20/03/2002

MediVision presents management's report for the year ended on December 31st, 2001

Yokneam Elit, Israel, MediVision Medical Imaging Ltd. (EURO.NM: MEDV) released today (March 20, 2002) information concerning its operations and the financial results for the year ended December 31st, 2001.

The Company's sales in the year ended December 31, 2001 were U.S.$7,575 thousands, compared to U.S.$2,068 thousands sales for year ended December 31, 2000 an increase of 266%. The Pro-forma aggregated sales volume of the company and its subsidiary, amounted approximately to U.S.$4,956 thousands for the year 2000, reflecting an increase of 52% of FY2001 over the sales volume of FY2000.
The EBITDA for the year ended December 31, 2001 was U.S.$(357) thousands, an improvement of 477%, as compared with EBITDA of U.S.$(2,053) thousands for the year ended December 31, 2000.

Noam Allon, President & CEO of MediVision stated: "We are encouraged by the major progress achieved during FY2001 by MediVision and OIS, the US subsidiary. The bold increase in sales is a demonstration of the confidence of our customers in our new products and in the strength of the company. Our efforts to improve operations yielded a dramatic improvement in our gross profits. Additionaly, our agreement with Agfa opens new markets and opportunities which will enable the company to maintain growing momentum."

Highlights of the year ended December 31, 2001:

• Investment agreement with AGFA-GEVAERT N.V. - On September 25, 2001 the Company and AGFA-GEVAERT N.V. ("Agfa") signed a coopeartion and investment agreements. According to the investment agreement,Agfa will invest an aggregate Euro-link amount of approximately U.S.$3.5 million, which represents a price of EUR2.10 per share. $1 Million were already invested upon closing, and the remainder is expected to be made in two performance-linked installments over a period of approximately 12 months. The Company agreed to issue to Agfa, upon completion of second and third installments approximately 25% of the Company's issued share capital. Pursuant to Co-Development, Distribution and OEM agreement, the parties also undertook to mutually cooperate in development, promotion, marketing and sales of Digital Imaging and PACS systems for the ophthalmic market. As of the balance sheet date the amount of $1 Million has been received.

• Increase in sales volume - The sales volume for the year ended December 31, 2001 amounted to approximately U.S.$7,575 thousands, as compared to U.S.$2,068 thousands for the comparable year 2000. The company and its subsidiary have achieved a significant increase of 266% over the volume of sales of the previous year, which includes the sales of the subsidiary, Ophthalmic Imaging Systems Inc. ("OIS"), results for the four months period ended December 31, 2000.
  The Pro-forma aggregated sales volume of the company and its subsidiary, amounted approximately to U.S.$4,956 thousands for the year 2000, reflecting an increase of 52% of FY2001 over the sales volume of FY2000.

• Increase in gross profit percentage - The Company and its subsidiary have managed to significantly decrease the costs of goods sold and achieved an increase in the gross profit percentage. The Gross profit for year ended December 31, 2001 was approximately U.S.$4,586 thousands, which is 61% of sales as compared to approximately U.S.$761 thousands, which is 37% of sales for the parallel period in 2000.

• Introduction of New Products - The effort invested in R&D during FY2001 by both MediVision and OIS, have resulted in the introduction of the following new products:
  WinStation 5000 - Ultra high-resolution (2400x2048) digital imaging system for Fluorescein Angiography, Color photography and ICG imaging. Unmatched in the eye care industry, the WinStation 5000 rivals photographic film by providing unprecedented resolution and DICOM-compliance. Enhancement and analysis features helps to get the most diagnostic value from each image. The alliance with Agfa, a worldwide leader in medical imaging and Picture Archiving and Communications Systems (PACS), enables to provide fast access to images from the MD office, across town, or across the country.
  WinStation 1400 Mobile - A portable version of the WinStation 1400 system enabling physicians the ability to move between clinics with the system. WinStation 1400 is a high resolution, low-cost digital imaging system for Fluorescein Angiography and Color photography. The most popular system, offers unprecedented power, value and ease of use. This is a high-resolution digital imaging system, a compact solution for FA and color fundus imaging, and DICOM-compliant. The alliance with Agfa provides fast access to images in a DICOM format.

