The four leading causes of preventable vision loss in the United States are AMD, glaucoma, diabetic retinopathy and cataracts. AMD strikes at the macula and leads to symptoms including distorted or blurred vision. According to the Eye Diseases Prevalence Research Group, more than 1.75 million Americans have AMD today and it is estimated that AMD will affect almost 3 million Americans by 2020.

Glaucoma is a group of diseases that cause vision loss through damage to the optic nerve. According to a 2002 Harvard Health Publications Study, over 2 million Americans have glaucoma today, but that over half of these cases have not been diagnosed.

Diabetic retinopathy is a retinal vascular disorder that occurs as a complication of diabetes when abnormal blood sugar levels damage small blood vessels in the retina. According to the Eye Diseases Prevalence Research Group, of the approximately 20 million Americans who have either type-I or type-II diabetes, over 5 million have diabetic retinopathy. The National Eye Institute states it is a leading cause of blindness in working age adults.

AMD and glaucoma are age-related and are becoming more prevalent as baby-boomers move past middle age. All Americans over 50 years old and African-Americans and Hispanics over 40 years old are at increasing risk of these diseases. These groups represent a total of approximately 90 million Americans. The incidence of diabetic retinopathy is growing rapidly due to the underlying growth of diabetes. The National Eye Institute estimates that over 20 million Americans have diabetes, and of the approximately 14.6 million Americans that have been diagnosed, 40% to 45% have some stage of diabetic retinopathy.

Screening typically takes three to six minutes and most often does not require pharmacological dilation. Screening is paid for out-of-pocket by the patient at a price set be the optometrist.

Medical imaging is performed when the optometrist has diagnosed disease either through screening or direct examination. Its purpose is to help diagnose the extent of disease, document the disease state and to track the efficacy of treatments. Medical imaging entails taking more images of each eye, including a stereo view of the optic disc, which is useful in detecting optic disc abnormalities including glaucoma.

For both screening and medical imaging, the optometric physician may choose to analyze a patient’s images or send them to the EyeTel Reading Center for analysis. The process for the latter is comparable to that for primary diabetes care. For physicians who prefer to analyze the images themselves, the Company offers tools to assist in generating reports directly on the DigiScope.

The EyeTel Reading Center is a division of the Company which provides telemedicine expert analysis of images captured by DigiScopes. The EyeTel Reading Center is scalable to handle the Company’s forecasted patient volumes. Each reading station can handle up to four shifts per day and therefore can handle 120,000 patient image sets per year. The EyeTel Reading Center currently maintains the hardware to handle up to 960,000 patients image sets per year and the staff to handle 150,000 patient image sets per year.

DigiScopes automatically call into a local Internet service provider each night and transfer their images to EyeTel’s Vision Access database over a secure Internet connection. For optometric physicians who analyze some or all of their patients’ images themselves, the Company provides back up storage of the images.

Research and development expenses decreased $47,083, or 9%, to $506,143 in 2006 from $553,226 in 2005.

Sales and marketing expenses decreased $741,783, or 26%, to $2,070,419 in 2006 from $2,812,202 in 2005.

Interest income increased $29,818, or 31%, to $124,522 in 2006 from $94,704.

Interest expense was $594,027 in 2006 compared to $0 in 2005.