United States Securities and Exchange CommissionWashington, D.C. 20549

FORM 10-QSB

|  |                                                                                            
|- | -------------------------------------------------------------------------------------------
|x | QUARTERLY REPORT PURSUANT
  TO SECTION 13 OR 15(D) OF THE
  SECURITIES EXCHANGE ACT OF 1934
|  | For the quarterly period
  ended  September 30th 2006                                     
|  |                                                                                            
|o | TRANSITION REPORT PURSUANT
  TO SECTION 13 OR 15(D) OF THE
  SECURITIES EXCHANGE ACT       
|  | For the transition period
  from ______________ to ____________                            

Commission file number: 000-33191

(VISUALMED LOGO)

VISUALMED CLINICAL SOLUTIONS CORP.(Exact name of small business issuer as specified in its charter)

|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|NEVADA                                                             |  | 88-0436055                              
|(State
  of other jurisdiction of
  incorporation or organization) |  | (IRS
  Employer Identification
  Number)

1035 Laurier Street West
Montreal, Quebec
Canada H2V 2L1(Address of principal
executive offices)

(514) 274-1115(Issuers telephone
number)

(Former name, former address and former fiscal year, if changed since
last report)

Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).Yes o   No x

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 10, 2006, the
issuer had 46,863,345 outstanding shares of common stock.



---

Transitional Small Business
Disclosure Format (Check one): Yes o   No x

---



PART I.

ITEM 1. - Financial Statements

VisualMED Clinical Solutions
Corp.
(A Development Stage Company)

|                                               |  |      
|---------------------------------------------- |  | -----
|                                               |  | Index
|                                              
|Consolidated
  Balance Sheets                  |  | F1  
|                                               |  |      
|Consolidated
  Statements of Operations        |  | F2  
|                                               |  |      
|Consolidated
  Statements of Cash Flows        |  | F3  
|                                               |  |      
|Consolidated Notes to the Financial Statements |  | F4  

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)Consolidated Balance Sheets
(expressed in U.S. dollars)
(unaudited)

|                                                                              |  |                          |             |                     |  |             |  
|----------------------------------------------------------------------------- |  | ------------------------ | ----------- | ------------------- |  | ----------- | -
|                                                                              |  | September 30,
  2006
  $ |             | June 30,
  2006
  $ | 
|Assets                                                                        |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Current
  Assets                                                              |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Cash                                                                          |  |                          | 2,813       |                     |  | 10,976      |  
|Accounts receivable                                                           |  |                          |            |                     |  | 2,550       |  
|Advances to related parties (Note 4)                                          |  |                          | 24,846      |                     |  | 30,175      |  
|Prepaid expenses (Note 3)                                                     |  |                          | 29,426      |                     |  | 249,517     |  
|Inventory                                                                     |  |                          | 13,587      |                     |  | 13,587      |  
|Other assets                                                                  |  |                          | 9,599       |                     |  | 16,319      |  
|                                                                              |  |                          |             |                     |  |             |  
|Total
  Current Assets                                                        |  |                          | 80,271      |                     |  | 323,124     |  
|                                                                              |  |                          |             |                     |  |             |  
|Property and
  Equipment (Note 5)                                             |  |                          | 73,053      |                     |  | 69,754      |  
|                                                                              |  |                          |             |                     |  |             |  
|Total Assets                                                                  |  |                          | 153,324     |                     |  | 392,878     |  
|                                                                              |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Liabilities
  and Stockholders Deficit                                       |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Current
  Liabilities                                                         |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Accounts payable                                                              |  |                          | 162,551     |                     |  | 220,785     |  
|Accrued liabilities (Note 6)                                                  |  |                          | 156,346     |                     |  | 155,526     |  
|Current portion of capital lease
obligation                                   |  |                          | 4,045       |                     |  | 3,951       |  
|Deferred revenue                                                              |  |                          | 256,542     |                     |  | 17,291      |  
|Other liabilities                                                             |  |                          | 90,086      |                     |  |            |  
|                                                                              |  |                          |             |                     |  |             |  
|Total
  Current Liabilities                                                   |  |                          | 669,570     |                     |  | 397,553     |  
|                                                                              |  |                          |             |                     |  |             |  
|Capital
  Lease Obligation                                                    |  |                          | 2,179       |                     |  | 3,232       |  
|                                                                              |  |                          |             |                     |  |             |  
|Total
  Liabilities                                                           |  |                          | 671,749     |                     |  | 400,785     |  
|                                                                              |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Commitments
  (Notes 1 and 11)                                                |  |                          |             |                     |  |             |  
|                                                                              |  |                          |             |                     |  |             |  
|Stockholders
  Deficit                                                       |  |                          |             |                     |  |             |  
|Preferred
  Stock,                                                            |  |                          |             |                     |  |             |  
|Authorized: 15,000,000 shares, Series A 10%
  Cumulative; par value $0.00001; |  |                          |             |                     |  |             |  
|Issued and outstanding: nil shares                                            |  |                          |            |                     |  |            |  
|Authorized:10,000,000 shares, Undesignated;
  par value $0.00001;             |  |                          |             |                     |  |             |  
|Issued and outstanding: nil shares                                            |  |                          |            |                     |  |            |  
|Common
  Stock,                                                               |  |                          |             |                     |  |             |  
|Authorized: 100,000,000 shares, par value
  $0.00001;                         |  |                          |             |                     |  |             |  
|Issued and outstanding: 46,038,345 shares
  (2006 - 46,028,345 shares)        |  |                          | 460         |                     |  | 460         |  
|Additional
  Paid-in Capital                                                  |  |                          | 14,855,866  |                     |  | 13,887,221  |  
|Accumulated
  Other Comprehensive Loss                                        |  |                          | (115,909    | )                   |  | (113,753    | )
|Deficit
  Accumulated During the Development Stage                            |  |                          | (15,258,842 | )                   |  | (13,781,835 | )
|                                                                              |  |                          |             |                     |  |             |  
|Total
  Stockholders Deficit                                                 |  |                          | (518,425    | )                   |  | (7,907      | )
|                                                                              |  |                          |             |                     |  |             |  
|Total
  Liabilities and Stockholders Deficit                                 |  |                          | 153,324     |                     |  | 392,878     |  
|                                                                              |  |                          |             |                     |  |             |  

(The accompanying notes are an integral part
of these consolidated financial statements)

