Summary of VIRTUALHEALTH TECHNOLOGIES INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the Company's plan of operation and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto.

The Company was a development stage company until August 28, 2006, at which time it emerged from development stage status upon the acquisition of MBHC, and its wholly-owned operating subsidiaries, VPSH, and SEHLLC. Prior to emerging from development stage status, no ongoing operations were conducted and no revenues were generated prior to the acquisition.

On October 6, 2006, the Company consummated a Stock Exchange Agreement with New Market Technology, Inc., a Nevada corporation, pursuant to which the Company acquired the outstanding shares of MOS, a company engaged in physician practice management. Prior to the acquisition, the Company owned forty-nine percent (49%) of MOS's outstanding shares. Under the terms of the Stock Exchange Agreement, the Company acquired the remaining outstanding shares of MOS in exchange for (a) 1,400,000 shares of the Company's common stock, and (b) a two-year convertible promissory note in the principle amount of $900,000. This note was converted as of September 30, 2009 in exchange for 1,000,751 shares of stock.

The Company generated revenue of $154,811 with cost of sales of $31,923, and incurred $334,257 in operating expenses (excluding interest income and expense), resulting in a $211,369 loss from operations during the three months ended September 30, 2009. The Company generated revenue of $578,003 with cost of sales of $134,448, and incurred $929,829 in operating expenses (excluding interest income and expense), resulting in a $486,274 loss during the nine months ended September 30, 2009.

Plan of Operation

The Company's (VHGI) primary business focus is to provide next generation solutions that securely and efficiently connects healthcare providers and their communities. The Company's three operating units each independently service an area of healthcare that benefits from its technology, and combined the three create a healthcare platform that is completely secure, intuitive and allows healthcare practioners to collaborate with one another in ways that were never possible before. Additional capital will be required, either through the sale of equity or through debt financing to meet our contractual obligations, and continue operations.
The development of Veriscrip™ as the nation's first "Real-Time" prescription drug monitoring program paves the way to exploit the Company's deep understanding of the need for improved data security in both state and federal managed healthcare programs. As a result, Secure eHealth, LLC has become the core component in any future development within the Company's product line. The Medical Office Software (MOS) business unit currently services a client base of over 1,500 early technology adopters. As both Veriscrip and Secure eHealth products are deployed in states where MOS has a base of users, we believe that we can leverage those users' familiarity with the Company and its technology solutions as initial sites for testing the services.

In 2009, President Obama's stimulus proposal, which includes billions in funding for healthcare technology implementation, has become the driving force behind a sharp increase in interest by physicians to adopt electronic prescription and electronic health record solutions. In light of the new focus on electronic solutions, VHGI has implemented a strategy for leveraging the federal funding that should be available through the proposed stimulus plan once approved. This strategy includes developing partnerships with several leaders in the area of Community Based HIE (Health Information Exchange) and RHIO (Regional Health Information Organization) to provide an electronic privacy management platform to create the secure environments required for successful adoption. Also included in our 2009 strategy is an emphasis on the marketing of our newly designed Practice Management and EHR (Electronic Health Records) solutions for MOS' 1,500 existing customers. Also we are continuing to identify strategic acquisitions of like companies to grow the MOS client base of healthcare practitioners providing a wider demographic to cross sell the Company's services and products.

In addition to stimulus funding for healthcare technology implementation, we believe that the approval of funding for the National All Scheduled Prescription Electronic Reporting (NASPER) program by Congress should create the opportunities for us to introduce our Veriscrip products and services as the most comprehensive solution to aid in the growing problem of prescription drug diversion and fraud that is occurring across state lines.

In 2008 Secure eHealth, LLC entered into a licensing agreement with Private Access, Inc. to provide security tools to enhance their existing platform. Private Access, Inc. is a California-based developer of privacy management tools for individuals to determine who, when and under what circumstances others can access and/or use their personal medical information. We believe that our association with Private Access, Inc. will provide a broad audience for Secure eHealth, LLC and facilitate the introduction of our secure electronic platforms for exchanging digital health information.

