<PAGE>


                      US Securities and Exchange Commission
                              Washington, DC 20549

                                   FORM 10-KSB
     (Mark One)
        [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                 EXCHANGE ACT OF 1934 [Fee Required]

                  For the fiscal year ended December 31, 2002.

        [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

                         Commission File Number 0-12365

                            MIRACOR DIAGNOSTICS, INC.
                 (Name of small business issuer in its charter)

                      Utah                         58-1475517
                ----------------                ---------------
         (State or other jurisdiction of         (IRS Employer
         incorporation or organization)        Identification No.)

         9191 Towne Centre Drive, Suite 400, San Diego, California 92122
                    (Address of principal executive offices)

                    Issuer's telephone number: (858) 455-7127

Securities registered under Section 12(b) of the Exchange Act:        None

Securities registered under Section 12(g) of the Exchange Act:        None

         Title of each class
         -------------------
 Common Stock, $0.15 Par Value

         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[ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]

State issuer's revenues for its most recent fiscal year $12,040,908.

As of March 14, 2003, Registrant had outstanding 15,248,657 shares of the
Registrant's common stock, and the aggregate market value of such shares held by
non-affiliates of the Registrant (based upon the closing bid price of such
shares as listed on the over-the-counter NASD Bulletin Board on March 14, 2003)
was approximately $2,694,894.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


DOCUMENTS INCORPORATED BY REFERENCE

Certain sections of the Registrant's definitive Proxy Statement for the 2003
Annual Meeting of Stockholders to be held on May 13, 2003, are incorporated by
reference in Part III of this Form 10-KSB to the extent stated herein.


<PAGE>

                                TABLE OF CONTENTS

                                     PART I

Item 1.   Description of the Business........................................1

Item 2.   Description of Property............................................6

Item 3.   Legal Proceedings..................................................7

Item 4.   Submission of Matters to a Vote of Security Holders................7

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder
          Matters ...........................................................8

Item 6.   Management's Discussion and Analysis and Plan of Operation.........8

Item 7.   Financial Statements..............................................14

Item 8.   Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure..........................................14

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons,
          Compliance with Section 16(a) of the Exchange Act.................15

Item 10.  Executive Compensation............................................16

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management........................................................16

Item 12.  Certain Relationships and Related Transactions....................16

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K..................................18


<PAGE>

                                     PART I

This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates, and
projections about Miracor Diagnostics' industry, management beliefs, and certain
assumptions made by Miracor Diagnostics' management. Words such as
"anticipates," expects," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words, and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties, and assumptions
that are difficult to predict; therefore, actual results may differ materially
from those expressed or forecasted in any such forward-looking statements.
Unless required by law, the Company undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events, or otherwise. However, readers should carefully review the risk factors
set forth in this Annual Report on Form 10-KSB and in other reports and
documents that the Company files from time to time with the Securities and
Exchange Commission, particularly the Quarterly Reports on Form 10-QSB and any
Current Reports on Form 8-K. All references to "us", "we", "Miracor", or "the
Company" refer to Miracor Diagnostics, Inc., its predecessors and its
subsidiaries.

ITEM 1.  DESCRIPTION OF THE BUSINESS

Overview and History
--------------------

         Miracor Diagnostics, Inc. was incorporated on February 6, 1980, under
the laws of the state of Utah.

         Prior to 1992, our business was the exploration and production of
hydrocarbons. As of June 1, 1992, we re-entered the development stage. Effective
January 1, 1994, we completed the divestiture of all oil and gas properties and
are no longer in the hydrocarbon business. Since that time, we have been
exclusively a medical based company.

         Between 1994 and 1998, we engaged in the development of the following
innovative medical devices:

         1.       The Fluid Alarm System (FAS) monitored the integrity of
                  infection control barriers, such as surgical gloves and gowns
                  worn during medical procedures. We received FDA clearance for
                  the FAS during the year ended December 31, 1995. We have the
                  patent licensing rights through 2005 with an option to extend
                  such rights through the life of the patent, 2010.

         2.       The Cell Recovery System (CRS), was a cell "brushing" and
                  retrieval system that used an automated biopsy brush for the
                  collection of specimen cells for diagnostic purposes,
                  primarily (but not limited to) cancer detection. We received
                  FDA clearance for the CRS in March 1996. We initiated further
                  clinical trials on the CRS in 1997. We own 50% of the patent.
                  Additionally, we have the patent licensing rights through the
                  life of the patent, 2008.

                                       1


<PAGE>

         In 1998, we redefined our business focus from medical devices to
medical diagnostic imaging services and emerged as an operating company through
the acquisition of medical diagnostic imaging centers in Orlando and
Jacksonville, Florida, Toledo, Ohio, and Oak Brook, Illinois.

        In 1998, coincident with the purchase of Vision, we recorded impairment
losses associated with the FAS and the CRS licenses. However, we may elect to
reintroduce or sell either product at a later date, although we have no plans to
do so at this time.

         Through these acquisitions of MRI centers, we redefined our business
focus to medical diagnostic imaging services and emerged as an operating
company. In October 1999, we changed our name to Miracor Diagnostics, Inc. to
reflect our focus in medical diagnostic imaging.