F-1

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)Consolidated Statements of Operations
(expressed in U.S. dollars)(unaudited)

|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|----------------------------------------- |  | ---------------------------------------------------------------------------------------- | ----------- | --------------------------------------------------------- |  | --------------------------------------------------------- | - |  | ---------- | -
|                                          |  | Accumulated from
  September 7, 1999
  (Date of Inception)
  to September 30,
  2006
  $ |             | For the
  Three Months
  Ended
  September 30,
  2006
  $ |  | For the
  Three Months
  Ended
  September 30,
  2005
  $ |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Revenue                                   |  |                                                                                          | 317,696     |                                                           |  | 8,750                                                     |   |  |           |  
|Cost of
  sales                           |  |                                                                                          | 179,467     |                                                           |  | 4,238                                                     |   |  |           |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Gross Profit                              |  |                                                                                          | 138,229     |                                                           |  | 4,512                                                     |   |  |           |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Expenses                                  |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Customer service                          |  |                                                                                          | 1,187,243   |                                                           |  | 140,089                                                   |   |  | 101,453    |  
|Amortization                              |  |                                                                                          | 35,569      |                                                           |  | 8,055                                                     |   |  | 2,992      |  
|Development costs                         |  |                                                                                          | 1,787,416   |                                                           |  | 132,964                                                   |   |  | 217,377    |  
|General and administration                |  |                                                                                          | 2,924,610   |                                                           |  | 178,817                                                   |   |  | 180,719    |  
|Sales and marketing                       |  |                                                                                          | 4,665,132   |                                                           |  | 1,021,660                                                 |   |  | 46,200     |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Total
  Expenses                          |  |                                                                                          | 10,599,970  |                                                           |  | 1,481,585                                                 |   |  | 548,741    |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Net Loss
  From Operations                |  |                                                                                          | (10,461,741 | )                                                         |  | (1,477,073                                                | ) |  | (548,741   | )
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Other Income
  (Expenses)                 |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Interest                                  |  |                                                                                          | (38,249     | )                                                         |  | (168                                                      | ) |  |           |  
|Financing costs                           |  |                                                                                          | (4,514,285  | )                                                         |  |                                                          |   |  |           |  
|Foreign exchange gain                     |  |                                                                                          | 137,510     |                                                           |  | 234                                                       |   |  | 17,423     |  
|Gain on forgiveness of interest           |  |                                                                                          | 7,655       |                                                           |  |                                                          |   |  |           |  
|Gain on forgiveness of debt               |  |                                                                                          | 12,689      |                                                           |  |                                                          |   |  |           |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Net Loss
  Before Discontinued Operations |  |                                                                                          | (14,856,421 | )                                                         |  | (1,477,007                                                | ) |  | (531,318   | )
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Discontinued
  Operations                 |  |                                                                                          | (402,421    | )                                                         |  |                                                          |   |  |           |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Net Loss                                  |  |                                                                                          | (15,258,842 | )                                                         |  | (1,477,007                                                | ) |  | (531,318   | )
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Other
  Comprehensive Loss                |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Foreign currency translation adjustments  |  |                                                                                          | (115,909    | )                                                         |  | (2,156                                                    | ) |  | 1,136      |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Comprehensive
  Loss                      |  |                                                                                          | (15,374,751 | )                                                         |  | (1,479,163                                                | ) |  | (530,182   | )
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Net Loss Per
  Share  Basic and Diluted  |  |                                                                                          |             |                                                           |  | (0.03                                                     | ) |  | (0.01      | )
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  
|Weighted
  Average Shares Outstanding     |  |                                                                                          |             |                                                           |  | 46,038,000                                                |   |  | 42,855,000 |  
|                                          |  |                                                                                          |             |                                                           |  |                                                           |   |  |            |  

(The accompanying notes are an integral part
of these consolidated financial statements)

F-2

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)Consolidated Statements of Cash Flows
(expressed in U.S. dollars)(unaudited)

|                                                                                |  |                                                           |            |                                                           |  |           |  
|------------------------------------------------------------------------------- |  | --------------------------------------------------------- | ---------- | --------------------------------------------------------- |  | --------- | -
|                                                                                |  | For the
  Three Months
  Ended
  September 30,
  2006
  $ |            | For the
  Three Months
  Ended
  September 30,
  2005
  $ | 
|Operating
  Activities                                                          |  |                                                           |            |                                                           |  |           |  
|Net loss                                                                        |  |                                                           | (1,477,007 | )                                                         |  | (531,318  | )
|Adjustments
  to reconcile net loss to net cash used in operating activities:   |  |                                                           |            |                                                           |  |           |  
|Amortization                                                                    |  |                                                           | 8,055      |                                                           |  | 2,992     |  
|Gain on foreign exchange                                                        |  |                                                           |           |                                                           |  | (15,196   | )
|Stock-based compensation                                                        |  |                                                           | 963,746    |                                                           |  |          |  
|                                                                               
|Changes in
  operating assets and liabilities                                   |  |                                                           |            |                                                           |  |           |  
|Prepaid expenses                                                                |  |                                                           | 220,076    |                                                           |  | 2,152     |  
|Inventory                                                                       |  |                                                           |           |                                                           |  | (73,936   | )
|Other assets                                                                    |  |                                                           | 6,700      |                                                           |  | (16,659   | )
|Deferred revenue                                                                |  |                                                           | 239,250    |                                                           |  | 47,250    |  
|Advances and receivables                                                        |  |                                                           | 7,902      |                                                           |  | (5,984    | )
|Accounts payable and accrued liabilities                                        |  |                                                           | (57,321    | )                                                         |  | 14,044    |  
|Other liabilities                                                               |  |                                                           | 90,086     |                                                           |  |          |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Net Cash
  Provided By (Used In) Operating Activities                           |  |                                                           | 1,487      |                                                           |  | (576,655  | )
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Investing
  Activities                                                          |  |                                                           |            |                                                           |  |           |  
|Purchase of property and equipment                                              |  |                                                           | (11,575    | )                                                         |  | (13,110   | )
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Net Cash
  (Used In) Investing Activities                                       |  |                                                           | (11,575    | )                                                         |  | (13,110   | )
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Financing
  Activities                                                          |  |                                                           |            |                                                           |  |           |  
|Proceeds from the sale of common stock                                          |  |                                                           | 4,900      |                                                           |  | 250,025   |  
|Repayment of capital lease obligation                                           |  |                                                           | (927       | )                                                         |  |          |  
|Proceeds from notes payable                                                     |  |                                                           |           |                                                           |  | 529,290   |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Net Cash
  Provided By Financing Activities                                     |  |                                                           | 3,973      |                                                           |  | 779,315   |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Effect of
  Exchange Rate Changes on Cash                                       |  |                                                           | (2,048     | )                                                         |  | 1,883     |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Increase
  (Decrease) in Cash                                                   |  |                                                           | (8,163     | )                                                         |  | 191,433   |  
|Cash 
  Beginning of Period                                                    |  |                                                           | 10,976     |                                                           |  | 348,410   |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Cash  End
  of Period                                                          |  |                                                           | 2,813      |                                                           |  | 539,843   |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Non-Cash
  Financing Activities                                                 |  |                                                           |            |                                                           |  |           |  
|Common stock issued for settlement of notes
  payable and accrued interest, net |  |                                                           |           |                                                           |  | 1,165,959 |  
|                                                                                |  |                                                           |            |                                                           |  |           |  
|Supplemental
  Disclosures                                                      |  |                                                           |            |                                                           |  |           |  
|Interest paid                                                                   |  |                                                           |           |                                                           |  |          |  
|Income taxes paid                                                               |  |                                                           |           |                                                           |  |          |  
|                                                                                |  |                                                           |            |                                                           |  |           |  

(The accompanying notes are an integral part
of these consolidated financial statements)

