line and customer base, as well as significantly augment our long-term revenue and earnings power.”

Conference Call

IRIDEX management will conduct a conference call today at 2:00 p.m. (Pacific Time) to discuss its first quarter 2006 results and recent corporate developments. Interested parties may access the live conference call via telephone by dialing 866-356-4281 for domestic participants or 617-597-5395 for international participants. The passcode is 89534048. Interested parties may also visit the Company’s website at www.iridex.com. A telephone replay will be available beginning on May 15, 2006 through May 22, 2006 by dialing 888-286-8010 for domestic participants or 617-801-6888 for international participants. The passcode is 12628609. In addition, an archived version of the webcast will be available on May 15, 2006 on the Company’s website at www.iridex.com.

About IRIDEX

IRIDEX Corporation is a leading worldwide provider of therapeutic based laser systems and delivery devices used to treat eye diseases in ophthalmology and skin conditions in dermatology (also referred to as aesthetics). IRIDEX products are sold in the United States through a direct sales force and internationally through a network of independent distributors into more than 100 countries. For further information, visit the Company’s website at www.iridex.com.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Act of 1934, as amended, relating to the Company’s growth strategy and prospects, revenues, gross margins, earnings, potential acquisitions and new product releases. Actual results could differ materially and adversely from those projected in the forward- looking statements based on, among other things, the actual order and shipment rate for the Company’s ophthalmology and dermatology product lines, the rate of sales to OEM customers, the rate of growth in sales of disposables and services, the rate of introduction and market acceptance of the Company’s products, and the impact of any continuing weakness and uncertainties related to general economic conditions or weakness in overall demand in the Company’s markets, especially with regard to the Company’s dermatology products which are typically used for elective procedures that can be deferred. Additional risks and uncertainties to which the Company are subject may include, but may not necessarily be limited to, the amount of orders that the Company receives and ships, dependence on international sales and the Company’s network of independent distributors, the risks associated with bringing new products to market, and the results of clinical trials and competition in our markets, as well as the risks associated with a competitive market for management talent and the risks inherent with identifying, negotiating and integrating strategic acquisitions of complementary businesses, products or

technologies. Please see a detailed description of these risks contained in our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Securities and Exchange Commission. Forward- looking statements contained in this announcement are made as of this date and will not be updated.

(1)

Proforma earnings per diluted share excluding impact of SFAS 123(R) is not a measurement determined in accordance with accounting principles generally accepted in the United States. IRIDEX believes its calculation of earnings per diluted share excluding impact of SFAS 123(R) in this press release is a useful measure to investors of the Company’s ongoing performance because it provides comparability to periods prior to the adoption of SFAS 123(R) and disclosures of its operations on the same basis as that used by management. Earnings per diluted share excluding impact of SFAS 123(R) should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the item excluded from it is a significant component in understanding and assessing financial performance.

Excluding the effect of SFAS 123(R), the Company recorded a proforma net loss of $49,000 in the first quarter of 2006 compared with a loss of $20,000 in the year-ago period and a proforma net loss per share was $0.01 in the first quarter of 2006 compared with a net loss per share of $0.00 in the corresponding quarter of 2005. Earnings per diluted share excluding impact of SFAS 123(R) is not a measurement determined in accordance with accounting principles generally accepted in the United States. The difference between reported results and proforma results arises from the pre-tax expense of SFAS 123(R) of $457,000. IRIDEX believes that its presentation of financial information excluding the impact of SFAS 123(R) in this press release is a useful measure of the Company’s ongoing performance because it provides comparability to periods prior to the adoption of SFAS 123(R) and presents information related to the results of operations on the same basis as that used by management. Financial information excluding the impact of SFAS 123(R) should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the item excluded from it calculation is a significant component in understanding and assessing financial performance. The difference between reported gross margin and proforma gross margin arises from the pre-tax expense of SFAS 123(R) of $35,000, recorded as component of cost of sales.

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

		April 1,				December 31,
		2006				2005
		(unaudited)
Assets
Current Assets:
Cash and cash equivalents		$	3,256			$	12,655
Available-for-sale securities			18,166				8,779
Accounts receivable, net			6,247				6,589
Inventories			8,687				8,594
Prepaids and other current assets			1,090				885
Current deferred income taxes			1,415				1,415
Total current assets			38,861				38,917
Long term portion of available-for-sale securities			—				—
Property and equipment, net			1,063				1,114
Deferred income taxes			1,073				1,073
Total assets		$	40,997			$	41,104
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable		$	1,109			$	1,094
Accrued expenses			3,312				4,421
Deferred revenue			995				1,072
Total liabilities			5,416				6,587
Stockholders’ Equity:
Common stock			78				76
Additional paid-in capital			27,643				26,334
Accumulated other comprehensive loss			(10	)			(27	)
Treasury stock			(430	)			(430	)
Retained earnings			8,300				8,564
Total stockholders’ equity			35,581				34,517
Total liabilities and stockholders’ equity		$	40,997			$	41,104

IRIDEX Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

		Three Months Ended
		April 1,				April 2,
		2006				2005
Sales		$	9,010			$	8,145
Cost of sales			4,665				4,467
Gross profit			4,345				3,678
Operating expenses:
Research and development			1,121				1,039
Sales, general and administrative			3,941				2,797
Total operating expenses			5,062				3,836
Income (loss) from operations			(717	)			(158	)
Interest and other income, net			179				126
Income (loss) before income taxes			(538	)			(32	)
Benefit from (provision for) income taxes			274				12
Net income (loss)			($264	)			($20	)
Net income (loss) per common share — basic			($0.03	)			($0.00	)
Net income (loss) per common share — diluted			($0.03	)			($0.00	)
Shares used in per common share basic calculations			7,587				7,317
Shares used in per common share diluted calculations			7,587				7,317