         In February 2000, we closed the acquisition of 80% of three centers
located in Palm Harbor, St. Petersburg and Tampa, Florida as well as the holding
company, Ultra Open MRI Holding Corporation ("Ultra"). During 2001, the
transaction was rescinded pursuant to a settlement agreement. We relinquished
our holdings in Ultra and cancelled approximately 2.5 million shares of common
stock in return, effective February 28, 2001.

         In June 2001, we acquired three diagnostic imaging centers located in
California. Laguna Niguel MRI, Inc. is an MRI center located in Laguna Niguel,
California. Envision Healthcare, LLC, is an MRI center located in Long Beach,
California. We also acquired 51% of Envision Open MRI, LLC, an MRI center
located in Newport Beach, California.

         In October 2001, we established a start-up MRI center located in
Perrysburg, Ohio. In February 2002, we opened our ninth diagnostic center
located in Woodridge, Illinois through an asset purchase agreement.

         In December 2002, we opened a start-up diagnostic imaging center
located in Kissimmee, Florida. Also in December 2002, we acquired three
diagnostic centers located in Coos Bay, Oregon; Long Beach, California and Carol
Stream, Illinois.

         In January 2003, we opened a start-up diagnostic imaging center located
in Jacksonville, Florida. With this addition, we now own fourteen diagnostic
centers in five states.

         Our mission is to establish a growing and profitable diagnostic imaging
company based on maintaining the highest level of business integrity and
continually striving to improve the level of service to our referring physicians
and their patients.

         We utilize capital to purchase new diagnostic imaging equipment, to
upgrade and replace existing equipment, to expand within existing markets and to
enter new markets.

         We are an independent provider of medical diagnostic imaging services
through the operation of our fourteen centers. Our principal executive office is
located at 9191 Towne Centre Drive, Suite 400, San Diego, California 92122. Our
telephone number is 858/455-7127, and our website is www.miracor.net.

         We file annual, quarterly, and special reports, proxy statements, and
other information with the Securities Exchange Commission (SEC). Reports, proxy
statements and other information filed with the SEC can be inspected and copied
at the public reference facilities of the SEC at 450 Fifth Street NW,
Washington, DC 20549. Such material may also be accessed electronically by means
of the SEC's website at www.sec.gov.

         Our common stock, par value $0.15 per share, is traded over-the-counter
on the NASD Bulletin Board under the symbol "MRDG".

         As of December 31, 2002, we employed five full-time and one part-time
corporate employees and 83 full-time and 36 part-time employees at our thirteen
diagnostic imaging centers. None of our employees is covered by collective
bargaining contracts.


                                          2

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Risk Factors
------------

         Investment in our securities involves a high degree of risk. Investors
should carefully consider the following factors, among others, relating to
Miracor.

We have an Accumulated Deficit; While We have been Profitable, there is an
Uncertainty of Future Profitability

         At December 31, 2002, we had an accumulated deficit of approximately
$25,190,000 which includes losses from our prior operations in the oil and gas
business, medical device industry and from our first three years of operating in
the medical diagnostic imaging business.

         While we have been profitable in our last two fiscal years, our ability
to achieve profitability depends upon our ability to successfully market our
medical diagnostic imaging business, of which there can be no assurance. There
is no assurance that newly acquired sites will be profitable.

We Expect to Need Additional Capital to Expand Our Operations

         We utilize capital to purchase new diagnostic imaging equipment, to
upgrade and replace existing equipment, to expand within existing markets and to
enter new markets. Our capital sources have consisted primarily of income from
operations, borrowings under our credit facility, borrowings under secured
leases, and issuance of common stock. Our ability to accomplish our goals and to
execute our business strategy depend on our continued ability to access capital
on appropriate terms. Our growth could be limited and our existing operations
impaired unless it is able to obtain additional capital through subsequent debt
or equity financings. There can be no assurance that borrowing capacity under
the credit facility will be available to us when needed or that we will be able
to obtain additional financing or that, if available, such financing will be on
terms acceptable to us. As a result, there can be no assurance that we will be
able to implement our business strategy successfully.

We Would Like to Acquire New Operations but Can Give No Assurance That we Can
Identify or Acquire Additional Operations

         From time to time, if our resources allow, we intend to explore the
acquisition of additional medical diagnostic imaging operations. There can be no
assurance, however, that we will be able to identify any additional diagnostic
imaging operations and, even if suitable operations are identified, there can be
no assurance that we will have sufficient funds to acquire any such operations
or that any such operations will be profitable.

Our Operations Are Subject to Extensive Government Regulations

         Our operations are subject to extensive government regulations in the
United States. In order to operate our medical diagnostics imaging equipment, we
must satisfy numerous mandatory procedures, regulations, and safety standards
established by the federal and state regulatory agencies. There can be no
assurance that we can successfully comply with all present or future government
regulations.

We Are In An Intensely Competitive Business and Cannot Guarantee that We Can
Effectively Compete

         The medical diagnostic imaging industry is intensely competitive,
particularly in terms of price, quality and marketing. Some competitors are
better established and have substantially greater financial, marketing and other
resources than us. Further, most of our competitors have been in existence for a
substantially longer period of time and may be better established in those
markets where we intend to sell our services. As a result of our relative lack
of financial, marketing and other resources, there can be no assurance that we
will be able to market our MRI services successfully, or compete in the
diagnostic imaging industry.