F-3

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company) Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | Nature of
  Operation and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company
  was incorporated in the State of Nevada on September 7, 1999. The Company
  changed its name to VisualMed Clinical Solutions Corporation on November 30,
  2004. The Companys majority shareholder is Visual Healthcare Corporation
  which is a Nevada Corporation, based in Montreal, Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The
  Companys business plan involves the distribution of medical software. The
  Company is primarily involved in activities related to the distribution of
  medical software and is considered to be a development stage company. At
  September 30, 2006, the Company had a working capital deficiency of $589,299
  and has incurred losses of $15,258,842 since inception. The ability of the
  Company to emerge from the development stage with respect to any planned
  principal business activity is dependent upon its successful efforts to raise
  additional equity financing and then attain profitable operations. Management
  has plans to seek additional capital through equity and/or debt offerings.
  There is no guarantee that the Company will be able to complete any of the
  above objectives. These financial statements do not include any adjustments
  to the recoverability and classification of recorded asset amounts and
  classification of liabilities that may be necessary should the Company be
  unable to continue as a going concern. These factors raise substantial doubt
  regarding the Companys ability to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Summary of
  Significant Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|a) | Basis of Presentation and Fiscal Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | These
  consolidated financials statements and related notes are presented in
  accordance with accounting principles generally accepted in the United
  States, and are expressed in US dollars. The Company has not produced
  significant revenues from its principal business and is a development stage
  company as defined by Statement of Financial Accounting Standard (SFAS) No.
  7 Accounting and Reporting by Development
  Stage Enterprises. These financial statements include the
  accounts of the Company and its wholly-owned subsidiary, VisualMed Clinical
  Systems Marketing Inc., a company incorporated and based in Quebec, Canada.
  All intercompany transactions and balances have been eliminated. The
  Companys fiscal year-end is June 30.                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|b) | Interim
  Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | These
  interim unaudited financial statements have been prepared on the same basis
  as the annual financial statements and in the opinion of management, reflect
  all adjustments, which include only normal recurring adjustments, necessary
  to present fairly the Companys financial position, results of operations and
  cash flows for the periods shown. The results of operations for such periods
  are not necessarily indicative of the results expected for a full year or for
  any future period. The financial statements and related notes should be read
  in conjunction with the audited financial statements and notes thereto
  included in Form 10-KSB for the year ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|c) | Use of
  Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The
  preparation of financial statements in conformity with U.S. generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets and liabilities and
  disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenues and expenses during the
  reporting period. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-4

---



VisualMED
Clinical Solutions Corp. 
(A Development Stage Company) 
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Summary of
  Significant Accounting Principles (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|d) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company
  considers all highly liquid instruments with a maturity of three months or
  less at the time of issuance to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|e) | Property and
  Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Property and
  equipment is stated at cost, less accumulated amortization, and consists of
  office furniture, computer hardware and software, leasehold improvements and
  assets under capital lease. Amortization of office furniture is computed
  using the straight-line method over five years. Amortization of computer
  hardware and software is computed using the straight-line method over three
  years. Amortization of leasehold improvements is computed using the
  straight-line method over five years. Amortization of assets under capital
  lease is computed using the straight-line method over the term of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|f) | Long-Lived
  Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In
  accordance with SFAS No. 144, Accounting
  for the Impairment or Disposal of Long-Lived Assets, the carrying
  value of intangible assets and other long-lived assets is reviewed on a
  regular basis for the existence of facts or circumstances that may suggest
  impairment. The Company recognizes impairment when the sum of the expected
  undiscounted future cash flows is less than the carrying amount of the asset.
  Impairment losses, if any, are measured as the excess of the carrying amount
  of the asset over its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|g) | Foreign
  Currency Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The
  Companys functional and reporting currency is the United States dollar. The
  functional currency of the Companys subsidiary is the Canadian dollar. The
  financial statements of the subsidiary are translated to United States
  dollars in accordance with SFAS No. 52 Foreign
  Currency Translation using period-end rates of exchange for
  assets and liabilities, and average rates of exchange for the period for
  revenues and expenses. Translation gains (losses) are recorded in accumulated
  other comprehensive income (loss) as a component of stockholders equity.
  Foreign currency transaction gains and losses are included in current
  operations.                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|h) | Development
  Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Costs
  related to the enhancement of existing medical software modules are expensed
  as incurred until technological feasibility in the form of a working model has
  been established. The time period between the establishment of technological
  feasibility and completion of product development is expected to be short,
  therefore the Company has not capitalized any product development costs
  during the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|i) | Basic and
  Diluted Net Income (Loss) Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company
  computes net income (loss) per share in accordance with SFAS No. 128, Earnings per Sharewhich requires
  presentation of both basic and diluted earnings per share (EPS) on the face
  of the income statement. Basic EPS is computed by dividing net income (loss)
  available to common shareholders (numerator) by the weighted average number
  of shares outstanding (denominator) during the period. Diluted EPS gives
  effect to all dilutive potential common shares outstanding during the period
  including stock options, using the treasury stock method, and convertible
  preferred stock, using the if-converted method. In computing diluted EPS, the
  average stock price for the period is used in determining the number of
  shares assumed to be purchased from the exercise of stock options or
  warrants. Diluted EPS and the weighted average number of common shares
  excludes all dilutive potential shares since their effect is anti dilutive.
  Shares underlying these securities totalled approximately 1,137,000 as of
  September 30, 2006.

F-5

---



VisualMED
Clinical Solutions Corp. 
(A Development Stage Company) 
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Summary of
  Significant Accounting Principles (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|j) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The carrying
  value of cash, accounts receivable, advances to related parties, accounts
  payable, accrued liabilities, notes payable and capital lease obligation
  approximate fair value due to the relatively short maturity of these
  instruments. Financial instruments which potentially subject the Company to a
  concentration of credit risk consist primarily of cash. The Company deposits
  cash with a high quality financial institution. For the three month period
  ended September 30, 2006, revenue from one customer represented 57% of total
  revenue and from a second customer represented 43% of total revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|k) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Inventory
  consists of computer hardware and software acquired for specific revenue
  contracts and also includes related support and implementation costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|l) | Revenue
  Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company
  recognizes revenue related to sales and licensing of medical software in
  accordance with Statement of Position No. 97-2, Software Revenue Recognition (SOP 97-2), as amended
by
  Statement of Position No. 98-9, Software
  Revenue Recognition with Respect to Certain Arrangements.
  Pursuant to SOP 97-2 and Staff Accounting Bulletin No. 104 Revenue Recognition, revenue will only
  be recognized when the price is fixed or determinable, persuasive evidence of
  an arrangement exists, the service is performed, and collectibility is
  reasonably assured. The Companys revenue contracts are accounted for in
  conformity with Accounting Research Bulletin No. 45 Long-Term Construction-Type Contracts,
  using the relevant guidance in SOP 81-1 Accounting
  for Performance of Construction-Type and Certain Production-Type Contracts,
  unless specified criteria for separate accounting for any service element are
  met. The Company also follows the guidance in Emerging Issues Task Force
  (EITF) Issue No. 00-21 Revenue
  Arrangements with Multiple Deliverables relating to the
  separability of deliverables included in an arrangement into different units
  of accounting and the allocation of an arrangements consideration to those
  units of accounting. It does not address when revenue should be recognized
  for the units of accounting. The Company received $8,750 during the three
  month period ended September 30, 2006 for annual license renewal fees. At
  September 30, 2006, the balance of deferred revenue, which relates to the
  unearned portion received of annual license fees, is $8,542. During the
  period ended September 30, 2006, the Company also received $248,000,
  representing advances paid to the Company in relation to a contract. This
  amount is record in deferred revenue. Incremental direct costs related to
  contract acquisition and origination, which result in deferred revenue, are
  expensed as incurred. Any allowance for doubtful accounts is based on the
  Companys detailed assessment of the collectibility of specific customer
  accounts. Any significant customer accounts that are not expected to be
  collected are excluded from revenues. To date, the Company has not
  experienced any losses from uncollectible accounts.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|m) | Comprehensive
  Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | SFAS No.
  130, Reporting Comprehensive Income,
  establishes standards for the reporting and display of comprehensive loss and
  its components in the financial statements. For the three month period ended
  September 30, 2006 and 2005, the Companys only component of comprehensive
  loss was foreign currency translation adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|n) | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Certain
  reclassifications have been made to the prior periods financial statements to
  conform to the current periods presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-6

