Item 2. Management's Discussion and Analysis

FORWARD LOOKING STATEMENTS

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the Notes to Consolidated Financial Statements, are "forward-looking statements", within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and uncertainties that may be outside our control. The words "believe", "expect", "anticipate", "optimistic", "intend", "will", and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, the realization of our deferred tax assets, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, our expansion and acquisition strategy, our ability to achieve operating efficiencies, our dependence on network infrastructure, capacity, telecommunications carriers and other suppliers, industry pricing and technology trends, evolving industry standards, domestic and international regulatory matters, general economic and business conditions, the strength and financial resources of our competitors, our ability to find and retain skilled personnel, the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the Securities and Exchange Commission (the "Commission"). Additional factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: 1) our ability to successfully develop, manufacture and deliver the CardioGSM to Natali Ltd. on a timely basis and in the prescribed condition; 2) our ability to compete effectively with other companies that provide emergency homecare products to cardiac patients; 3) our ability to continue to develop and market products to the blind and visually impaired; 4) our ability to raise sufficient capital in order to effectuate our business plan; and 5) our ability to retain our key executives.

CRITICAL ACCOUNTING POLICIES

Stock-based compensation

Employee stock-based compensation is accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and the FASB interpretations thereof. Pursuant to those accounting pronouncements, compensation is recorded for share options granted to employees at the date of grant based on the difference between the exercise price of the options and the market value of the underlying shares at that date. Due to the terms of the grants, the fair value of the compensation in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation" approximates the values computed in accordance with APB No. 25. Stock-based compensation to non-employees is accounted for in accordance with SFAS No. 123.

Under both accounting pronouncements, as part of the necessary computations, management is required to estimate the fair value of the underlying shares. Fair value has generally been determined by management as the price at which the Company's shares were issued at the most recent prior placement of the Company's Common Stock. The timing of the grant and measurement of stock-based awards could have a material effect on the Company's results of operations and financial position.

Revenue recognition

The Company's revenues currently derive solely from a low volume of product sales at standard terms which are recognized, in accordance with generally accepted accounting principles, upon shipment of its products to the customer provided that persuasive evidence of an arrangement exists, title has transferred, the price is fixed, collection of resulting receivables is probable and there are no remaining significant obligations. Future results of operations may be affected by the nature of the products that may be developed and marketed in the future by the Company and by the terms to be included in the sales agreements. Such matters may have a significant impact on the timing of the Company's revenue recognition at each reporting date.

Development stage enterprise and going concern issue

The Company is in the development stage and has not generated significant revenues. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's accumulated deficit as of June 30, 2004, of $2,906,201 and working capital deficit as of June 30, 2004, of $512,018 raise substantial doubt about its ability to continue as a going concern. In addition, since the second half of 2002 the Company operations have been carried out with a significantly reduced staff.

The ability of the Company to continue as a going concern is dependent upon the successful completion of the Company's development program and, ultimately, the attainment of profitable operations, which are contingent upon future events, including maintaining adequate financing to fulfill its development activities, and achieving a level of sales adequate to support the Company's expense structure.

DESCRIPTION OF BUSINESS

We develop, manufacture and market personal digital assistants ("PDAs") targeted to niche markets where mainstream products are not addressing the needs of the customers.

We were incorporated in the State of Delaware on February 26, 2002. In June 2002, we acquired approximately 99.8% of the outstanding shares of Voice Diary Ltd., an Israeli corporation ("VDL" or the "Subsidiary"). The Subsidiary began its operations in 1993 and has been in the development stage since then.

The Subsidiary developed several models of a PDA for the blind and visually impaired. The latest model is named IMP. The subsidiary's accumulated sales amount to 4,500 units for revenues of about $700,000. VDL has no inventory of its products and it does not plan to manufacture these products again because the market for the products is estimated to be very low.

On August 9, 2004, we decided to temporarily suspend the operations of the Subsidiary in Israel until such time as we reach a settlement with several creditors who seized VDL's bank account in Israel, which contained approximately $400, and have engaged the Enforcement of Justice Office for collection proceedings against VDL for debt amounting to approximately $220,000, including penalties and interest. We believe that by law these creditors cannot proceed against the Company directly. We can give no assurance that we will reach a settlement with these creditors. The attached financial reports indicate how our financial statements may change if VDL will goes into receivership. The main effect will be a substantial decrease in our deficit in working capital.