                                       3

<PAGE>

The Health Care Industry is Subject to Continuing Reform Measures By Governments
and Third Party Payors, Which Contribute to the Uncertainty of Pricing and
Reimbursements To Us

         The levels of revenues and profitability of medical diagnostic imaging
operations may be affected by the continuing efforts of governmental and third
party payors to contain or reduce the costs of health care through various means
and the initiatives of third party payors with respect to the availability of
reimbursement. In the United States, there have been, and we expect that there
will continue to be, a number of federal and state proposals to implement
similar governmental control. Although we cannot predict what legislative
reforms may be proposed or adopted or what actions federal, state or private
payors for health care services may take in response to any health care reform
proposals or legislation, the existence and pendency of such proposals could
have a material adverse effect on us.

         Whether a medical procedure is subject to reimbursement from third
party payors impacts upon the likelihood that a service will not be purchased.
Third party payors are increasingly challenging the prices charged for medical
procedures. There can be no assurance that any of our medical diagnostic imaging
services will continue to be reimbursable at the current rate. To the extent any
or all of our medical procedures are not reimbursable by third party payors our
ability to sell our services on a competitive basis will be adversely affected,
which could have a material adverse effect on us.

Various Laws Put Restrictions on the Corporate Practice of Medicine, Which May
Limit Our Ability to Operate in Certain Circumstances.

         The laws of certain states in which we operate or may operate in the
future prohibit non-physician entities from practicing medicine, exercising
control over physicians or engaging in certain practices such as fee-splitting
with physicians. Although we have structured our affiliations with physician
groups so that the physicians maintain exclusive authority regarding the
delivery of medical care, there can be no assurance that these laws will be
interpreted in a manner consistent with our practices or that other laws or
regulations will not be enacted in the future that could have a material adverse
effect on our business. If a corporate practice of medicine law is interpreted
in a manner that is inconsistent with our practices, we would be required to
restructure or terminate its relationship with the applicable physician group to
bring its activities into compliance with such law. The termination of, or
failure of us, to successfully restructure any such relationship could result in
fines or a loss of revenue that could have a material adverse effect on our
business, financial condition or operating results.

Our Stock Is Volatile, Has A Limited Public Market, And You May Not Be Able To
Resell Your Shares At Or Above Your Purchase Price.

We have a limited public market for our common stock. In addition, the stock
market has, from time to time, experienced extreme price and volume fluctuations
that have particularly affected the market prices of companies in the healthcare
service industries and that have often been unrelated to the operating
performance of the affected companies. Announcements of changes in reimbursement
policies of third-party payors, legislative or regulatory developments, economic
news and other external factors, including geopolitical developments, may have a
significant impact on the market price of healthcare stocks. Although our common
stock trades on the NASD Bulletin Board, an active trading market for our shares
may never be sustained. Your purchase price may vary from the market price of
our common stock after your purchase. If you purchase shares of common stock,
you may not be able to resell those shares at or above your purchase price. The
market price of our common stock may fluctuate significantly in response to
numerous factors, some of which are beyond our control, including the following:

         -        factors affecting national security markets;
         -        actual or anticipated fluctuations in our operating results;
         -        changes in financial estimates by securities analysts or our
                  failure to perform in line with such estimates;
         -        changes in market valuations of other similar companies,
                  particularly those that sell products and services such as
                  ours;
         -        announcements by us or our competitors of significant
                  technical innovations, acquisitions, strategic partnerships,
                  joint ventures or capital commitments;
         -        introduction of technologies or product enhancements that
                  reduce the need for our products or services; and
         -        departures of key personnel.



                                       4
<PAGE>

We Do Not Expect to Pay Dividends On Our Common Stock

         The board of directors reviews our dividend policy annually. We have
not paid any cash dividends with respect to our common stock, and it is unlikely
that we will pay any dividends on our common stock in the foreseeable future.
Earnings, if any, that we may realize will be retained in the business for
further development and expansion.

We Have Anti-Takeover Provisions In Our Corporate Documents, Which Include
Poison Pill Issuance of Preferred Stock; We are Subject to the State of Utah
Anti-Takeover Provisions

         Our Articles of Incorporation and By-Laws contain provisions that may
make the acquisition of control of the Company by means of tender offer,
over-the-counter market purchases, a proxy fight or otherwise, more difficult.
This could prevent security holders from realizing a premium on their
securities. We also have a staggered board of directors, which is a further
impediment to a change in control.

         We have adopted a so-called "poison pill." Specifically, the poison
pill significantly increases the cost to an unwanted party to acquire control of
us upon the acquisition by such unwanted suitor of 15% of the outstanding voting
power.

         In addition, the board of directors may issue one or more series of
preferred stock without any action on the part of our shareholders of the
Company, the existence and/or terms of which may adversely affect the rights of
holders of the common stock. In addition, the issuance of any such additional
preferred stock may be used as an "anti-takeover" device without further action
on the part of the shareholders. Issuance of preferred stock, which may be
accomplished through a public offering or a private placement to parties
favorable to current management, may dilute the voting power of holders of
common stock and the preferred stock (such as by issuing preferred stock with
super voting rights) and may render more difficult the removal of current
management, even if such removal may be in the shareholders' best interests. We
are subject to the provisions of Sections 61-6-3 through 61-6-12 of the Utah
Control Shares Acquisition Act, an anti-takeover statute. Sections 61-6-3
through 61-6-12 effectively provide that in the event a person acquires
ownership or the power to effect, directly or indirectly, the exercise of 20% or
more of the voting power of a Utah corporation in connection with the election
of directors, then such person shall only be entitled to vote to the extent
expressly agreed to by the majority of the other shareholders of the
corporation. Accordingly, potential acquirers of us may be discouraged from
attempting to effect acquisitions of our voting securities, thereby possibly
depriving holders of our securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices.