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company) 
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Summary of
  Significant Accounting Principles (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|o) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Potential
  benefits of income tax losses are not recognized in the accounts until
  realization is more likely than not. The Company has adopted SFAS No. 109 Accounting for Income Taxes as of its
  inception. Pursuant to SFAS No. 109 the Company is required to compute tax
  asset benefits for net operating losses carried forward. The potential
  benefit of net operating losses have not been recognized in these financial
  statements because the Company cannot be assured it is more likely than not
  it will utilize the net operating losses carried forward in future years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|p) | Stock-based
  Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company
  records stock-based compensation in accordance with SFAS No. 123R Share Based Payments, using the fair
  value method. The Company had not issued any stock options and had no
  unvested share based payments prior to January 1, 2006. Accordingly, there
  was no effect on the Companys reported loss from operations, cash flows or
  loss per share as a result of adopting SFAS No 123R.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|q) | Recent
  Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In September
  2006, the FASB issued SFAS No. 158, Employers
  Accounting for Defined Benefit Pension and Other Postretirement Plans  an
  amendment of FASB Statements No. 87, 88, 106, and 132(R). This
  statement requires employers to recognize the overfunded or underfunded
  status of a defined benefit postretirement plan (other than a multiemployer
  plan) as an asset or liability in its statement of financial position and to
  recognize changes in that funded status in the year in which the changes
  occur through comprehensive income of a business entity or changes in
  unrestricted net assets of a not-for-profit organization. This statement also
  requires an employer to measure the funded status of a plan as of the date of
  its year-end statement of financial position, with limited exceptions. The
  provisions of SFAS No. 158 are effective for employers with publicly traded
  equity securities as of the end of the fiscal year ending after December 15,
  2006. The adoption of this statement is not expected to have a material
  effect on the Companys future reported financial position or results of
  operations.                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In September
  2006, the FASB issued SFAS No. 157, Fair
  Value Measurements. The objective of SFAS 157 is to increase
  consistency and comparability in fair value measurements and to expand
  disclosures about fair value measurements. SFAS 157 defines fair value,
  establishes a framework for measuring fair value in generally accepted
  accounting principles, and expands disclosures about fair value measurements.
  SFAS 157 applies under other accounting pronouncements that require or permit
  fair value measurements and does not require any new fair value measurements.
  The provisions of SFAS No. 157 are effective for fair value measurements made
  in fiscal years beginning after November 15, 2007. The adoption of this
  statement is not expected to have a material effect on the Companys future
  reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In March
  2006, the FASB issued SFAS No. 156, Accounting
  for Servicing of Financial Assets, an amendment of FASB Statement No. 140,
  Accounting for Transfers and Servicing of Financial Assets and
  Extinguishments of Liabilities. This statement requires all
  separately recognized servicing assets and servicing liabilities be initially
  measured at fair value, if practicable, and permits for subsequent
  measurement using either fair value measurement with changes in fair value
  reflected in earnings or the amortization and impairment requirements of
  Statement No. 140. The subsequent measurement of separately recognized
  servicing assets and servicing liabilities at fair value eliminates the
  necessity for entities that manage the risks inherent in servicing assets and
  servicing liabilities with derivatives to qualify for hedge accounting
  treatment and eliminates the characterization of declines in fair value as
  impairments or direct write-downs. SFAS No. 156 is effective for an entitys
  first fiscal year beginning after September 15, 2006. The adoption of this
  statement is not expected to have a material effect on the Companys future
  reported financial position or results of operations.

F-7

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements 
(expressed in U.S. dollars)
(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Summary of
  Significant Accounting Principles (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|q) | Recent
  Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In June 2006, the Financial Accounting Standards Board (FASB) issued
  FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
  interpretation of FASB Statements No. 109. FIN 48 clarifies the
  accounting for uncertainty in income taxes by prescribing a two-step method
  of first evaluating whether a tax position has met a more likely than not
  recognition threshold and second, measuring that tax position to determine
  the amount of benefit to be recognized in the financial statements. FIN 48
  provides guidance on the presentation of such positions within a classified
  statement of financial position as well as on derecognition, interest and
  penalties, accounting in interim periods, disclosure, and transition. FIN 48
  is effective for fiscal years beginning after December 15, 2006. The adoption
  of this statement is not expected to have a material effect on the Companys
  future reported financial position or results of operations.                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
  Financial Instruments-an amendment of FASB Statements No. 133 and 140,
  to simplify and make more consistent the accounting for certain financial
  instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments
  and Hedging Activities, to permit fair value re-measurement for
  any hybrid financial instrument with an embedded derivative that otherwise
  would require bifurcation, provided that the whole instrument is accounted
  for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting
  for the Impairment or Disposal of Long-Lived Assets, to allow a
  qualifying special-purpose entity to hold a derivative financial instrument
  that pertains to a beneficial interest other than another derivative
  financial instrument. SFAS No. 155 applies to all financial instruments
  acquired or issued after the beginning of an entitys first fiscal year that
  begins after September 15, 2006, with earlier application allowed. The
  adoption of this statement is not expected to have a material effect on the
  Companys future reported financial position or results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | Prepaid
  expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As at
  September 30, 2006 and June 30, 2006, the following comprises prepaid
  expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |                                                 |  |                          |  |                     |         | 
| | ----------------------------------------------- |  | ------------------------ |  | ------------------- | ------- | 
| |                                                 |  | September 30,
  2006
  $ |  | June 30,
  2006
  $
| |                                                 |  |                          |  |                     |         | 
| | Directors
  and officers insurance              |  | 21,771                   |  |                     | 33,640  | 
| | Prepaid
  expenses related to Medicool contract |  |                         |  |                     | 204,587 | 
| | Other                                           |  | 7,655                    |  |                     | 11,290  | 
| |                                                 |  |                          |  |                     |         | 
| |                                                 |  | 29,426                   |  |                     | 249,517 | 
| |                                                 |  |                          |  |                     |         | 

|   |                              
|-- | -----------------------------
|4. | Advances to
  Related Parties

| |                         |  |                          |  |                     |        | 
| | ----------------------- |  | ------------------------ |  | ------------------- | ------ | 
| |                         |  | September 30,
  2006
  $ |  | June 30,
  2006
  $
| |                         |  |                          |  |                    
| | Advances to
  employees |  | 24,846                   |  |                     | 30,175 | 
| |                         |  |                          |  |                     |        | 
| |                         |  | 24,846                   |  |                     | 30,175 | 
| |                         |  |                          |  |                     |        | 

| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | Advances to
  employees of $24,846 represent amounts advanced towards travel expenses to be
  incurred. These amounts are non-interest bearing.