Information with regard to the Financial Situation For the year ending December 31, 2001

CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars (in thousands - except per share amounts)

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Company

Sales

The Company's consolidated Sales for the year ended December 31, 2001 aggregated approximately U.S.$7,575 thousands as compared to Sales of approximately U.S.$2,068 thousands for the comparable year of 2000. The increase in the volume of Sales is attributed to the consolidation of OIS, which was acquired in August 2000. During the year ended December 31, 2001 83% of the Company's Sales were in U.S.A., 9% were in Europe and 8% were to local and other markets. The company and its subsidiary have achieved a significant increase of 266% over the previous period sales volume, which includes the subsidiary company, OIS, results for the four months period ended December 31, 2000. The Pro-forma aggregated sales volume of the company and its subsidiary, amounted approximately to U.S.$4,956 for the year 2000, reflecting an increase of 52% of FY2001 over the sales volume of FY2000.
The Company has achieved significant increase in Service revenues during the year ended December 31, 2001. The revenues from Service during the year aggregated approximately to U.S.$403 thousands, an increase of 137% as compared to pro-forma service revenue of U.S.$170 thousands in the previous 12 month period.

Gross profit

For the year ended December 31, 2001 Gross Profit was approximately U.S.$4,586 thousands, which is 61% of sales revenues, as compared with gross profit of approximately U.S.$761 thousands, which was 37% for the comparable year of 2000. Such high percentage of Gross Profit in the consolidated results of 2001 represents a major improvement in the operations of OIS, whose traditional Gross Profit percentage was at the range of 30% prior to the acquisition by MediVision.

Research and Development Expenses

In accordance with International Accounting Standards (IAS), the Company does not capitalize its research and development expenses. Accordingly, statements of operations include research and development expenses. The Company's total R&D expenses for the year ended December 31, 2001 were approximately U.S.$1,061 thousands, as compared to R&D expenses of approximately U.S.$817 thousands for the comparable period of 2000. The Increase in R&D expenses for the year ended December 31, 2001 is attributed mainly to the R&D efforts made by the company in connection with the C.G.L.T. project, which is supported by the participation of the BIRD Foundation. The participation of the BIRD-F during the year ended December 31, 2001, which is included as a deduction of research and development expenses, amounted to approximately U.S.$339 thousands.

During the year ended December 30, 2000 the Company received a conditional grant from the BIRD-F of a total aggregate amount of U.S.$800 thousands, for the 24-month project duration. The grant is to be solely dedicated for the Research & Development project of a Retinal laser treatment system, to be carried out jointly by the Company and its US based subsidiary, OIS. The new device is designed to provide the physician with an accurate, efficient, safe and user-friendly tool to treat various Retinal diseases with intervention, using sophisticated laser therapy technique.

Selling and Marketing Expenses

Total net Selling and Marketing expenses for the year periods ended December 31, 2001 were approximately U.S.$2,591 thousands, which are 34% of total sales revenues, as compared to U.S.$1,273 thousands, which were 62% of total sales revenues during the previous year. Marketing expenses include expenses stemming from a worldwide marketing campaign of the Company's systems, trade shows, travel, salaries and advertising in professional publications.

General and Administrative Expenses

General and Administration constitutes the administrative and general expenses of the Company and include mainly management salaries, professional services, rental, maintenance and doubtful accounts. Total General and Administrative expenses for the year ended December 31, 2001 were approximately U.S.$2,020 thousands, which are 27% of the total sales during the year of 2001, as compared to U.S.$1,164 thousands, which were 56% of the total sales during previous year.
The Company's management has implemented a streamlining plan, in order to reduce the General and Administrative expenses, part of which are already reflected in FY2001 results. Management estimates that the G&A expenses of FY2002 will show further improvement.

Other Income, net

In accordance with International Accounting Standards (IAS), the Company includes expenses and income that occurred with connection to single unique events which are not directly related to the Company's main course of business. Total net other income for the year ended December 31, 2001 was approximately U.S.$55 thousands, attributed mainly to write-off of accounts payable related to previous years.

About MediVision

MediVision specializes in digital imaging devices for ophthalmic applications with an emphasis on diagnostics related to the eye retina. MediVision's products provide digital upgrades for a range of ophthalmic imaging systems, thus significantly enhancing imaging capability and providing its users with advanced diagnostic tools. The company's goals are to achieve significant market share and be a market leader in the ophthalmic digital imaging field.
The company owns a 73% interest in Ophthalmic Imaging Systems Inc. based in Sacramento, California, USA.

This Release contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Management of the Company as well as assumptions made by and information currently available to the Management of the Company. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks and other factors, which may be outside of the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results of outcomes may vary materially from those described herein as projected, anticipated, believed, estimated, expected or intended.

For more information, please contact:
Ariel Shenhar
MediVision Medical Imaging Ltd.
Vice President, Chief Financial Officer
Tel. ++972-4-9894884
Fax ++972-4-9894883
cel. ++972-52-821728

MediVision Medical Imaging Ltd. ) +(972) 4-989-4884
2 +(972) 4-989-4883
* P.O. Box 45, Yokneam Elit Industrial Park 20692, Israel
ariel@medivision.co.il

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