We Have a Number of Restricted Shares Eligible for Future Sale

         At December 31, 2002, there were 5,464,258 shares of common stock that
were issued and outstanding that are "restricted securities" as that term is
defined by Rule 144 of the Securities Act, all of which are currently eligible
for resale in compliance with Rule 144 of the Securities Act. Of these shares,
21% are owned by our current officers and directors.

         Rule 144 provides that, in general, a person holding restricted
securities for a minimum period of one (1) year may, every three (3) months
thereafter, sell in brokerage transactions an amount of shares which does not
exceed the greater of one percent (1%) of the Company's then outstanding common
stock or the average weekly trading volume of the common stock during the four
(4) calendar weeks immediately prior to such sale. Rule 144 also permits, under
certain circumstances, the sale of shares without any quantity limitations by a
person who is not an affiliate of the Company and was not an affiliate at any
time during the ninety (90) day period immediately prior to such sale, and who
has satisfied a two (2) year holding period. Sales of the Company's common stock
by shareholders under Rule 144 may have a depressive effect on the market price
of the Company's common stock.


                                         5
<PAGE>

Acquisitions and Start-Ups
--------------------------

         During 1998, we acquired either the stock or substantially all of the
assets and liabilities of Vision Diagnostics, Inc. and Affiliates ("Vision").
Vision was in the business of providing medical diagnostic services. The
affiliated group of companies includes Vision Diagnostic, Inc., Regional MRI of
Orlando, Inc., Regional MRI of Jacksonville, Inc., Regional MRI of Toledo, Inc.
and West Regional MRI Limited Partnership. This acquisition included medical
diagnostic imaging centers in Orlando and Jacksonville, Florida; Toledo, Ohio
and Oak Brook, Illinois.

         In February 2000, we acquired 80% ownership in Ultra Open MRI Holding
Corporation with a combination of 20% in the form of a payable and 80% in
Restricted Rule 144 common stock. The purchase price was $1,900,800 and goodwill
associated with this transaction was recorded at $1,544,553 which included
direct costs associated with the purchase. Total assets were approximately $1.8
million and total liabilities were approximately $1.3 million as of February 9,
2000. During 2001, the Ultra purchase transaction was rescinded pursuant to a
settlement agreement. Effective February 28, 2001, we relinquished our holdings
in Ultra and cancelled 2,534,400 shares of our common stock in return. As a
result of this rescinded transaction, common stock and additional paid-in
capital were reduced by $2,656,456. The revenues and expenses of Ultra for the
two month period ended February 28, 2001 were $695,327 and $453,893,
respectively, and are included in the Company's consolidated financial
statements. The assets and liabilities of Ultra as well as related notes
payable, goodwill associated with the acquisition, and all other Ultra related
balances are not included in the consolidated financial statements of the
Company after February 28, 2001. The minority shareholder's portion of Ultra's
net income has been presented as minority interest in the accompanying
consolidated statements of operations for the year ended December 31, 2001 (see
Part II, Item 7 "Notes to Consolidated Financial Statements" - Notes 2 and 5).

       In June 2001, we acquired Laguna Niguel MRI, Inc., an MRI center located
in Laguna Niguel, California. The acquisition was funded via third party
financing. The purchase price was $1,250,000 and goodwill associated with the
transaction was recorded at $906,793 which included direct costs associated with
the purchase. Total assets were approximately $575,000 and total liabilities
were approximately $177,000. The note payable to the third party, along with
accrued interest was payable over 5 years. In September 2002, this note was
refinanced into a new note payable which also included the purchase price of new
MRI equipment (see Part II, Item 7 "Notes to Consolidated Financial Statements"
- Note 2).

         In June 2001, we acquired Envision Healthcare, LLC, an MRI center
located in Long Beach, California. The center was acquired from one of our
directors/officers. The acquisition was funded via seller's financing. The
purchase price was $200,000 and goodwill associated with the transaction was
recorded at $84,773. Total assets were approximately $803,500 and total
liabilities were approximately $688,000. The convertible note payable of
$200,000 to the seller was payable over 3 years in payments of interest only at
10% for the first year with the principal to be paid down in equal installments
during the following two years. In June 2002, we issued 18,000 shares of
Restricted Rule 144 common stock valued at $2,340 as consideration for extending
the note by six months.

         In June 2001, we acquired 51% of Envision Open MRI, LLC, an MRI center
located in Newport Beach, California. The center was acquired from one of our
directors/officers. The acquisition was funded via seller's financing. The
purchase price was $75,000 and goodwill associated with the transaction was
recorded at $7,000. Total assets were approximately $558,000 and total
liabilities were approximately $426,000. The convertible note payable to the
seller, along with accrued interest was payable over 3 years. The remaining
minority principal's share of the shareholders' capital had been reflected as a
minority interest on the accompanying consolidated balance sheet at December 31,
2001 and December 31, 2002. This principal's share of the center's net income
has been presented as minority interest share of income in the accompanying
consolidated statements of operations for the years ended December 31, 2002 and
December 31, 2001. In June 2002, we issued 7,000 shares of Restricted Rule 144
common stock valued at $910 as consideration for extending the monthly interest
only payments by six months.



