SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

                          CARTER LEDYARD & MILBURN LLP
                                Counselors at Law

                                  2 Wall Street
                             New York, NY 10005-2072       1401 Eye Street, N.W.
                                                            Washington, DC 20005
    Steven J. Glusband                 o                       (202) 898-1515
          Partner                                                     o
             o                Tel (212) 732-3200            570 Lexington Avenue
 Direct Dial: 212-238-8605    Fax (212) 732-3232             New York, NY 10022
 E-mail: glusband@clm.com                                      (212) 371-2720

                               September 26, 2005

Mr. Stephen G. Krikorian
Branch Chief - Accounting
Division of Corporation Finance
Securities and Exchange Commission
100 F Street,  N.E.
Washington, D.C. 20549

                  Re:     LanOptics Ltd.
                          Form 20-F for the Fiscal Year Ended December 31, 2004
                          File No. 0-20860
                          ----------------

Dear Mr. Krikorian:

     On behalf of our client, LanOptics Ltd. (the "Company"),  we are submitting
this letter in response to the written  comments of the Staff of the  Securities
and  Exchange  Commission  (the  "Staff"),  in a letter to Mr.  Meir  D.Burstin,
Chairman of the Board of the Company,  dated  September 6, 2005, with respect to
the  Company's  Form 20-F for the fiscal year ended  December 31, 2004.  We have
repeated  your  numbered  comments  below and have  provided a response  to each
comment.

Form 20-F for the Fiscal Year Ended December 31, 2004
-----------------------------------------------------
Controls and Procedures, Page 71
--------------------------------

1.   We note your  statements  in the third  paragraph  regarding  the  inherent
     limitations of internal control systems. You should state clearly, if true,
     that yours  disclosure  controls  and  procedures  are  designed to provide
     reasonable  assurance of achieving their  objectives.  In the  alternative,
     remove the reference to the level of assurance of your disclosure  controls
     and procedures.  Please refer to Section II.F.4 of Management's  Reports on
     Internal Control Over Financial  Reporting and  Certification of Disclosure
     in Exchange Act Periodic Reports, SEC Release No. 33-8238.

     The Company  believes  that its  disclosure  controls  and  procedures  are
designed to provide  reasonable  assurance of achieving their objective and will
revise the  disclosure in its future annual reports in response to this comment.
The Company seeks  permission  to provide this updated  disclosure in its annual
report for the fiscal year ending December 31, 2005.

<PAGE>

Mr. Stephen G.  Krikorian

Notes to the Consolidated Financial Statements
----------------------------------------------
Note 2 : Significant Accounting Policies
----------------------------------------
Note 2j - Redeemable Preferred shares in a subsidiary and Preferred shares in a
-------------------------------------------------------------------------------
subsidiary, page F-12
---------------------

2.   With regard to the redeemable preferred shares in EZchip,

     a.   Tell us how you are  accounting  for the  accretion to the  redemption
          value, including the amounts recorded in each period presented.

     The Staff is advised that the Company  accounted  for the  accretion to the
redemption  value (the  accrued  and the unpaid  annual 6% coupon  interest)  in
accordance with ASR 268 as an annual addition to the original  issuance price of
EZchip's  Series C  Redeemable  Preferred  Shares (the  "Series C Shares").  The
Company  credited  the  Series C Shares in a  "Redeemable  Preferred  Shares and
Warrant issued By Subsidiary" account (as presented in the financial statements)
and debited financial expenses.  The amounts recorded are presented in a summary
table included in the response to comment 2b below.

     b.   Provide a  roll-forward  of the related  balances and a description of
          how  the  amounts  recorded  were  computed,   including  the  initial
          valuation of the shares in March of 2003.

     The Staff is advised  that during  March  2003,  EZchip  issued  16,542,267
Series C Shares at a price per share of $0.8161 receiving total consideration of
$13.5  million  (the "C1  Round").  Of such amount,  the Company  invested  $2.3
million in  consideration of receiving  2,818,312 Series C Shares.  During March
2004,  EZchip issued an additional  9,802,825  Series C Shares at the same price
per share receiving total  consideration of $8 million (the "C2 Round"). Of such
amount,  the  Company  invested  $5.3  million  in  consideration  of  receiving
6,564,274 Series C Shares.