F-8

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements 
(expressed in U.S. dollars)
(Unaudited)

|   |                         
|-- | ------------------------
|5. | Property and
  Equipment

| |                          |  |          |  |                                |        |                                            |  |                                        |  |  |        | 
| | ------------------------ |  | -------- |  | ------------------------------ | ------ | ------------------------------------------ |  | -------------------------------------- |  |  | ------ | 
| |                          |  | Cost
  $ |  | Accumulated
  Amortization
  $ |        | September 30,2006
  Net carrying value
  $ |  | June 30, 2006
  Net carrying value
  $
| |                          |  |          |  |                                |        |                                            |  |                                       
| | Computer
  hardware      |  | 61,404   |  |                                | 19,466 |                                            |  | 41,938                                 |  |  | 38,023 | 
| | Computer
  software      |  | 26,499   |  |                                | 10,113 |                                            |  | 16,386                                 |  |  | 15,873 | 
| | Office
  furniture       |  | 12,542   |  |                                | 4,052  |                                            |  | 8,490                                  |  |  | 9,128  | 
| | Leasehold
  improvements |  | 9,658    |  |                                | 3,419  |                                            |  | 6,239                                  |  |  | 6,730  | 
| |                          |  |          |  |                                |        |                                            |  |                                        |  |  |        | 
| |                          |  | 110,103  |  |                                | 37,050 |                                            |  | 73,053                                 |  |  | 69,754 | 
| |                          |  |          |  |                                |        |                                            |  |                                        |  |  |        | 

| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Assets under
  capital lease are included in office furniture with a cost of $11,599. During
  the three month period ended September 30, 2006, the Company recognized
  accumulated amortization of assets under capital lease of $927 (September 30,
  2005 - $686).

|   |                                                                                             
|-- | --------------------------------------------------------------------------------------------
|6. | Accrued
  Liabilities                                                                       
|   |                                                                                             
|   | As at
  September 30, 2006 and June 30, 2006, the following comprises accrued
  liabilities:

| |                                    |  |                          |  |                     |         | 
| | ---------------------------------- |  | ------------------------ |  | ------------------- | ------- | 
| |                                    |  | September 30,
  2006
  $ |  | June 30,
  2006
  $
| |                                    |  |                          |  |                     |         | 
| | Salaries,
  wages and vacation pay |  | 104,595                  |  |                     | 112,276 | 
| | Professional
  fees                |  | 43,500                   |  |                     | 35,000  | 
| | Other                              |  | 8,250                    |  |                     | 8,250   | 
| |                                    |  |                          |  |                     |         | 
| |                                    |  | 156,345                  |  |                     | 155,526 | 
| |                                    |  |                          |  |                     |         | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | Preferred
  Stock                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On January
  12, 2006, the Company restated its Articles of Incorporation to increase the
  authorized share capital to 125,000,000 shares consisting of 100,000,000
  shares of common stock, and 25,000,000 shares of preferred stock, of which
  15,000,000 have been designated as Series A 10% Cumulative Preferred Stock.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Series A
  10% Cumulative Preferred Stock has a par value of $0.00001 per share, a
  stated value of $1.00 per share and are non-voting. The holders of the Series
  A Preferred Stock will be entitled to receive an annual dividend equal to 10%
  per annum of the stated value of $1.00 per share payable, at the option of
  the Board of Directors, in either cash or in shares of Series A Preferred
  Stock.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                         
|8. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                            

| |    |                                                                                                                                                                         
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | On July 5,
  2006, the Company issued 5,000 shares of common stock upon the exercise of
  5,000 options at an exercise price of $0.49 per share for proceeds of $2,450. 
| |    |                                                                                                                                                                         
| | b) | On July 10,
  2006, the Company issued 5,000 shares of common stock upon the exercise of
  5,000 options at an exercise price of $0.49 per share for proceeds of $2,450.

F-9

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements 
(expressed in U.S. dollars)
(Unaudited)

|   |                                             |                                                                                
|-- | ------------------------------------------- | -------------------------------------------------------------------------------
|9. | Stock
  Options and Share Purchase Warrants
|   |                                            
|   | i)                                          | Stock
  Options:                                                               
|   |                                             |                                                                                
|   |                                             | The
  following table summarizes the continuity of the Companys stock options:

| |                                 |  |                    |   |                                      |      | 
| | ------------------------------- |  | ------------------ | - | ------------------------------------ | ---- | 
| |                                 |  | Number of
  Shares |   | Weighted
  average
  exercise price$
| |                                 |  |                    |   |                                      |      | 
| | Outstanding, June 30, 2006      |  | 884,500            |   |                                      | 1.08 | 
| | Granted                         |  |                   |   |                                      |     | 
| | Exercised                       |  | (10,000            | ) |                                      | 0.49 | 
| | Cancelled                       |  |                   |   |                                      |     | 
| |                                 |  |                    |   |                                      |      | 
| | Outstanding, September 30, 2006 |  | 874,500            |   |                                      | 1.09 | 
| |                                 |  |                    |   |                                      |      | 

| |      |                                                                           
| | ---- | --------------------------------------------------------------------------
| | iii) | Share
  Purchase Warrants:                                                
| |      |                                                                           
| |      | The
  following table summarizes the continuity of the Companys warrants:

| |                                 |  |                      |  |                                      |      | 
| | ------------------------------- |  | -------------------- |  | ------------------------------------ | ---- | 
| |                                 |  | Number of
  Warrants |  | Weighted
  average
  exercise price$
| |                                 |  |                      |  |                                      |      | 
| | Balance, June 30, 2006          |  | 262,122              |  |                                      | 1.25 | 
| | Issued                          |  |                     |  |                                      |     | 
| | Exercised                       |  |                     |  |                                      |     | 
| |                                 |  |                      |  |                                      |      | 
| | Outstanding, September 30, 2006 |  | 262,122              |  |                                      | 1.25 | 
| |                                 |  |                      |  |                                      |      | 

At
September 30, 2006, the following share purchase warrants were outstanding:

| |                      |  |                  |  |                 
| | -------------------- |  | ---------------- |  | ----------------
| | Number of
  Warrants |  | Exercise
  Price |  | Expiry Date     
| |                      |  |                  |  |                 
| | 262,122              |  | $ 1.25           |  | March 23,
  2007

|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10. | Segment
  Disclosures                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company
  operates as one operating segment which is the sale of its suite of clinical
  software modules. The Chief Executive Officer is the Companys Chief
  Operating Decision Maker (CODM) as defined by SFAS 131, Disclosure about Segments of an
  Enterprise and Related Information. The CODM allocates resources
  and assesses the performance of the Company based on the results of
  operations.

