26/11/2002

MediVision presents management's report for the period ended on September 30, 2002

Sales of the third quarter increased by 59% compared to the parallel period of 2001

Yokneam Elit, Israel, MediVision Medical Imaging Ltd. (EURO.NM: MEDV) released today (November 26, 2002) information concerning its operations and the financial results for the nine and three months period ended September 30th, 2002.

The company and its subsidiary increased the sales of the Third quarter and the nine month period of 2002 by 59% for the quarter and 32% for the nine months results, compared to the parallel periods of 2001 and reached a record-high nine months period sales of U.S.$6,687. The Company maintained a high level of Gross profit - 59%. The EBITDA for the nine and three months periods ended September 30, 2002 were U.S.$309 thousands and U.S.$126 thousands respectively, as compared with EBITDA of U.S.$(443) thousands and U.S.$(180) thousands for the comparable periods ended September 30, 2001.

Highlights of the Period ended September 30, 2002:

AGFA-GEVAERT N.V. investment in MediVision - Further to the Investment agreement signed with AGFA GEVAERT N.V. ("Agfa"), the Company signed on April 4, 2002 an addendum according to which the Company received a second investment in the amount of $1 million in consideration of approximately 7.4% of the Company's issued share capital, representing a price of Euro 2.1 per share.
Subsequent to balance sheet date on October 31, 2002 the Company and Agfa have singed a second addendum according to which the Company recieved an additional amount of U.S.$500 thousands in cosidiration for approximatly 3.3% of the Company's issued share capital, also representing the same price of Euro 2.1 per share. According to the agreement and the two addendums to it, the Company will receive an additional amount of U.S.$500 thousands when it achieves certain milestones and if certain terms and conditions are met. An additional amount of $500 thousands shall be postponed to a later date to be mutually agreed upon.

Increase in sales volume - The Company's sales for the nine and three months periods ended September 30, 2002 were U.S.$6,687 thousands and U.S.$2,270 thousands respectively, compared to U.S.$5,062 thousands and U.S.$1,423 thousands sales for parallel periods in 2001, an increase of 59% and 32% respectively.

The on going increase in the sales volume is a direct result of the increased investment in the sales operations, to which end the company and its subsidiary have increased the number of sales people and sales support team by 5 persons. In addition this very significant increase demonstrates the continued confidence of the customers in Company's products and technology.

Decrease in operating expenses - From the beginning of FY2002, the Company and it's subsidiary have managed to maintain the same level of operating expenses which stand on approximately U.S.$3,927 thousands for the nine months period of 2002, as compared with approximately U.S.$3,910 thousands for the comparable period of 2001.
Examining operating expenses relative to the sales volumereveals a significant expense cut, from 77% and 83% in the comparable nine and three months periods of 2001 down to 59% and 58% in the nine and three months for the reported periods. This cut clearly illustrates the success of the management in implementing the streamlining plan which commenced in the second part of 2001.

FAST 50 Technology contest - The 2002 Israeli Fast 50 program ranks the Israeli technology companies upon their three year percentage growth in revenue between 1999 and 2001.The contest is held by Deloitte & Touche accounting firm in Israel. This program is also conducted in the US, Europe, South Africa, Hong Kong, China and Japan.
The Company was awarded the second place in the field of Medical Devices, second place for public companies and was over all ranked at the 11th place, out of 50 ranked companies.

Information with regard to the Financial Situation For the period ending September 30, 2002

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 consolidated Sales for the nine and three months periods ended September 30, 2002 aggregated approximately to U.S. $6,687 thousands and U.S.$2,270 thousands as compared to Sales of approximately U.S.$5,062 thousands and U.S.$1,423 thousands for the comparable periods in the year of 2001. During the nine months period ended September 30, 2002 88% of the Company's Sales were in U.S.A., 10% were in Europe and 2% were to domestic and other markets. The company and its subsidiary have achieved an increase of approximately 32% over the previous nine months period sales volume. The Company also achieved a significant increase in Service revenues during the nine and three months period ended September 30, 2002 as compared to the parallel periods in 2001. The revenues from Service aggregated to approximately U.S.$551 thousands and U.S.$210 thousands in 2002 as compared with U.S.$418 thousands and U.S.$184 thousands in 2001 respectively, reflecting an increase of 32% for the nine months period as compared with the parallel period last year.

Gross profit

Gross profit for the nine and three months periods ended September 30, 2002 was approximately U.S.$3,977 thousands and U.S.$1,352 thousands, which are 59% and 60% of sales revenues, as compared with gross profit of approximately U.S.$3,175 thousands and U.S.$936 thousands, which were 63% and 66% for the comparable periods in the year of 2001. The deviation in the Gross profit percentage between the three quarters of 2001 and the current reported quarters is due to product mix, which was balanced in the last quarter of 2001 thus averaging the Gross profit for the entire year 2001 on 60%.

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 nine and three months periods ended September 30, 2002 were approximately U.S.$843 thousands and U.S.$282 thousands, as compared to R&D expenses of approximately U.S.$735 thousands and U.S.$221 thousands for the comparable period of 2001. The Increase in R&D expenses for the period ended September 30, 2002 is attributed mainly to the R&D efforts made in conjunction with integration between MediVision products and AGFA products. The R&D efforts with regards to the integration with AGFA products has resulted in the completion of the first phase of that integration. The companies have jointly placed two Beta-installations in luminary sites in order to test clients' satisfaction and to obtain inputs, which will guide the remaining R&D efforts.
The participation of the BIRD-F during the nine months period ended September 30, 2002, which is included as a deduction of research and development expenses, amounted to approximately U.S.$280 thousands.

Selling and Marketing Expenses

Total Selling and Marketing expenses for the nine and three months periods ended September 30, 2002 were approximately U.S.$1,981 thousands and U.S.$660 thousands, which are 30% and 29% of total sales revenues, as compared to U.S.$2,064 thousands and U.S.$560 thousands, which were 41% and 39% of total sales revenues during the parallel periods in previous year. The significant decrease in the relative portion of Selling and Marketing expenses from the Sales volume is attributed to the increase in sales and ongoing efforts made by the Company in order to reduce expenses and to further increase the efficiency of its sales activity. This dramatic increase in the effectiveness of the sales organization, demonstrates the success of the management to implement the streamlining plan, which started in the second part of 2001. Marketing expenses include expenses stemming from a marketing campaigns, trade shows, advertising in professional publications, travel, salaries and commissions.

General and Administrative Expenses

General and Administration expenses include mainly management salaries, professional services, rental, maintenance and various provisions. Total General and Administrative expenses for the nine and three months periods ended September 30, 2002 were approximately U.S.$1,383 thousands and U.S.$480 thousands, which are 21% and 21% of the total sales, as compared to U.S.$1,416 thousands and U.S.$457 thousands, which were 28% and 32% of the total sales during parallel period in previous year. The decrease in General and administrative expenses further illustrates the success of the company in the implementation of a company wide cost containment plan.

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

P.O. Box 45, Yokneam Elit Industrial Park 20692, Israel

ariel@medivision-ois.com

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