On August 18, 2003, we signed an agreement with Natali (the company for emergency medical services in Israel) Ltd. ("Natali"), an Israeli company that provides emergency services to Homecare patients. The agreement was reaffirmed and revised on July 27, 2004. Under the revised agreement we will provide Natali with 10,000 units of a GSM cellular phone that has an integrated EKG (ECG) device (the "CardioGSM"). Natali has the right to reduce the order to 2,500 units. The value of the order is $3,000,000, unless the order is reduced to 2,500 units, in which case the value is $750,000. The CardioGSM will permit cardiac patients that are subscribers to Natali's services to take their own EKG wherever they are and transmit the results via the embedded cellular phone to Natali's emergency center for doctor evaluation. The CardioGSM will also operate as a regular cellular phone. The price to be paid by Natali for the CardioGSM will be $300 or cost plus 20%, whichever is higher. However, if the price exceeds $350, Natali may cancel the order. Natali may also cancel the order if a third party claims that the CardioGSM infringes its patents. The Company has agreed to indemnify Natali in the event of any such infringement.

The Company is obligated to deliver the first shipment of 1,000 units by December 2005. If the Company fails to do so, the order may be cancelled, but without penalty to the Company.

On August 14, 2004, the Company signed an agreement with Itzhak Tavori who holds U.S. Patent No. 5724025 and EU Patent application Number 97102255.3 (the "Patents"). The Patents cover claims regarding a portable vital-signs monitor. The agreement gives the Company non-exclusive licensing rights to develop, manufacture and sell products using the Patents. The Company will be using the Patents in the development of the CardioGSM. The license is granted in consideration for 3% royalties of revenues from products developed by the Company under the Patents up to $400,000 and up to 271,410 shares of Class A Common Stock (approximately 3% of the current outstanding shares) to be issued pro-rata to orders received up to $3,000,000. After royalty payments of $300,000 the Patents will be fully assigned to the Company without payment of additional consideration.

At present we do not have the money to develop the CardioGSM. We intend to raise the necessary funds, about $1,000,000, in the fourth quarter of 2004. Although we are now in discussions regarding various capital-raising alternatives, there can be no guarantee that we will be successful in raising the funds. If we fail to notify Natali by the end of 2004 that we have the necessary funds and have started development of the CardioGSM, Natali has the right to cancel the order.

Based on the know-how we will acquire in the development of the CardioGSM, we intend to develop a new cellular voice PDA, the "VoicePilot", for the blind and visually impaired. In developing the VoicePilot we will not be using the intellectual property that belongs to the Subsidiary. However, we expect that claims to the contrary may be presented by the Chief Scientist of the Ministry of Industry and Trade of the Government of Israel that participated in the development of the intellectual property of the Subsidiary, or by a receiver to the assets of VDL if one is appointed. We believe that such claims have no basis and will not prevail.

In addition to these developments we are looking to expand our core technology and add additional lines of products to complement our growth through strategic acquisitions or mergers. Although there have been some preliminary discussions in this direction, there are no concrete discussions ongoing at this time, and we can make no assurances that we will be able to complete any such transactions on terms favorable to us.

On June 22, 2004, our Class A Common Stock was approved for listing on the Over-the-Counter Bulletin Board. Our symbol is VDYI.

On July 20, 2004, the Company filed a registration statement on form S-8 to register 1,000,000 shares of Class A Common Stock to be issued upon exercise of options granted under the Company's 2003 Stock Option Plan. On July 26, 2004, the Company issued 595,000 shares of Class A Common Stock upon exercise of options granted under the 2003 Stock Option Plan. The exercise price was $0.01 and the proceeds received were $5,950. The options were issued to members of our advisory board, which was expanded during the last few months to include professionals in public relations, corporate matters, finance, mergers and acquisitions. On August 14, 2004, the Company granted 180,941 options under the 2003 Stock Option Plan in consideration for solicitation services provided in relation to the order from Natali. The exercise price is $0.01.

Our staff consists of a group of dedicated professionals that work, mostly on a part-time basis, for no compensation. If we are able to raise the funds necessary to continue our development plans, these individuals would be retained on a regular basis.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statements included in this report and is qualified in its entirety by the foregoing.

