purchase our ordinary shares may freely convert
all amounts received in Israeli currency in respect of such ordinary shares,
whether as a dividend, liquidation distribution or as proceeds from the sale of
the ordinary shares, into freely-repatriable non-Israeli currencies at the rate
of exchange prevailing at the time of conversion (provided in each case that the
applicable Israeli income tax, if any, is paid or withheld).

     Until May 1998, Israel imposed extensive restrictions on transactions in
foreign currency. These restrictions were largely lifted in May 1998. Since
January 1, 2003, all exchange control restrictions have been eliminated
(although there are still reporting requirements for foreign currency
transactions). Legislation remains in effect, however, pursuant to which
currency controls can be imposed by administrative action at any time.

     The State of Israel does not restrict in any way the ownership or voting of
our ordinary shares by non-residents of Israel, except with respect to subjects
of countries that are in a state of war with Israel.

                                     EXPERTS

     Our consolidated financial statements as of December 31, 2006 and 2005, and
for each of the three years ended December 31, 2006 included in our Annual
Report on Form 20-F for the year ended December 31, 2006, have been audited by
Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global,
independent registered public accounting firm, as set forth in their report
thereon and incorporated herein. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.

                                  LEGAL MATTERS

     The validity of the ordinary shares offered hereunder will be passed upon
for us by Naschitz, Brandes & Co., Tel-Aviv, Israel, our Israeli counsel.

                                MATERIAL CHANGES

     Except as otherwise described in our Annual Report on Form 20-F for the
fiscal year ended December 31, 2006 and in our Reports on Form 6-K filed or
submitted under the Exchange Act and incorporated by reference herein, no
reportable material changes have occurred since December 31, 2006.


                                       25

              WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION OF
                        CERTAIN INFORMATION BY REFERENCE

     We file annual and special reports and other information with the SEC
(Commission File Number 0-20860). These filings contain important information
which does not appear in this prospectus. For further information about us, you
may read and copy these filings at the SEC's public reference room at 100 F
Street, N.E, Washington, D.C. 20549. You may obtain information on the operation
of the public reference room by calling the SEC at 1-800-SEC-0330, and may
obtain copies of our filings from the public reference room by calling (202)
551-8090.

     The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which we have filed or will file with the SEC.
We are incorporating by reference in this prospectus the documents listed below
and all amendments or supplements we may file to such documents, as well as any
future filings we may make with the SEC on Form 20-F under the Exchange Act
before the time that all of the securities offered by this prospectus have been
sold or de-registered.

     o    Our Annual Report on Form 20-F for the fiscal year ended December 31,
          2006;

     o    Our Reports on Form 6-K submitted to the SEC on May 15, 2007 and May
          30, 2007; and

     o    The description of our ordinary shares contained in Amendment No. 3 to
          our Registration Statement on Form F-1 filed with the SEC on November
          18, 1992.

     In addition, we may incorporate by reference into this prospectus our
reports on Form 6-K filed after the date of this prospectus (and before the time
that all of the securities offered by this prospectus have been sold or
de-registered) if we identify in the report that it is being incorporated by
reference in this prospectus.

     Certain statements in and portions of this prospectus update and replace
information in the above listed documents incorporated by reference. Likewise,
statements in or portions of a future document incorporated by reference in this
prospectus may update and replace statements in and portions of this prospectus
or the above listed documents.

     We shall provide you without charge, upon your written or oral request, a
copy of any of the documents incorporated by reference in this prospectus, other
than exhibits to such documents which are not specifically incorporated by
reference into such documents. Please direct your written or telephone requests
to LanOptics Ltd., 1 Hatamar Street, PO Box 527, Yokneam 20692, Israel, Attn:
Dror Israel, Chief Financial Officer, telephone number +972-4-959-6666. You may
also obtain information about us by visiting our website at www.lanoptics.com.
Information contained in our website is not part of this prospectus.