                                         6

<PAGE>

         In October 2001, we opened a start-up MRI center located in Perrysburg,
Ohio. In connection with this new MRI center, we entered into two capital lease
agreements with a finance company, financing medical equipment with a purchase
price of $1,191,970 over a 67 month period with interest of 11.54% and a monthly
payment of $25,269. In addition, we financed leasehold improvements of $75,500
over a 67 month period with interest of 11.55% and a monthly payment of $1,622
with a finance company.

         In February 2002, we opened a diagnostic center located in Woodridge,
Illinois through an asset purchase agreement. Associated with this transaction,
we recorded total assets of approximately $836,000, a capital lease liability of
$1,066,000 and goodwill of $230,000. We assumed MRI equipment and other medical
equipment pledged under a capital lease through a finance company with a monthly
installment payment of $30,050 over 44 months with an interest rate of 12.18%.

         In December 2002, we opened a start-up diagnostic imaging center
located in Kissimmee, Florida. We financed medical equipment pledged under a
capital lease with a finance company. The agreement finances MRI equipment with
a carrying amount of approximately $320,000 with a monthly installment payment
of $5,728 over 60 months with an interest rate of 9.56%.

         In December 2002, we assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
carrying amount was $1,882,433 and goodwill associated with the transaction was
recorded at $1,635,008. Total assets were approximately $594,000 and total
liabilities were approximately $347,000. The note payable to a finance company
has a monthly installment payment of $32,194 over 84 months with an interest
rate of 8.54%.

         In December 2002, we assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The carrying amount was $2,117,567 and goodwill associated with the
transaction was recorded at $1,045,049. Total assets were approximately
$1,290,000 and total liabilities were approximately $219,000. The note payable
to a finance company has a monthly installment payment of $36,215 over 84 months
with an interest rate of 8.54%.

         In December 2002, we acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The purchase price was
$1,750,000 and goodwill associated with the transaction was recorded at
approximately $768,000. Total assets were approximately $1,034,000 and total
liabilities were approximately $52,000. The note payable to a finance company
has a monthly installment payment of $35,596 over 72 months with an interest
rate of 10.84%.

         We plan to seek, investigate and, if such investigation warrants, to
acquire controlling interests in business opportunities that are similar in
nature to our existing medical diagnostic imaging centers. We plan to
concentrate our search for opportunities located in the regions in which our
existing diagnostic centers are located. We may seek a business opportunity in
the form of centers which have recently commenced operations or are mature
businesses.

         In seeking business opportunities, we will base our decision upon the
objectives of seeking long-term appreciation in market value. We will attempt to
analyze all relevant factors and make a determination based upon reasonable
investigative measures and available data. We may utilize the services of our
present attorney and accountants in the investigation of prospective
acquisitions. We may also utilize the services of hired consultants.

Subsequent Event
----------------
         In January 2003, we opened a start-up diagnostic imaging center located
in Jacksonville, Florida. We financed MRI equipment pledged under a capital
lease with a finance company. The agreement has a carrying amount of
approximately $950,000 with a monthly installment payment of $16,182 over 66
months. We also financed other medical equipment totaling $165,000 with various
finance companies.

ITEM 2.  DESCRIPTION OF PROPERTY

         Our corporate headquarters and executive offices are in San Diego, CA,
where we lease an office facility which expires August 31, 2005. In addition, we
lease medical office facilities in five states for our thirteen diagnostic
centers. Expiration dates on these medical office leases range from 2003 to
2011. We believe that our current facilities will be sufficient to meet our
needs for at least the next 12 months.

         We also lease or have pledges as collateral under note payable
obligations all of our MRI machines and various other medical equipment. These
long-term obligations expire on dates ranging from 2003 to 2009. See Part II,
Item 7 "Notes to Consolidated Financial Statements" - Notes 5 and 7 for
information regarding our obligations under facilities leases and financing
activities.


                                             7
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         A suit in the Court of Common Pleas, Cuyahoga, Ohio was commenced by
Plaintiff James V. Zelch and his wholly owned entity, J.Z. Investments, Inc.,
against us and three of our MRI site subsidiary entities, namely, Regional MRI
of Orlando, Inc., Regional MRI of Toledo, Inc., and West Regional MRI Limited
Partnership, seeking the payment of fees for radiological diagnostic services
allegedly rendered to patients of the aforementioned MRI Sites at a time prior
to our purchase of these MRI site entities. We have contested this lawsuit.
However, a default judgment for $187,102 was entered which we have claimed on an
appeal to the Ohio Court of Appeals that the judgment should have been vacated
and set aside by the lower court. A Decision of the Ohio Court of Appeals dated
March 20, 2003 has reversed the judgment against Miracor in its entirety, and
remanded the case back to the trial Court with instructions to conduct an
evidentiary hearing on the scope and meaning of two release documents given to
Miracor by the Plaintiffs.

         From time to time we have been named as a defendant in a lawsuit. As of
December 31, 2002, all such lawsuits have been dismissed or settled through
agreed-upon payment terms, except for as noted above. There are no other
material legal proceedings, to which we are a party, which could have a material
adverse effect on our business, financial condition or operating results.

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

         No matters were submitted to our shareholders during the fourth
quarter.