Six Months Ended June 30, 2004 Compared to Six Months ended June 30, 2003

Our revenues decreased from $72,792 to $1,557 as the sales of the IMP practically halted as the Subsidiary ran out of stock and we decided to discontinue the IMP and wait for our next generation product before we launch a new marketing effort.

Our cost of goods sold reflects our writing off of our Subsidiary's inventory.

We had no research and development expenses in this period. We eliminated our research and development team in the second quarter of 2003 due to budgetary constraints and the expense in the comparable period of 2003 is related to the phasing-out of research and development activity.

Marketing, general and administrative expenses decreased in this period by $51,856 (approximately 54%) compared to the same period in 2003, due to decreased marketing activity in an effort to reduce expenses. In the period most of the management expenses were incurred in the effort to raise capital for the Company.

Our financial expenses in the six months ended June 30, 2004, were $127,232 compared to financial expenses of $17,512 in the first six months of 2003. The increase is mainly due to penalties set on the Subsidiary for debt that is the subject of Enforcement of Judgment proceedings.

Our other income for the period came from sales of computer boards to a related party. In the same period of 2003 other income was from consulting services to a related party.

Our loss in the first two quarters of 2004 was $169,272 compared to a loss of $88,507 in the same period of 2003. The increase in loss in the recent period was a result of the sharp increase in our financial expenses, mostly due to the penalties on the loan from the Bank for Industrial Development of Israel Ltd. ("IDBI").

Three Months Ended June 30, 2004 Compared to Three Months ended June 30, 2003

Our revenues were negligible in both periods. This was a result of the decrease in the sales of the IMP as we ran out of stock and decided to discontinue the IMP and wait for our next generation product before we launch a new marketing effort.

Our cost of goods sold in the period reflects the writing off or our Subsidiary's inventory.

We had no research and development expenses in this period as we eliminated our research and development team in the second quarter of 2003 due to budgetary constraints. The expense of $9,501 in the previous period reflects phasing-out expenses.

Our marketing, general and administrative expenses in the period decreased in by $43,065 (approximately 66%) compared to the same period in 2003, due to decreased marketing activity in an effort to reduce expenses. In the period most of the management expenses were incurred in the effort to raise capital to the company.

Our financial expenses in the three months ended June 30, 2004, were $129,979 compared to financial expenses of $15,434 in the second quarter of 2003. The increase is mainly due to penalties set on our Subsidiary for debt that is the subject of Enforcement of Judgment proceedings.

Our other income for the period came from sales of computer board to a related party. In the previous period our other income was negligible.

Our loss in the second quarter of 2004 was $150,244 compared to a loss of $90,189 in the same period of 2003. The increase is mainly due to penalties set on our Subsidiary for debt that is the subject of Enforcement of Judgment proceedings.

Liquidity

VDL has a deficit in working capital and accumulated deficit as of June 30, 2004 of $612,193 and $2,230,115, respectively. On August 9, 2004, we decided to temporarily suspend the operations of VDL in Israel until such time as we reach a settlement with several creditors who seized VDL's bank account in Israel, which contained approximately $400, and have engaged the Enforcement of Justice Office for collection proceedings against VDL for debt amounting to approximately $220,000, including penalties and interest. We plan to meet the obligations of VDL by reaching settlement with the creditors that defers payments until future financing is obtained. We can give no assurance that we can reach a settlement. We believe that by law these creditors cannot proceed against the Company directly. The financial statements include disclosure on a pro-forma basis presenting how our financial statements may change if VDL will enter into receivership. The main effect will be a substantial decrease in our deficit in working capital.

Our operating budget is about $12,000 a month. Our available funds will permit us to operate under this budget until the end of 2004. We will seek to raise money through the sale of our equity in private or public transactions. If we are unable to raise money we face the risk of being unable to continue our operations.

Ultimately, our ability to continue as a going concern will depend upon our ability to achieve and maintain profitability in the sale of our products. Our independent certified public accountants stated in their report on our financial statements as of December 31, 2003, that our recurring losses from operations, negative working capital and shareholders' deficiency raise substantial doubt about our ability to continue as a going concern.

See Part II Item 1, "Legal Proceedings", regarding litigation initiated by creditors against VDL.