F-10

---



VisualMED
Clinical Solutions Corp.
(A Development Stage Company)
Notes to the Consolidated Financial Statements 
(expressed in U.S. dollars)
(Unaudited)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11. | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|a)  | In November
  2004, the Company entered into a lease agreement for office premises at a
  rate of $70,649 (CDN$78,700) per annum including property taxes, insurance
  and other operating expenses, for a five year term expiring on September 30,
  2009, with an option to renew for an additional five years. During the three
  month period ended September 30, 2006, the Company incurred rent expense of
  $12,981. Future payments for the next four fiscal years are as follows:

| |  |      |  |   |         | 
| |  | ---- |  | - | ------- | 
| |  | 2007 |  | $ | 57,668  | 
| |  | 2008 |  | $ | 70,649  | 
| |  | 2009 |  | $ | 70,649  | 
| |  | 2010 |  | $ | 19,288  | 
| |  |      |  |   |         | 
| |  |      |  | $ | 218,254 | 
| |  |      |  |   |         | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b)  | On June 5,
  2006, the Company entered into an automobile lease for a term of 48 months.
  The monthly payments are CAD$642 ending May 5, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|c)  | On September
  1, 2006, the Company entered into an agreement with an individual to provide
  consulting services.  As consideration
  for these services, the Company agreed to grant 125,000 options pursuant to
  Companys Nonqualified Stock Option Plan.
  Further remuneration is payable based on the following performance
  milestones: 50,000 options pursuant to Companys Nonqualified Stock Option
  Plan per contract proposal, and 100,000 options pursuant to Companys
  Nonqualified Stock Option Plan upon completion of any sale to a healthcare
  facility in Italy.  On October 6,
  2006, the Company granted 375,000 stock options exercisable at $0.00001 per
  share for a five year term expiring in September, 2011 under the Companys
  October 2006 Nonqualified Stock Option Plan. The fair value for options
  granted was estimated at each measurement date using the Black-Scholes
  option-pricing model with the following weighted average assumptions: an
  expected life of 5 years, a risk-free interest rate of 4.35% to 4.51% and an
  expected volatility of 89% to 93%. During the period ended September 30,
  2006, the Company recognized stock based compensation of $663,747.                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|d)  | On September
  8, 2006, the Company entered into an agreement with an individual to provide
  consulting services.  As consideration
  for these services, the Company agreed to grant 150,000 options pursuant to
  Companys Nonqualified Stock Option Plan.
  Further remuneration is payable based on the following performance
  milestones: 50,000 options pursuant to Companys Nonqualified Stock Option
  Plan per contract proposal; and 100,000 options pursuant to Companys
  Nonqualified Stock Option Plan upon completion of any sale.  Further options will be granted in the amount
  of 75,000 options for the initiation of contact discussions with companies
  that are publicly listed corporations with sales of more than one billion
  dollars.  On October 16, 2006, the
  Company granted 150,000 stock options exercisable at $0.00001 per share for a
  five year term expiring in September, 2011 under the Companys October 2006
  Nonqualified Stock Option Plan. The fair value for options granted was
  estimated at the measurement date using the Black-Scholes option-pricing
  model with the following weighted average assumptions: an expected life of 5
  years, a risk-free interest rate of 4.54% and an expected volatility of 92%.
  During the period ended September 30, 2006, the Company recognized stock
  based compensation of $299,999.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|12. | Subsequent
  Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | On October
  4, 2006, the Company filed a Form S-8 Registration Statement in connection
  with its October 2006 Non-Qualified Stock Option Plan (the Plan) allowing
  for the direct award of shares or stock options to directors, officers,
  employees and consultants to acquire up to a total of 2,000,000 common
  shares.   During October 2006, the
  Company issued 825,000 shares of common stock upon the exercise of 825,000
  options at $0.00001 per share under the Plan for no consideration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-11

---



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS

We
incurred losses of $1,477,007 for the three months ending September 30, 2006.
This compares to $531,318 in the comparable prior year period. The principal
components of the loss involved the following:

| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maintenance
  and continuing development of our expanding marketing and customer support
  facilities;                                                                                                     
| |   |                                                                                                                                                                                                            
| |  | operating
  and maintaining our world-wide state-of-the-art service center capable of
  supporting client hospitals by remote support technology;                                                          
| |   |                                                                                                                                                                                                            
| |  | newly hired
  employees and consultants, and increased travel expenses as our business
  grows in the United States and overseas, and as we continue to pursue
  contracts and attend industry conferences;
| |   |                                                                                                                                                                                                            
| |  | software licenses;                                                                                                                                                                                         
| |   |                                                                                                                                                                                                            
| |  | Stock-based
  compensation                                                                                                                                                                                 
| |   |                                                                                                                                                                                                            
| |  | travel and
  presentation expenses                                                                                                                                                                         
| |   |                                                                                                                                                                                                            
| |  | costs
  related to direct sales approach and first contact with potential client
  hospitals, from a steadily growing sales funnel comprising over 120 hospitals
  worldwide.                              
| |   |                                                                                                                                                                                                            
| |  | Finally, a
  small amount was devoted to professional expenses, depreciation, and filing
  fees.                                                                                                           

Operating
expenses for the three months ending September 30, 2006 were $1,481,585.

The
main challenges that we will have over the next year will be to continue
financing operations, continue building our base of client hospitals and
healthcare facilities, marketing of our modules and concluding strategic
alliances to help us penetrate specific marketplaces in promising geographies.
We now have a round the clock support service which we offer to our clients,
capable of providing on the spot assistance to our growing customer base.

During
the three month period ended September 30, 2006, we have begun to implement our
system in the Colorectal Surgery Department of Montreals Jewish General
Hospital, and are near to the conclusion of an agreement to implement another
hospital in the Montreal area. We have teamed with Post Logic, a French
software firm, and expect our technology will aid them to successfully bid for
key French government healthcare information system contracts. French
institutions are being mandated by law to deploy large scale fully shareable
electronic medical records across France.

---



In
this period we have also invested in system configurations designed for smaller
doctors practices, private laboratories and clinics. One of the unique aspects
of our system is that it is fully scaleable, and therefore affordable to
smaller consumers.

We
continue to implement our marketing and sales strategy for the VisualMED
system, and other product lines in development. We have hired, and intend to
continue hiring, sales and marketing executives and consultants as our business
grows.

Our
sales effort will continue targeting regions where current legal regulations
encourage the adoption of our clinical management modules, as well as areas in
close proximity to our existing sites in Wichita, Kansas, Battle Creek,
Michigan, El Paso, Texas and Montreal. These markets are being aggressively
pursued through the creation of sales consortiums that bring together local
healthcare consultants, hardware vendors and local systems integrators.

Negotiations
are on going with several hospital management groups in Italy and France for
the implementation of our clinical modules, and we are continuing to respond to
requests for proposals from hospitals in Canada, France, Italy, and the United
States.

In
July, we entered into a preliminary OEM licensing agreement with Peloton
Solutions Inc., of Littleton Colorado, a provider of leading-edge IT solutions
to law enforcement agencies. Pelotons flagship product, the Longarm Record
Management System (RMS) focuses on streamlining records management in the
Public Safety marketplace. The agreement will allow Peloton to offer to that
industry a VisualMED security system that has been validated to meet the most
stringent confidentiality requirements of medical records. Peloton will
integrate and offer the VisualMED biometric technology to its clients, who
typically pay a monthly or yearly fee for using their system. VisualMED will
get a steady royalty stream from the wide distribution of its system.
VisualMEDs proprietary biometric technology exceeds even the most stringent
standards currently existing in law enforcement because of our need to comply
with the Health Insurance Portability and Accountability Act ( HIPAA).