Veriscrip ™ Business Model and Market Strategy

The business model for our Veriscrip products and services is primarily based upon the selling and operation of real-time controlled prescription drug monitoring for state agencies, which pay for the services. Our fees are composed of a mix of license fees and transaction fees. We believe that these fee components are a standard practice for electronic solutions and will be accepted in the market. In addition, a small amount of revenue may be derived from electronic networks with which we have established connectivity to reach pharmacies and Pharmacy Benefit Managers (PBMs). We expect that our typical customer will be a state or federal agency and can be classified as follows:

Primary Paying Customer: State agencies who contract with us to provide controlled prescription management solutions within their jurisdiction, typically a state, and the regulators they employ to manage the administration of prescription drugs within their states.

Parties Involved: Prescribers, including physicians, nurse practitioners, psychiatrists, and dentists, as well as pharmacies, are participants as they are directly involved in the authorization and dispensing of controlled prescription drugs. We service these parties per our agreements with state sponsors; however, we have not forecasted, nor do we expect to, derive revenue for our core functionality from these parties for our core product offering. Future value-added transaction sets and functionality may garner additional revenue.

The following are our anticipated primary sources of revenue:

Pilot Fees: In advance of each contract with a state-wide agency, it is anticipated we will begin with a pilot program within a small region to test and verify with the state agency the effectiveness and operation of our solution. We anticipate that the state agency will pay a nominal amount, most likely as a flat fee, to support these pilot activities.

License Fees: We expect to be paid a one-time license fee from our state agency customers, based upon state population, and paid over a period of time. This fee is anticipated to cover all of our startup and implementation costs.

State Transaction Fees: We also anticipate receiving transaction revenue from our state agency customers for each transaction processed.

We believe that our Veriscrip System has several advantages in this emerging market, key among which are:

First to Operate a Real-Time Solution: We believe that the Veriscrip pilot project in Kentucky is the first state-backed real time electronic prescription drug monitoring program (PDMP) in the United States. This experience provides us with an opportunity to work with regulators and state governments to fine tune an overall product offering, and provides a potential advantage in marketing to other states.

Single Focus: Unlike many potential competitors, Veriscrip has one focus-the provision of controlled prescription compliance solutions to state agencies. By maintaining a simple focus, we can maximize our resources. Although our management personnel have a deep and varied base of experience in related healthcare solutions (i.e., records management, healthcare privacy solutions) of our competitors, our simple focus helps to avoid management distractions that might otherwise be focused toward these related areas.

Most Secure: One of the largest hurdles in the introduction of healthcare technology proliferation, specifically in the areas of centralized data storage and data mobility is the perceived inability to adequately protect patient information. Veriscrip is designed to take full advantage of the latest advances in authentication and encryption technologies by integrating Secure eHealth's suite of security products rendering the Veriscrip platform the most secure PDMP available.

Our marketing strategy is to position Veriscrip such that user barriers to adoption are minimized, leveraging existing complementary vendors rather than competing with them and combining a set of services that both uniquely meets the regulatory monitoring needs of state agencies and resolves current problems facing prescribers and pharmacies. Our current marketing efforts are focused on states that appear to be aware of the prescription drug problems within their state, have drafted bills or commissioned studies on prescription drug abuse, and have some drug monitoring system or plan currently in place. These criteria will assist in identifying target states for marketing efforts, but contacts and relationships of management will play essential roles in securing audience with state decision makers. Currently as of August 2009, there are only forty states with legislation allowing prescription drug monitoring of which thirty-two have active programs in place. Of these programs none are real-time, which represents a tremendous opportunity for Veriscrip to be the leader in the field of PDMP.

As a rule, the following challenges exist within every state:

Lack of awareness: Most state governments do not have a general awareness of the extent and cost of prescription drug abuse. In addition, most do not know that practical real time options exist for administration and monitoring of prescription drugs. Generating awareness through media stories and direct marketing to government officials and health related groups are essential parts of our strategy.