                                       8

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is traded over-the-counter on the NASD Bulletin Board
under the symbol MRDG. The following table sets forth, for the periods
indicated, the high and low bid prices for the common stock, as listed on the
over-the-counter NASD Bulletin Board during 2001 and 2002.

                                    Bid Price
                                                   High                   Low
                                                  ----------------------------
2001
----
         First Quarter                            $ 0.23               $ 0.13
         Second Quarter                           $ 0.20               $ 0.14
         Third Quarter                            $ 0.21               $ 0.10
         Fourth Quarter                           $ 0.27               $ 0.13
2002
----
         First Quarter                            $ 0.33              $  0.19
         Second Quarter                           $ 0.33              $  0.21
         Third Quarter                            $ 0.28              $  0.24
         Fourth Quarter                           $ 0.31              $  0.21


         On March 14, 2003, the closing bid and asked prices of our common
stock, as listed on the over-the-counter NASD Bulletin Board, were both $0.24
and $0.27 per share, respectively.

         On March 14, 2003, we had approximately 1,243 holders of record of
common stock.

         We have not paid any cash dividends with respect to our common stock,
and it is unlikely that we will pay any dividends on our common stock in the
foreseeable future. Earnings, if any, that we may realize will be retained in
the business for further development and expansion.

         We intend to meet the listing requirements of the BBX Securities
Exchange and to list our securities on the exchange when it commences.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

         The following discussion should be read in conjunction with, and is
qualified in its entirety by, the consolidated financial statements and notes
there included in Item 7 in this Annual Report on Form 10-KSB. This item
contains forward-looking statements that involve risks and uncertainties. Actual
results may differ materially from those indicated in such forward-looking
statements. Factors that may cause such a difference include, but are not
limited to, those discussed in "Item 1: Description of the Business - Risk
Factors."

Forward-Looking Statements
--------------------------

         When used in this discussion as well as in other Items in this Annual
Report on Form 10-KSB, words such as "anticipates," expects," "intends,"
"plans," "believes," "seeks," "estimates," variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict; therefore,
actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Unless required by law, the Company undertakes
no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. However, readers should
carefully review the risk factors set forth in this Annual Report on Form 10-KSB
and in other reports and documents that the Company files from time to time with
the Securities and Exchange Commission, particularly the Quarterly Reports on
Form 10-QSB and any Current Reports on Form 8-K.

                                       9
<PAGE>

Overview
--------

         In 1998, we redefined our business focus from medical devices to
medical diagnostic imaging services and emerged as an operating company through
the acquisition of medical diagnostic imaging centers. As of December 31, 2002
we own 13 medical diagnostic centers in five states.

         We plan to seek, investigate and, if such investigation warrants, to
acquire controlling interests in business opportunities that are similar in
nature to our existing medical diagnostic imaging centers. We plan to
concentrate our search for opportunities located in the regions in which our
existing diagnostic centers are located. We may seek a business opportunity in
the form of centers which have recently commenced operations or are mature
businesses.

         In seeking business opportunities, we will base our decision upon the
objectives of seeking long-term appreciation in market value. We will attempt to
analyze all relevant factors and make a determination based upon reasonable
investigative measures and available data. We may utilize the services of our
present attorney and accountants in the investigation of prospective
acquisitions. We may also utilize the services of hired consultants.

         In the immediate future, to fund expansion of our existing operations
and acquire additional diagnostic imaging centers, we intend to obtain
additional debt or equity financing. Our ability to obtain additional sources of
financing cannot be assured. Our growth is dependent on our ability to obtain
additional funding to expand our existing operations and acquire other
diagnostic centers.

Critical Accounting Policies
----------------------------

         The preparation of consolidated financial statements in conformity with
accounting principals generally accepted in the United States of America
requires us to make a number of 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. Such estimates and
assumptions affect the reported amounts of revenues and expenses during the
reporting period. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
conditions.

         We believe that the estimates and assumptions that are most important
to the portrayal of our financial condition and results of operations, in that
they require our most difficult, subjective or complex judgments, form the basis
for the accounting policies deemed to be most critical to us. These critical
accounting policies relate to bad debts, impairment of intangible assets and
long lived assets, contractual adjustments to revenue, and contingencies and
litigation. We believe estimates and assumptions related to these critical
accounting policies are appropriate under the circumstances; however, should
future events or occurrences result in unanticipated consequences, there could
be a material impact on our future financial conditions or results of
operations.

Results of Operations
---------------------

         Year ended December 31, 2002 compared to year ended December 31, 2001.

Net Revenue
------------

         Net patient service revenue for the year ended December 31, 2002 was
$12,040,908 compared to $9,344,867 for the year ended December 31, 2001. The
increase of 28.9% is primarily attributed to increased scan volume and:

         -        the acquisitions of Laguna Niguel MRI, Inc., Envision
                  Healthcare, LLC, and Envision Open MRI, LLC in June 2001,
         -        the start-up MRI center located in Perrysburg, Ohio in October
                  2001,
         -        the acquisition located in Woodridge, Illinois in February
                  2002,
         -        the start-up diagnostic imaging center located in Kissimmee,
                  Florida in December 2002 and
         -        the acquisitions of three diagnostic centers located in Coos
                  Bay, Oregon; Long Beach, California and Carol Stream, Illinois
                  in December 2002.

         Revenue from diagnostic imaging centers is generated by providing
scanning services for the healthcare market and accounted for all of the net
revenue during the years ended December 31, 2002 and 2001.


