MONROVIA, Calif. ( TheStreet) -- Shares of implantable contact lens maker STAAR Surgical ( STAA), were up early on Wednesday after STAAR announced the settlement of a lawsuit that has served as an overhang on shares of the company.

STAAR will pay $4 million to settle two suits from a deposit fund held by the court -- $3.4 million from the deposit fund will be returned to STAAR.

STAAR expects the settlement of the suit to put to rest concerns about the company's viability. STAAR noted in a recent SEC filing that its independent registered public accounting firm was expected to conclude that there remains substantial doubt regarding STAAR's ability to continue as a going concern in its review of STAAR's financial statements.

However, STAAR now believes that the settlement will resolve this doubt and that it will receive an unqualified opinion on its audited financial statements, the company said in a statement announcing the suit's settlement.

In early February, STAAR shares popped by 11% when the company was approved in Japan for sale of its Visian Implantable Collamer Lens (ICL) for the surgical treatment of myopia.

At the time of the positive news development for STAAR in Japan, Joanne Wuensch, an analyst at BMO Capital Markets, said it was important to keep in mind that STAAR only generated $18 million in revenues in the last quarter, and has not turned a profit since it went public The big-ticket item on the STAAR Surgical horizon would be approval from the FDA for its toric ICL.

STAAR shares were up more than 6.2% early on Wednesday morning. An earlier share gain of 25 cents, to the price of $3.79, was lower than the level STAAR shares reached in early February on news of the Japanese approval when shares hit an intra-day high of $3.97. Still, the gain was bringing STAAR shares near their highest closing price in recent months, at $3.87.

The BMO analyst said on Wednesday morning that the big-ticket item remains FDA approval for the toric ICL, but the end of the legal issue is a positive for STAAR largely because it removes the overhang on the stock, and because money was actually returned to STAAR.

"They're done with the litigation, they won't have to spend any more money on it, and somehow, STAAR accounted for more than they had to in the reserve fund and is now is getting money back. All good," the BMO Capital Markets analyst said. However, the resolution of the suit has not led to a change in the way the BMO analyst views STAAR's financial model.

As far as the toric ICL, the BMO analyst said the product has been delayed many times, and the best guess is still that approval will come sometime this year. "Building revenue will come from the toric ICL approval," BMO's Wuensch said.

-- Reported by Eric Rosenbaum in New York.

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