In
the Middle East, The Tunisian Minister of Health is set for a review of our pilot
project with Habib Thameur Hospital in Tunis.

In
Saudi Arabia, we have signed a representation agreement with International Test
Systems of Riyadh, Saudi Arabia. The agreement is the result of a year-long
collaboration with interested parties in the Middle East. Initial efforts have
focused on identifying a suitable first site through which VisualMED
technology will be showcased for potential clients in Saudi Arabia, the United
Arab Emirates, and Lebanon. System demonstrations have been organized at a
number of hospitals. ITS is well established in the Middle East, with
significant experience in complex system implementation and validation. As
well, ITS, through its own partnership programs, brings broad-based business
expertise to the relationship. This expertise will be critical in the
implementation of any large scale healthcare informatics projects.

In
terms of the VisualMED technology itself, the platform on which the system
operates has undergone a significant improvement, in anticipation of
Microsofts new Dot-Net operating system. Dot-Net will replace the Windows
Win32 operating system, in existance for more than a decade, and new VisualMED
components have been, and continue to be, developed, capable of communicating
with Dot-Net. The first components undergoing redesign included VisualMEDs
load balancing process. The load balancing process ensures timely access by
users to servers and business objects in the application tier of VisualMEDs
state-of-the-art n-tier application. For us the practical benefits of this
shift to the Dot-Net environment include more cost-effective development over
time and increasing attractive pricing for our system. The system upgrade will
also render VisualMED more attractive to individual doctors offices and
smaller group practices, where rapid series of fast implementations with
extremely low integration costs, executed over a matter of days, could
significantly boost our market presence in the short term. While our original
development efforts involved programming languages whose use ensured overall
high quality of code, moving to Dot-Net brings advantages that carry over to
future development. The Quality-Assurance process is now more fully integrated
with programming, bringing benefits to our programming staff and all system
users.

---



Subsequent Events

On
October 4, 2006, the Company filed its October 2006 Non-Qualified Stock Option
Plan (incorporated herein by reference).

Financial Condition, Liquidity and Capital
Resources

During
the three months ending September 30, 2006, we recognized revenue of $8,750
from licensing of our product.

At
September 30, 2006, we had a working capital deficiency of $589,299, compared
to a working capital deficiency of $74,429 at June 30, 2006. We had cash on
hand of $2,813 at September 30, 2006.

We
had a net loss of $1,477,007 and $531,318 for the three month periods ending
September 30, 2006 and 2005, respectively.

At
September 30, 2006, our total assets were $153,324, as compared to total assets
of $392,878 at June 30, 2006.

At
September 30, 2006, we had pre-paid expenses of $29,426. This amount consisted
of $21,771 for directors and officers insurance, $3,620 for property taxes and
a security deposit of $4,035 for the lease of an automobile for a marketing
employee.

At
September 30, 2006, our total liabilities were $671,749, as compared to total
liabilities of $400,785 at June 30, 2006.

We
will need to raise additional equity and/or debt financing to sustain
operations over the next twelve months. Our auditors have expressed substantial
doubt about our ability to continue as a going concern in their audit report
that was included in our Form 10-KSB for the fiscal year ended June 30, 2006.

Critical Accounting Policies

Our
discussion and analysis of financial condition and results of operations are
based upon the financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of financial statements requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities,
revenues and expenses and disclosures on the date of the financial statements.
On an on-going basis, we evaluate our estimates, including, but not limited to,
those related to revenue recognition.

We
use authoritative pronouncements, historical experience and other assumptions
as the basis for making judgments. Actual results could differ from those
estimates. Critical accounting policies identified are as follows:

Long-Lived Assets

In
accordance with SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, we test
long-lived assets or asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to:
significant decreases in the market price of the asset; significant adverse
changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition
or construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than
not be sold or disposed significantly before the end of its estimated useful
life.

---



Recoverability
is assessed based on the carrying amount of the asset and its fair value which
is generally determined based on the sum of the undiscounted cash flows
expected to result from the use and the eventual disposal of the asset, as well
as specific appraisal in certain instances. An impairment loss is recognized
when the carrying amount is not recoverable and exceeds fair value.

Foreign Currency Transactions/Balances

Our
functional and reporting currency is the United States dollar. The functional
currency of the Companys subsidiary is the Canadian dollar. The financial
statements of this subsidiary are translated to United States dollars in
accordance with SFAS No. 52, Foreign
Currency Translation, using period-end rates of exchange for
assets and liabilities, and average rates of exchange for the period for
revenues and expenses. Translation gains (losses) are recorded in accumulated
other comprehensive income (loss) as a component of stockholders equity.
Foreign currency transaction gains and losses are included in current
operations.

Revenue Recognition

The
Company recognizes revenue related to sales and licensing of medical software
in accordance with Statement of Position No. 97-2, Software Revenue Recognition (SOP 97-2), as
amended by
Statement of Position No. 98-9, Software
Revenue Recognition with Respect to Certain Arrangements. Pursuant
to SOP 97-2 and Staff Accounting Bulletin No. 104 Revenue Recognition, revenue will only be recognized when
the price is fixed or determinable, persuasive evidence of an arrangement
exists, the service is performed, and collectibility is reasonably assured. The
Companys revenue contracts are accounted for in conformity with Accounting
Research Bulletin No. 45 Long-Term
Construction-Type Contracts, using the relevant guidance in SOP
81-1 Accounting for Performance of
Construction-Type and Certain Production-Type Contracts, unless
specified criteria for separate accounting for any service element are met. The
Company also follows the guidance in Emerging Issues Task Force (EITF) Issue
No. 00-21 Revenue Arrangements with
Multiple Deliverables relating to the separability of deliverables
included in an arrangement into different units of accounting and the
allocation of an arrangements consideration to those units of accounting. It
does not address when revenue should be recognized for the units of accounting.
The Company received $35,000 during the year ended June 30, 2006 for annual
license renewal fees, which are recognized in revenue over the term of the
license. At June 30, 2006, the balance of deferred revenue, which relates to
the unearned portion received of annual license fees, is $17,291. As at
September 30, 2006 the unearned portion was $8,542. Incremental direct costs
related to contract acquisition and origination, which result in deferred
revenue, are expensed as incurred. Any allowance for doubtful accounts is based
on the Companys detailed assessment of the collectibility of specific customer
accounts. Any significant customer accounts that are not expected to be
collected are excluded from revenues. To date, the Company has not experienced
any losses from uncollectible accounts.

Disclosure Regarding Forward-Looking
Statements

Certain
statements contained in this quarterly report on Form 10QSB/A constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause deviations in actual results, performance or
achievements to be materially different from any future results, performance or
achievement expressed or implied. Such factors include but are not limited to:
market and customer acceptance of and satisfaction with our products, market
demand for our products; fluctuations in foreign currency markets; the use of
estimates in the preparation of our financial statements; the impact of
competitive products and pricing in our field; the ability to develop and
launch new products in a timely fashion; government and industry regulatory
environment; fluctuations in operating results, including, but not limited to,
spending on research and development, spending on sales and marketing
activities, spending on technical and product support; and other risks outlined
in previous filings with the Securities and Exchange Commission, and in this
quarterly report on Form 10-QSB/A. The words believe, expect, may,
anticipate, intend and plan and similar expressions identify
forward-looking statements. Such statements are subject to risks and
uncertainties that cannot be quantified and, consequently, actual results may
differ materially from those expressed or implied by such forward-looking
statements. You are cautioned not to place undue reliance on these
forward-looking statements. The terms Company, we, us, our, VisualMED
and the Registrant refer to VisualMED Clinical Solutions Corp., a Nevada
corporation, and its subsidiaries.

