[LETTERHEAD OF RATZKOVSKY FRIED]

                         REPORT OF INDEPENDENT AUDITORS

                             TO THE SHAREHOLDERS OF

                                 MEDI-CARD LTD.

We have audited the accompanying balance sheets of Medi-Card Ltd. ("the
Company") as of December 31, 1998 and 1997, and the related statements of
operations, changes in shareholders' equity and cash flows for each of the two
years in the period ended December 31, 1998 and for the period from inception
(May 28, 1996) to December 31, 1996. These financial statements are the
responsibility of the Company's Board of Directors and management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
in Israel, including those prescribed by the Israeli Auditors Regulations ( Mode
of Performance) - 1973. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatements either originating within the financial
statements themselves, or due to any misleading statement included therein. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the Company's Board
of Directors and Management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

The aforementioned financial statements have been prepared on the basis of the
historical cost convention adjusted to reflect the changes in the general
purchasing power of the Israeli currency - on the basis of the changes in the
exchange rate of the U. S. Dollar - in accordance with the opinions of the
Institute of Certified Public Accountants in Israel. Condensed nominal Israeli
currency data, on the basis of which the adjusted financial statement of the
Company were prepared, is presented in Note 18.

The Company has restated its financial statements for the year ended December
31, 1997 and for the period ended December 31, 1996 in order to retroactively
reflect the inclusion of the financial statements on the basis of the changes in
the exchange rate of the U.S Dollar, as indicated in Note 4, a change with which
we concur.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1998 and 1997 and the results of its operations, changes in shareholders' equity
and cash flows for each of the two years ended in the period ended December 31,
1998 and for the period from inception (May 28, 1996) to December 31, 1996, in
conformity with generally accepted accounting principles, in Israel which differ
in certain respects from those followed in the United States - see Note 17 to
the financial statements. Furthermore, in our opinion, the aforementioned
financial statements comply with the requirements of the Israeli Securities
Regulations (Preparation of Annual Financial Statements) - 1993.


                                        /s/ RATZKOVSKY FRIED MANDOLA & CO.

                                            RATZKOVSKY FRIED MANDOLA & CO.
                                           Certified Public Accountants (Israel)
Haifa, Israel
February 21, 1999