     We are an Israeli company and are a "foreign private issuer" as defined in
Rule 3b-4 under the Securities Exchange Act of 1934, or Exchange Act. As a
result, (i) our proxy solicitations are not subject to the disclosure and
procedural requirements of Regulation 14A under the Exchange Act, (ii)
transactions in our equity securities by our officers, directors and principal
shareholders are exempt from Section 16 of the Exchange Act, and (iii) until
November 4, 2002, we were not required to make, and did not make, our SEC
filings electronically, so that those filings are not available on the SEC's
website. However, since that date, we have been making all required filings with
the SEC electronically, and these filings are available over the Internet at the
SEC's website at http://www.sec.gov.

     We are not required under the Exchange Act to file periodic reports and
financial statements as frequently or as promptly as U.S. companies whose
securities are registered under the Exchange Act.

     We make available to our shareholders an annual report containing financial
statements that have been examined and reported on, with an opinion expressed
by, an independent registered public accounting firm. For periods beginning on
or after January 1, 2004, we prepare our financial statements in U.S. dollars
and in accordance with accounting principles generally accepted in the United
States. For periods prior to January 1, 2004, we prepared our financial
statements in U.S. dollars and in accordance with accounting principles
generally accepted in Israel.


                                       26

     In addition, since we are also listed on the Tel Aviv Stock Exchange, or
TASE, we submit copies of all our filings with the SEC to the Israeli Securities
Authority and TASE. Such copies can be retrieved electronically through the TASE
internet messaging system (www.maya.tase.co.il) and, in addition, with respect
to filings effected as of February 17, 2004 through the MAGNA distribution site
of the Israeli Securities Authority (www.magna.isa.gov.il).




                       ENFORCEABILITY OF CIVIL LIABILITIES

     Service of process upon us and upon our directors and officers and the
Israeli experts named in this prospectus, most of whom reside outside the United
States, may be difficult to obtain within the United States. Furthermore,
because substantially all of our assets and substantially all of our directors
and officers are located outside the United States, any judgment obtained in the
United States against us or any of our directors and officers may not be
collectible within the United States.

     We have been informed by our legal counsel in Israel, Naschitz, Brandes
& Co., that there is doubt as to the enforceability of civil liabilities
under the Securities Act and the Exchange Act in original actions instituted in
Israel. However, subject to specified time limitations, an Israeli court may
declare a foreign civil judgment enforceable if it finds that:

     o    the judgment was rendered by a court which was, according to the laws
          of the state of the court, competent to render the judgment,

     o    the judgment is no longer appealable,

     o    the obligation imposed by the judgment is enforceable according to the
          rules relating to the enforceability of judgments in Israel and the
          substance of the judgment is not contrary to public policy, and

     o    the judgment is executory in the state in which it was given.

     Even if the above conditions are satisfied, an Israeli court will not
enforce a foreign judgment if it was given in a state whose laws do not provide
for the enforcement of judgments of Israeli courts (subject to exceptional
cases) or if its enforcement is likely to prejudice the sovereignty or security
of the State of Israel.

     An Israeli court also will not declare a foreign judgment enforceable if:

     o    the judgment was obtained by fraud,

     o    there was no due process,

     o    the judgment was rendered by a court not competent to render it
          according to the laws of private international law in Israel,

     o    the judgment is at variance with another judgment that was given in
          the same matter between the same parties and which is still valid, or

     o    at the time the action was brought in the foreign court a suit in the
          same matter and between the same parties was pending before a court or
          tribunal in Israel.



                                       27

     We have irrevocably appointed Puglisi & Associates as our agent to
receive service of process in any action against us in the state and federal
courts sitting in the City of New York, Borough of Manhattan arising out of this
offering or any purchase or sale of securities in connection therewith. We have
not given consent for this agent to accept service of process in connection with
any other claim.

     If a foreign judgment is enforced by an Israeli court, it generally will be
payable in Israeli currency. Judgment creditors must bear the risk of
unfavorable exchange rates.


                                       28

                            1,600,000 ORDINARY SHARES



                                 LANOPTICS LTD.



                        ---------------------------------

                        PRELIMINARY PROSPECTUS SUPPLEMENT

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