---



Factors
that could cause actual results to differ from those expressed in
forward-looking statements include, but are not limited to:

| |   |                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our limited
  operating history;                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Our auditors
  have issued a going concern opinion. Therefore we may not be able to achieve
  our objectives and may have to suspend or cease operations;                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Because we
  have historically incurred losses and these losses may increase in the
  future, we must begin generating a profit from our operations. If we do not
  begin generating a profit we may have to suspend or cease operations;                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | We have
  experienced a history of losses and expect to incur future losses. Therefore,
  we must continue to raise money from investors to fund our operations. If we
  are unable to fund our operations, we will cease doing business;                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Because we
  depend on a limited number of third parties to manufacture and supply
  critical components for our products and services, if a third party
  manufacturer should cease operations or refuse to sell components to us, we
  may have to suspend or cease operations;                                                    
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | If we cannot
  deliver the VisualMed systems our customers demand, we will be unable to
  attract customers, which would likely result in a loss of income and
  eventually a termination of our operations;                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Competition
  from companies with already established marketing links to our potential
  customers may adversely affect our ability to market our products;                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Our parent
  company has significant influence over our corporate decisions;                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Because we
  do not have any patents, we rely on trade secrets, confidentiality agreements
  and contractual agreements, which may not be adequate to protect our
  proprietary interests. If our proprietary interests are divulged to the
  public, our operations may be adversely impacted and we may have to cease
  operations;
| |   |                                                                                                                                                                                                                                                                                                                                      
|
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | We may be
  exposed to liability claims if products based on our technologies are
  marketed and sold. We have liability insurance coverage in the amount of
  $1,000,000, however, if a judgment is rendered against us in excess of the
  amount of our coverage, we may have to cease operations;                                 
| |   |                                                                                                                                                                                                                                                                                                                                      
| |  | Third
  parties may claim that our current or future products or services infringe
  their proprietary rights or assert other claims against us;                                                                                                                                                                                     

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| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | Fluctuations
  in the value of foreign currencies could result in increased product costs
  and operating expenses;          
| |   |                                                                                                                              
| |  | We must be
  able to respond to rapidly changing technology, services and standards in
  order to remain competitive;        
| |   |                                                                                                                              
| |  | Because the
  market for our common stock is limited, our investors may not be able to
  resell their shares of common stock;
| |   |                                                                                                                              
| |  | Because our
  common stock is subject to penny stock rules, the liquidity of investments
  may be restricted.                

ITEM 3. CONTROLS AND PROCEDURES

As
of the end of the period covered by this report, under the supervision and with
the participation of our management, including Gerard Dab, our Chief Executive
Officer, and Larry Kurlender, our Chief Financial Officer, we have evaluated
the effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) of the Securities and Exchange Act of 1934 (Exchange Act)). Based on
that evaluation, our Chief Executive Officer and our Chief Financial Officer
have concluded that these disclosure controls and procedures are effective to
ensure that information required to be disclosed in our annual reports filed
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities Exchange Commission rules and forms.
There were no changes in our internal control over financial reporting during
the fiscal quarter ended September 30, 2006 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.

Our officers
believe that our disclosure controls and procedures are effective to ensure
that information required to be disclosed in the reports that VisualMED files
or submits under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and our Chief Financial
Officer in order to allow timely decisions regarding required disclosure. There
are frequent daily communications among all of our executives, including Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, President
and our Vice President for Finance. All of our budgetary decisions and all of
our billing and other expenditures require the written, signed approval of at
least three of our executives. All issues regarding disclosures and procedures
are discussed in a timely fashion, including all financial and other key
operational information. Current disclosure controls and procedures are
governed by the Board of Directors, and any changes to such controls and
procedures must be made with the Boards approval.

Part II

ITEM 1. LEGAL PROCEEDINGS

From time to
time we may be involved in litigation incidental to the conduct of our
business, such as contractual matters and employee-related matters. Currently,
we are not a party to any material legal proceeding or litigation, whether
current or threatened, nor are any of our officers, directors or affiliates, a
party adverse to us in any legal proceeding or litigation.

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ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS

| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | On
  July 5, 2006 the Company issued 5,000shares of common stock upon the exercise
  of 5,000 options at .49 cents per share for proceeds of $2,450. 
| |                                                                                                                                                      
| | On
  July 10, 2006 the Company issued 5,000shares of common stock upon the
  exercise of 5,000 options at .49 cents per share for proceeds of $2,450.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|    |          |                                                                                                                                                                                                            
|--- | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Exhibits | Description                                                                                                                                                                                                
|    |          |                                                                                                                                                                                                            
|    | 3.1      | Articles of
  Incorporation (incorporated by reference to Exhibit 3.1 to the Companys
  Registration Statement on Form SB2 (Registration No. 33394835) filed with
  the SEC on January 18, 2001).       
|    |          |                                                                                                                                                                                                            
|    | 3.2      | Amendment to
  the Articles of Incorporation (incorporated by reference to Exhibit 3.2 to
  the Companys Quarterly Report on Form 10QSB filed with the SEC on February
  22, 2005).                      
|    |          |                                                                                                                                                                                                            
|    | 3.3      | ByLaws
  (incorporated by reference to Exhibit 3.2 to the Companys Registration
  Statement on Form SB2 (Registration No. 33394835) filed with the SEC on January 18,
  2001).                         
|    |          |                                                                                                                                                                                                            
|    | 3.4      | VisualMED
  Clinical Solutions Corp. October 2006 Nonqualified Stock Option Plan (incorporated
  by reference to the Companys Registration Statement on Form S-8 filed with
  the SEC on October 4, 2006).
|    |          |                                                                                                                                                                                                            
|    | 31.1     | Certification
  of Principal Executive Officer pursuant to Rule 13a-15(e) and Rule 15d-15(e),
  promulgated under the Securities and Exchange Act of 1934, as amended.                                     
|    |          |                                                                                                                                                                                                            
|    | 31.2     | Certification
  of Principal Financial Officer pursuant to Rule 13a-15(e) and Rule 15d-15(e),
  promulgated under the Securities and Exchange Act of 1934, as amended.                                     
|    |          |                                                                                                                                                                                                            
|    | 32.1     | Certification
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002 (Principal Executive Officer).                                                  
|    |          |                                                                                                                                                                                                            
|    | 32.2     | Certification
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002 (Principal Financial Officer).                                                  

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on this 13th day of
November, 2006.

| |                                    |                                                                                  
| | ---------------------------------- | ---------------------------------------------------------------------------------
| | VISUALMED CLINICAL SOLUTIONS CORP.
| | (Registrant)                      
| |                                    |                                                                                  
| | By:                                | /s/ Gerard
  Dab                                                                 
| |                                    |                                                                                  
| |                                    | Gerard Dab                                                                       
| |                                    | Principal
  Executive Officer, Secretary and
  a member of the Board of Directors

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