Confidentiality of Patient Information: Patient confidentiality remains a key barrier in passing legislation in certain states and is a primary contributing factor in the slow adoption. HIPAA legislation passed by Congress in 1996 provides a strong framework for securing health information. We believe that our Veriscrip System is HIPAA compliant, and meeting this concern requires effective communication of our system attributes, compliance, and a proactive approach to security and confidentiality in general.

Funding: States, facing fiscal crisis, have few dollars to spend on new programs even if they will save the state significant amounts of money. We believe, however, that there are several ways for states to generate the funding necessary for our Veriscrip System. For example, the U.S. Department of Justice is currently administering the Hal Rogers Fund, which was established to issue grants to states wishing to implement or improve prescription drug monitoring programs. In addition, states could establish a mechanism by which pharmaceutical companies may contribute to the state monitoring programs. As part of our marketing efforts, we plan on educating our potential customers as to these various approaches to funding for our services.

MOS Business Model and Market Strategy

Since its inception, MOS has been engaged in the physician practice management system ("PMS") market. Having completed more than 1,500 installations, MOS has established a strong presence and brand throughout Southeastern Florida as the premier provider of physician practice solutions. MOS began as a developer and marketer of its own PMS solution. At the present, however, MOS focuses almost exclusively on reselling and supporting products developed by other parties in an effort to provide the best of breed to its customers. The market segments and products for each of these markets are as follows:

Physician Practices: Practice Management Software, Electronic Medical Records Software, Electronic Claims Transactions via our Portal, E-prescribing Solutions.

The following are MOS's anticipated primary sources of revenue:

License Fees: For each of the software solutions whether Practice Management or Electronic Medical Records there is a license fee collected. The amount of each fee varies upon the scope of the installation and number of users. This one-time fee is independent of any on-going maintenance fees paid.

Upgrade Fees: As newer and improved versions of the software products are released, an upgrade fee is collected from the customer. Since many of the transactions that emerge from the software are regulated standards, these upgrades are issued annually and are quickly adopted by the user base.

Training Fees: Training fees are collected for both new installations and for existing installations that have a need to train new staff or for improved use of the existing product.

Support Maintenance Fees: We expect to be paid an annual maintenance fee for each installation. These fees are typically collected on the anniversary of the installation for each customer. They allow customers to receive critical updates and support for their products. Support is available via telephone, remotely via the web, or on-site as deemed necessary.

Transaction Fees: There are multiple transactions generated by the Practice Management Software: Electronic Claims, Electronic Statements, and Electronic Prescriptions. These transactions are all billed to the customer as a per transaction fee or a flat monthly rate option.

Hardware Sales: In addition to the software solutions, MOS also provides and installs hardware on which the MOS services operate (PC Workstations, Network HW, and Servers).

Hardware and Network Maintenance and Consulting Fees: MOS has an in-house team of technicians that are capable of setting up, trouble shooting and streamlining network performance and efficiency. These fees vary with the scope of each request.

Custom Development Fees: We also provide custom development services for customers who desire forms or reports particular to their operations. These fees vary on the scope of each request.

In a continuing pattern of identifying the changing needs of its customers and the industry, MOS recently entered into an agreement with SILK Information Systems, a developer of Software as a Service (SaaS) based Revenue Cycle Management solutions. This relationship is an important strategic success for MOS by having the diversity of both the traditional license model for software applications coupled with the ability to now provide monthly subscription based access to the same leading edge technology. The Company will benefit from the long-term recurring revenue streams of a SaaS model, which historically provide 5-8 times multiples in the market or higher for companies on this model versus a traditional license revenue only company.

One very interesting aspect of this new line of business is its ability to help customers increase their revenues. According to VHGI, the increased automation and efficiency enabled by its SILK solution allows its physician practice clients to increase collected revenues by 20% to 30%. With research conducted by the AMA revealing that physicians expend 14% of their collected revenues on correct billing alone, the ability of the company's technology to eliminate these costs are an extremely valuable asset for MOS and have played an integral role in building its current client base.

