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Letters from the Chairman
June 27, 2007
Dear Shareholders:
As we are nearing the end of the fiscal year,
I am once again asked by many shareholders to publish an update as
to where our company stands.
Let me begin by saying that the last two
months have been particularly exciting, as our diversification
strategy has begun to show its value. Most notable is the
significant progress we have made in the marketing of our Oncology
solution. The ability of VisualMED to compute precise dosage for
highly toxic cancer drugs, as well as to compute lifetime cumulated
dosage, has provided a strong appeal for VisualMED in academic
oncology circles. Those of you who look at our website from time to
time will have noticed that we are beginning to implement our
complete oncology solution, VisualONCOLOGY, at the Segal Cancer
Center, a new multi-story pavilion located at the Sir Mortimer B.
Davis Jewish General Hospital in Montreal, one of the largest and
busiest hospitals in Canada.
VisualONCOLOGY is a unique tool that will
allow every patient of the Center to be included in clinical studies
without additional cost or bureaucratic overhead. For our company,
the acceptance of this type of module is extremely important. The
oncology domain has long resisted computerization given the
complexity of care delivery associated with this type of practice. A
truly virgin market, our application is ahead of the curve with
respect to the competition in this niche area. Dr. John Lister,
Chief of Oncology at Western Pennsylvania Hospital, Pittsburgh,
recently reviewed VisualONCOLOGY and commented that compared to
other available Oncology medical records products, VisualONCOLOGY is
uniquely suited for clinical trials management in that the
application documents all aspects of clinical care, as well as data
specific to clinical investigation."
There are more than 600 major stand-alone and
hospital-based oncology centers in North America, and we think we
could rapidly attain a 10% market share, as there are almost no
competing products that can deliver the rich functionality we offer
in this particular clinical area. This could represent between $3
and $5 million in annual cash flow. It is quick to implement and
very inexpensive for us to maintain. In fact, we are already
currently in discussion with 3 additional oncology practices - two
private and one hospital-affiliated.
Another feature of our diversification has
been the tremendous interest generated by Medical.MD Inc.’s launch
of the web-based version of the VisualMED interactive Electronic
Medical Record. At the outset, it was meant as a personal health
management tool for the internet community on a subscription basis.
It has rapidly become clear that the concept has gained significant
traction in both the corporate and medical world. A few world
corporations who bear much of the cost of healthcare for their
employees saw in the personal health record a tool to help improve
both medical and cost performance. Also surprising was the readiness
with which networks who service the physician community engage in
pre-purchasing of subscription for resale to patients through their
physician.
Currently, negotiations are ongoing with a
large European corporation and with one provincial jurisdiction in
Canada, which if successful, would lead to an instant critical mass
of more than 1.1 million subscribers.
For corporate and government subscribers, the
decision to implement a subscriber-based medical record involves no
infrastructure at the jurisdictional or corporate level, no
development cost for the client, and no implementation per se, but
simply an annual subscription fee ranging between 29 € and 39 € per
subscriber. This limited opportunity alone could bring in close to
7,000,000 Euros in recurring revenue for our company at little
cost.
Of the approximately $ 1.9 million in revenue
that we expect to recognize in this fiscal year more than 80% will
come from either Oncology or the internet business. These are based
on revenue models that are more efficient than the hospital model
with its long sales cycle and extended period from contract signing
to revenue recognition. Through diversification we can accelerate
the shift from deficit financing to funding operations from revenue
stream.
Meanwhile we continue managing a sales funnel
which, although slow to mature, is nevertheless maturing in such
ways that we still expect signing new deals in the next few months.
To date, this year we have signed 2 contracts – one for an extension
of our inpatient application at our Battle Creek site to include
outpatient clinics and the other for a first implementation of
VisualDENTISTRY. We are on the cusp of signing a third contract, and
are “a finalist” in selection processes in hospitals in Iowa, Ohio,
and Maine that will be concluded over the summer. Our Italian
initiative, which many of our European shareholders watch closely,
is progressing and we have made up for the time lost last year as a
result of a change of government.
To close in a vein of optimism, I would like
to bring to your attention that a recent issue of Fortune magazine,
a leading American business publication, includes our business
category - medical information systems - as one of the six best
sectors for new investment going forward, in its special investment
issue of this month.
I conclude this Chairman’s letter on a more
positive note than my last letter as we have achieved some of our
financial milestones and see positive new market development in the
year to come.
Thank you for your support and for your
attention
Gerard Dab, Chairman and CEO
For more information on the VisualMED System, click
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