                                         10

<PAGE>

Operating Expenses
------------------

         Costs of services were $5,455,245 for the year ended December 31, 2002
as compared to $3,663,131 for the year ended December 31, 2001, representing an
increase of 48.9%. Selling, general and administrative costs were $5,447,138 in
2002 as compared to $4,549,651 in 2001, representing an increase of 19.7%. These
increases were primarily attributed to additional costs related to the increased
scan volume and:

         -        the acquisitions of Laguna Niguel MRI, Inc., Envision
                  Healthcare, LLC, and Envision Open MRI, LLC in June 2001,
         -        the start-up MRI center located in Perrysburg, Ohio in October
                  2001,
         -        the acquisition located in Woodridge, Illinois in February
                  2002,
         -        the start-up diagnostic imaging center located in Kissimmee,
                  Florida in December 2002 and
         -        the acquisitions of three diagnostic centers located in Coos
                  Bay, Oregon; Long Beach, California and Carol Stream, Illinois
                  in December 2002.

These increases were partly offset by the divesting of our holdings in Ultra.

Net Income
-----------

         Net income for the year ended December 31, 2002 was $278,541 as
compared to the net income of $329,823 for the year ended December 31, 2001. The
decrease of 15.5% was primarily attributable to increased operating costs
associated with the 2002 acquisitions and start-up diagnostic imaging centers
located in Carol Stream and Woodridge, Illinois; Kissimmee, Florida; Coos Bay,
Oregon and Long Beach, California. We expect the revenues for the start-up
diagnostic imaging centers to increase next year as the centers' operations
mature. However, we cannot say if this will translate into increased
profitability for us on a company-wide basis.

         Basic and diluted earnings per common share were $0.02 for the years
ended December 31, 2002 and 2001. Basic and diluted earnings per share remained
the same. Although there was a decrease in net income, it was not significant
compared to the weighted average number of common shares outstanding for the
years ended December 31, 2002 and 2001. The weighted average number of shares
outstanding calculation for the year ended December 31, 2001 includes the
cancellation of approximately 2.5 million common shares as of February 28, 2001,
resulting from the Ultra settlement.

These increases were partly offset by the divesting of our holdings in Ultra.

Liquidity and Capital Resources
-------------------------------

         To date, we have funded our capital requirements for the current
medical diagnostic imaging operations from cash flows from operations and the
public and private sale of debt and equity securities as well as from the
issuance of common stock in exchange for services. Our cash position at December
31, 2002 was $379,201 as compared to $363,478 at December 31, 2001, representing
a 4.3% increase.

         In 2002, operating activities provided $1,859,116 of net cash. We
received $178,291 from increases in our line of credit and $8,517 from cash
acquired through purchased companies. In addition during the year ended December
31, 2002, we made the following cash payments: $462,162 of principal payments on
notes payable, $30,000 of principal payments on notes payable to related
parties, $1,430,755 of principal payments on capital lease obligations and
purchased equipment of $107,284. During 2002, net cash provided by operating
activities included net income of $278,571. Net income was compensated by the
change in other net assets (excluding cash) of $87,758 and offset by minority
interest of ($3,003). This increase in net assets (excluding cash) was further
improved by

         -        $188,189 in common stock paid for services and interest in
                  lieu of cash,
         -        $1,290,558 in depreciation and amortization, and
         -        $17,073 in accrued stock compensation expense.

         Changes in current assets and current liabilities resulted in a
negative working capital position of ($662,940) at December 31, 2002 as compared
to a negative working capital of ($315,506) at December 31, 2001. Despite being
profitable and having approximately $379,000 in cash at December 31, 2002, we
have more current liabilities than current assets. As our liquidity is limited,
we need to increase profitability and may be required to obtain funds in the
short-term and in the longer term to continue to provide services to our current
diagnostic imaging centers and to acquire additional diagnostic centers.

                                       11
<PAGE>

         We have a line of credit with a finance company at prime plus 3% under
which we may borrow up to $2,000,000 or the "borrowing base" as defined, balance
due July 2004, renewable for consecutive one-year periods. The borrowing base at
December 31, 2002 was $1,990,695. At December 31, 2002 and 2001, the outstanding
balance was $1,470,303 and $1,292,012, respectively. In March 2003, we obtained
an increase in the line of credit to $3,000,000.

         In February 2002, we opened our ninth diagnostic center located in
Woodridge, Illinois through an asset purchase agreement. Associated with this
transaction, we recorded total assets of approximately $836,000, a capital lease
liability of $1,066,000 and goodwill of $230,000. We assumed MRI equipment and
other medical equipment pledged under a capital lease through a finance company
with a monthly installment payment of $30,050 over 44 months with an interest
rate of 12.18%.

         In September 2002, we purchased new MRI equipment for our Laguna Niguel
center funded by a note payable. Upon purchase of this equipment, an existing
note payable was refinanced and included with the purchase price of the new
equipment. The total note payable was for $2,806,846 and included equipment and
leasehold improvements totaling approximately $1,590,000, a refinanced note
payable of approximately $1,074,000, and loan fees and interest of $143,000. The
terms are interest-only for 3 months, followed by 75 monthly installments of
$50,680, including interest at 9.85%. The new equipment is pledged as collateral
for the note payable.