Secure eHealth Business Model and Market Strategy

Secure eHealth, LLC, formerly known as Envoii Healthcare, LLC, provides a suite of products to the healthcare industry that enhance an existing platform's ability to provide users access to their most critical and confidential information, quickly and securely. Its flagship product, the System Tray Notifier™ introduced last year is designed to revolutionize the communication of sensitive healthcare information by providing "single click access" to important messages from within the user's system tray without interrupting workflow and securely displaying the images, documents or messages directly from its server.

The System Tray Notifier™ was recently licensed by Private Access, Inc. a California developer of web-based tools that allows patients and healthcare professionals to control both the privacy and accessibility of confidential personal health records. Secure eHealth is also pursuing Health Information Exchange programs nationwide as a vehicle for securely exchanging data between disparate clinic and hospital based systems.

Secure eHealth, LLC recently concluded the formal license agreement with DRM Security, LLC to distribute the Cifra™ product in both a stand-alone product configuration and as a Software as a Service (SaaS) model. Three key benefits and features of Cifra are:

• Cifra provides a secure environment to transfer or store sensitive documents with the originator retaining complete control over the disposition of those documents (controls the recipient's ability to copy, print, save, edit, comment, etc.)
• Cifra provides a level of encryption equivalent to those authorized for use by the government such as the National Security Agency in instances where only the sender and recipient have access to the keys. The server and the system administrator NEVER have key access. Cifra is a closed environment preventing SPAM and minimizing the
• potential spread of viruses and worms

More than simply a secure messaging system, Cifra is a robust data delivery platform. It is expected that Cifra will change the way that healthcare practitioners around the world collaborate with one another. In the initial agreement, Secure eHealth will have preferred rights to market Cifra directly to both small and enterprise sized physician groups as well as Regional Health Organizations and state run Health Information Exchange programs. Cifra will also become an imbedded component in the Company's subsidiary, Medical Office Software which will be used for securely connecting both private and hospital based physician groups. In addition, Cifra will also become the key platform that will drive the Veriscrip prescription drug monitoring program to transfer controlled substance data between state agencies.

The market segments for Cifra include:

• State based Health Information Exchange Programs
• Both State run and Private Health Plans
• Hospital based Physicians Groups
• Regional Health Information Organizations Any covered entity that requires compliance with HIPAA and recent "Red
• Flag" rules for healthcare

The Services / Products for each of the above would include:

Authentication applications, secure messaging, secure encryption technologies for data exchange, transfer, secure storage/repository for all digital data files, and high security connectivity solutions.

The following are Secure eHealth's anticipated primary sources of revenue:

State Transaction Fees: We also anticipate receiving transaction revenue from our state agency customers for each transaction processed.

Sales Revenues from "Product" and "Software as a Service": Although the initial model will be to offer the Cifra solution to a select number of users at no-charge, the clients beyond those users will generate revenue based on a one-time purchase of the Cifra product set plus the annual support fees, or as a SaaS client with monthly recurring User fees, including support. The product will be propagated by the users as one client elects to share a secure document or message with another, the new users must be invited and then purchase the application, download to the client before using the system.

Liquidity and Capital Resources

The Company currently has no funds to execute its business plans, and it has no agreements or understandings in place that would provide it with the required funding to execute its business plan.

The Company's working capital requirements for the foreseeable future will vary based upon a number of factors and depending upon the entity owned by the company. VPSH, the owner of the Veriscrip System has capital demands to finish development and any customization of its primary system for the tracking of controlled prescriptions, the costs associated with launching the system if successfully developed, the acceptance of the system by each state and market penetration along with other factors that may not be foreseeable at this time. Secure eHealth, has capital requirements to finish development and any customization of its security platform and the launching and distribution of its systems. MOS, even though it has revenues sufficient to support its typical operations, has capital demands from time to time that exceed its ability to fund itself on its own. Management believes that the Company will need additional funding to grow. There can be no assurance that we will be able to obtain additional funding on satisfactory terms, or at all. If we do not receive the needed funding, we will not be able to execute our business plans.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Forward-Looking Statements

When used in this Form 10-Q or other filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized officer of the Company's executive officers, the words or phrases "would be", "will allow", "intends to", "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and advises readers that forward-looking statements involve various risks and uncertainties. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statement.