     The  holders of the Series C Shares may request  redemption  of such shares
after four  years.  The Series C Shares  will be  redeemed  at the higher of the
original  investment amount plus annual 6% accrued interest or the fair value of
the shares.  As  discussed  in the  response  to comment 2a above,  the Series C
Shares were recorded at their issuance price (less issuance expenses), while the
accrued  and  the  unpaid  annual  6%  coupon  interest  has  been   accumulated
periodically, as follows:

                                        2

<PAGE>

Mr. Stephen G.  Krikorian

---------------- --------------------------  ----------------------------------
    Period       Description                       Investment by Minority
                                                  (third parties), net of
                                                      issuance expenses
---------------- --------------------------  ----------------- ----------------
                                                 C1 Round         C2 Round
---------------- --------------------------  ----------------------------------
                                                        U.S Dollars
---------------- --------------------------  ----------------------------------
 March 2003       Minority Interests in C1    $10,927,000(1)          -
                 Round (net of issuance
                 expenses)
---------------- --------------------------  ---------------- -----------------
April -          Accretion of Interest                               -
December 2003                                  504,000(2)
---------------- --------------------------  ---------------- -----------------
Redeemable                                     11,431,000(*)         -
Shares in
Subsidiary as
of December
31, 2003
---------------- --------------------------  ---------------- -----------------
March 2004       Minority Interests in C2           -          $2,562,953(3)
                 Round (net of issuance
                 expenses)
---------------- --------------------------  ---------------- -----------------
March -          Accretion of Interest          672,000(4)         132,150(5)
December 2004
---------------- --------------------------  ---------------- ------------------
Redeemable                                             14,798,103(*)
Shares in
Subsidiary as
of December
31, 2004
---------------- --------------------------  ----------------------------------

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

*    In  the  financial  statements  as of  December  31,  2003  and  2004,  the
     "Redeemable  Preferred  Shares and Warrant  issued By  Subsidiary"  account
     included   additional   amounts  of  $176   thousand  and  $147   thousand,
     respectively,  which  represents the warrants issued by EZchip (See note 11
     to the financial statements).

(1)  $0.81609 * 13,723,955  shares - $273,000  issuance  expenses =  $10,927,000
     investment
(2)  $0.81609 * 13,723,955 shares * 0.06 * 3/4 = $504,000 accretion of interest
(3)  $0.81609  *  3,238,551  shares  -  $80,000  issuance  expenses=  $2,562,953
     investment
(4)  $0.81609 * 13,723,955 shares * 0.06 = $672,000 accretion of interest
(5)  $0.81609 * 3,238,551shares * 0.06 * 10/12= $132,150 accretion of interest

                                        3

<PAGE>

Mr. Stephen G.  Krikorian

     c.   Tell us the fair value of the shares as of  December  31, 2004 and how
          this value was determined.

     The Staff is hereby  advised that the Company  believes that the fair value
of the Series C Shares as of December  31, 2004  approximates  the fair value of
such  Series C  Shares  as  reflected  in the  three  closings  of the  Series C
financing  rounds in March 2003,  March 2004 and July 2005.  The price per share
was kept constant during the three periods.

     d.   Provide  us any  additional  information  necessary  surrounding  your
          subsidiary to support your  accounting  for its  preferred  shares and
          refer  to the  relevant  literature  that  supports  your  accounting.
          Address in your response the option you gave to the Major Shareholders
          to exchange their shares in EZchip for Ordinary shares of LanOptics.

     The  Staff is  hereby  advised  that  since  the  Series C Shares  are only
redeemable  at the  election of the holders of a majority of the Series C Shares
and that they may be converted  into EZchip's  ordinary  shares at any time, the
Series C Shares are not mandatory  redeemable  shares  according to SFAS 150 and
are not considered as a liability under SFAF 150.

     According  to ASR 268 all  equity  securities  that are  redeemable  at the
option of the  holder,  or upon the  occurrence  of an event  that is not solely
within  the  control of the issuer  and that are not  otherwise  required  to be
classified as  liabilities  by SFAS 150 should be classified  outside  permanent
equity, and should be normally  presented between  liabilities and shareholder's
equity  as a  "mezzanine  account"  (regardless  of the  likelihood  that  those
circumstances will arise).  Therefore,  the Company accounted for the net amount
that was  invested in EZchip's  Series C Shares by third  parties as  redeemable
preferred shares in a subsidiary as a mezzanine account according to ASR 268.

     The initial  carrying amount of redeemable  preferred  shares is their fair
value at the date of issue  (which is the amount  invested)  and such  amount is
adjusted to equal the redemption amount at the end of each reporting date.

     Please also see Topic 5-h question 3, which evaluated whether a gain may be
recognized  for issuance of subsidiary  stock,  according to which a gain should
not be recognized  before  exercise or conversion into common stock of preferred
shares issued by a subsidiary.

