This letter, explaining recent developments at Visualmed, was send yesterday by C.E.O. Gerard Dab

March 13th. 2011


Dear Sir
In response to your questions and that of some of our fellow shareholders, let me state the following:

We have just posted our results for 2010, and the first 6 months for fiscal 2011 will follow in the next two days. It is clear that the company has continued to make significant progress over the course of the year. We have continued to compress expenses and limit losses to a minimum. Thanks to this conservative policy, we have achieved our main objective to continue to own and control 100% of our $50 million plus intellectual property, which remains unencumbered and free of all liens even after the difficulties encountered in the last few years.

We have many new signed licensing agreements with private clinics but most of these will not be reflected in GAAP revenues until later in the year. We have also adopted a series of radical measures and innovations in order to remain well positioned for the coming transformation of healthcare delivery in the US. These include an upgrade to a more flexible platform, an innovative product line for American drug stores and for the first time we will be in a position to offer physicians a free app at almost no cost to us.

We continue to attract considerable attention from both industry players as well as from institutional investors. We have entered into agreements that would see significant capital injection into the company, at a valuation level that is higher than the current price of the stock. Our market appeal remains strong in view of the massive undertaking that will be required to reform and modernize the crumbling healthcare industry in the US. Conventional wisdom is that this cannot be achieved without automation and smart systems like ours.

This has brought new scrutiny by various parties looking at the company and we have been advised to reduce our current debt load in order to be in line with post crisis concerns over debt in the US. In the second quarter of 2011, before the completion of the Ride/VisualMED private placement memorandum, we had to bite the bullet and settle most of the company’s debt load by converting debt to equity, most of which will remained restricted.

Our agreement with Ride Empire, as documented by the public filing of a private placement memorandum in December, calls for issuance of convertible loans of up to a maximum of $53 million in exchange for a maximum dilution of 40% of the company in the form of restricted shares.
I believe that 2010 saw the transformation of the business from a science company, albeit a brilliant one, to a more prosaic organization, one that can adjust product offerings to actual market conditions. We are focusing more on what doctors want and not what we think they need.

We are expanding our offerings in cooperation with our affiliated companies. One of the most important is the development of a free-standing platform for general practitioners that will be available online and will allow them to track basic patient care in a way that will save them a significant amount of time and positively impact their bottom line.

This is a turning point for the company. We will be able to offer a free application as a genuine loss-leader, in order to rapidly augment the number of our registered users. This has been rendered possible by transposing applications on some of the newer convergence platforms, where we can recruit new users at practically zero installation cost.

At the other end of the spectrum, some of our system-wide complex applications for major hospital environments continue to be developed with the support of major institutions such as the Segal Cancer Center and Plexo Inc. We have undertaken the certification process for meaningful use, as defined by the Department of Health and Human Services in the United States, even though the rules continue to be less than clear.

In fact the regulatory establishment as well as medical organizations have yet to clarify in real terms how and when doctors will be reimbursed for modernizing their practices. At the recent HIMSS conference, there was much conflicting information, and the general mood from our prospective clients was to wait and see. This explains in part our lower revenue figure for 2010.

I fully realize that the lesser revenue figure for 2010 will disappoint some investors. It should be noted that after years of hemorrhaging red ink, our number one mission remains to maintain the integrity of the company and exclusive ownership of our intellectual property.

The Quarterly Reports for Q1 and Q2 2011 will continue to show modest revenues, but will explain in more detail the nature of some of the financing agreements that we have entered into.

As we move along in 2011, some of the investments that we are contemplating demonstrate once again that there is genuine shareholder value accrued in the company, and strong interest in the company’s potential once healthcare reform gets underway.

Hoping this note provides additional perspective, I remain

Yours Truly

Gerard Dab
Chairman and CEO