     As for the  option  that was given to the major  shareholders  to  exchange
their shares in EZchip for  ordinary  shares of  Lanoptics,  please refer to the
response to comment 3, below.

Note 3 - Investment in EZchip, page F-21
----------------------------------------

3.   Tell us more about the Swap  Options you granted to the Major  Shareholders
     in May 2003,  which  allows  them to  exchange  their  shares in EZchip for
     Ordinary shares of LanOptics. Include in your response the business reasons
     for  granting  the  Swap  Options  and the  underlying  formula  that  will
     determine the exchange  ratio.  Explain your accounting for the Swap Option
     at issuance (May 2003) and

                                       4

<PAGE>

Mr. Stephen G.  Krikorian

     the subsequent  interim  periods,  including  upon  exercise.  Refer to the
     authoritative  literature  that supports your  accounting,  including  your
     consideration  of EITF  00-19.  Tell us whether  the  exchange  transaction
     completed  in June  2005 was  completed  under the  provisions  of the Swap
     Option and if so, discuss the exchange ratio and the respective accounting.

     The  Staff is  advised  that as part of the  Series C Shares  funding  that
occurred in March 2003,  LanOptics  executed an agreement (the  "Exchange  Right
Agreement") with four major EZchip  shareholders (the "Major  Shareholders") who
hold 41.4% of EZchip's shares (on an "as converted basis").  The Company offered
these EZchip  shareholders  the option to exchange their EZchip preferred shares
for ordinary  shares of LanOptics ("the Swap Option" or "Exchange  Right").  The
business reasons for granting the Swap Option were:

     o    Attain  Absolute  Control.   LanOptics'  business  currently  consists
          exclusively  of the  business of EZchip,  an Israeli  company  that is
          engaged in the  development of high  performance  network  processors.
          Because  of this,  the value of  LanOptics  derives  from the value of
          EZchip. Over the last few years,  LanOptics has taken various steps to
          maintain its control over EZchip and has publicly indicated its desire
          to increase its ownership  interest in EZchip to 100%.  Increasing the
          ownership percentage of EZchip held by the Company should increase the
          value  of  LanOptics,  and may  result  in  greater  consideration  to
          LanOptics'  shareholders  over the  long-term in a future  transaction
          involving a merger or acquisition of EZchip.

     o    Unifying the Companies.  The Company  believes that it is desirable to
          rationalize  the  structure  of  LanOptics  and EZchip by unifying the
          shareholdings in the two companies. A unification of the shareholdings
          would allow various efficiencies in the operation of the businesses.

     o    No  Economic  Change  for  the  Shareholders.  Despite  the  resulting
          dilution in each LanOptics  shareholder's  percentage  ownership,  the
          economic  interest  of  each  LanOptics   shareholder   should  remain
          unchanged.   This  is  because  the  exchange  rate  mechanism   fully
          compensates  for the dilution in LanOptics'  shareholders'  percentage
          ownership by the increased percentage that LanOptics holds in EZchip.

     As a first step  toward  unifying  LanOptics  and EZchip,  in August  2002,
LanOptics  increased  its  ownership  interest  in EZchip  from 57% to 66% in an
exchange  transaction  with four  entities  affiliated  with Apax  Partners.  As
mentioned above, in early March 2003,  EZchip and several  investors,  including
the Company and other existing investors, entered into definitive agreements for
a new financing round involving the issuance of EZchip Series C Shares for total
proceeds  to  EZchip  of up to  $21.5  million.  The  Company  indicated  to the
investors in this  financing  round that it would  ultimately  be  interested in
acquiring their shares in EZchip on a basis similar to that in the Apax Partners
transaction.  The Major  Shareholders  and the Company  reached an  agreement in
principle concerning exchange rights that would follow the Apax Partners model.

                                        5

<PAGE>

Mr. Stephen G.  Krikorian

     In the proxy material for an extraordinary meeting of shareholders that was
held on April 15, 2003, the Company's shareholders were notified of the proposed
exchange and that the exchange  ratio would be calculated  assuming the exchange
of all the  shares of  EZchip  (on a  fully-diluted  basis)  into  shares of the
Company  (on a  fully-diluted  basis)  and  that  the  exchange  ratio  would be
identical for all classes and series of EZchip shares. Such exchange ratio would
of course be  subject  to  adjustment  in the event of  changes  in the  capital
structure of either  LanOptics or EZchip such as stock splits,  reverse  splits,
stock dividends and the like.

     On April 15, 2003, the  shareholders of Lanoptics  approved a resolution at
the  extraordinar