         In December 2002, we opened a start-up diagnostic imaging center
located in Kissimmee, Florida. We financed medical equipment pledged under a
capital lease with a finance company. The agreement finances MRI equipment with
a carrying amount of approximately $272,000 with a monthly installment payment
of $5,728 over 60 months with an interest rate of 9.56%.

         In December 2002, we assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
carrying amount was $1,882,433 and goodwill associated with the transaction was
recorded at $1,635,008. Total assets were approximately $594,000 and total
liabilities were approximately $347,000. The note payable to a finance company
has a monthly installment payment of $32,194 over 84 months with an interest
rate of 8.54%. The new equipment is pledged as collateral for the note payable.

         In December 2002, we assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The carrying amount was $2,117,567 and goodwill associated with the
transaction was recorded at $1,045,049. Total assets were approximately
$1,290,000 and total liabilities were approximately $219,000. The note payable
to a finance company has a monthly installment payment of $36,215 over 84 months
with an interest rate of 8.54%. The new equipment is pledged as collateral for
the note payable.

         In December 2002, we acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The purchase price was
$1,750,000 and goodwill associated with the transaction was recorded at
approximately $768,000. Total assets were approximately $1,034,000 and total
liabilities were approximately $52,000. The note payable to a finance company
has a monthly installment payment of $35,596 over 72 months with an interest
rate of 10.84%. The new equipment is pledged as collateral for the note payable.

         Pursuant to employee agreements, 69,500 shares of accrued employee
common stock grants were issued during the year ended December 31, 2002.
Accordingly, deferred stock compensation of $23,363 was reclassified to
common stock and additional paid-in capital during 2002. During the year ended
December 31, 2001, 34,500 shares of accrued employee common stock grants were
issued pursuant to employee agreements and 536 shares of accrued common stock
grants were cancelled. Accordingly, deferred stock compensation of $51,369 was
reclassified to common stock and additional paid-in capital during 2001.

         In October 2001, we opened a start-up MRI center located in Perrysburg,
Ohio. In connection with this new MRI center, we entered into two capital lease
agreements with a finance company, financing medical equipment with a purchase
price of $1,191,970 over a 67 month period with interest of 11.54% and a monthly
payment of $25,269. In addition, we financed leasehold improvements of $75,500
over a 67 month period with interest of 11.55% and a monthly payment of $1,622
with a finance company.

                                       12
<PAGE>

         In June 2001, we acquired three MRI centers located in California. All
three acquisitions were accounted for using the purchase method of
accounting. The goodwill arising from these three transactions was $998,566.
Laguna Niguel MRI, Inc. was funded via third party financing with a note payable
of $1,250,000 over 5 years. In September 2002, this note was refinanced into a
new note payable which also included the purchase price of new MRI equipment.
Envision Healthcare, LLC was acquired from one of our directors/officers with a
convertible note payable of $200,000 due to the seller, along with accrued
interest at 10% per annum over 3 years. In June 2002, this note was extended six
months. We also acquired 51% of Envision Open MRI, LLC from one of our
directors/officers with a convertible note payable of $75,000 due to the seller,
along with accrued interest at 10% per annum is payable over 3 years. In June
2002, this note was extended six months.

         Pursuant to an investment letter dated March 5, 2001 with an
individual, the Company received $15,000 for the purchase of 83,335 shares of
Restricted Rule 144 common stock at a purchase price of $0.18 per share. All
such shares have been issued.

         During the first quarter of 2001, we issued a $150,000 note payable at
a 15% interest rate, originally due August 28, 2001, to a corporation. The
noteholder was awarded warrants to purchase 400,000 shares of common stock at an
exercise price of $0.219 per share. On August 28, 2001, we awarded the
noteholder warrants to purchase 75,000 shares of common stock at an exercise
price of $0.219 per share as consideration for extending the due date by three
months. During November 2001, the note was paid in full.

         During the third quarter of 2000, we issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the ninth month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of our common stock. The aggregate payment amount due to the noteholders was
$37,500 plus accrued interest due April 15, 2001, July 15, 2001, October 15,
2001, and January 15, 2002. In April of 2001, we issued 56,250 shares of
Restricted Rule 144 common stock valued at $4,078 as consideration for extending
each due date by six months. In October 2001, we issued 100,000 shares of
Restricted Rule 144 common stock valued at approximately $8,500 as additional
consideration for extending the due dates of five of the six notes by an
additional twelve months. During the year ended December 31, 2002, $100,000 of
the notes was converted into 333,332 shares (at $.30 per share) of Restricted
Rule 144 common stock. The remaining $25,000 will be paid in quarterly
installments from October 2002 through July 2003. Thus, the balance of these
notes was $18,750 and $143,750 at December 31, 2002 and 2001, respectively.

         In January 2003, subsequent to our fiscal year end, we opened a
start-up diagnostic imaging center located in Jacksonville, Florida. We financed
MRI equipment pledged under a capital lease with a finance company. The
agreement has a carrying amount of approximately $950,000 with a monthly
installment payment of $16,182 over 66 months. We also financed other medical
equipment totaling $165,000 with various finance companies. None of these
transactions appear on our financial statements for the fiscal year ended
December 31, 2002.


                                       13

<PAGE>


PLAN OF OPERATION

Capital Requirements
--------------------

         Our greatest cash requirements during 2003 will be for funding growth
through expansion of our existing operations and for future acquisitions of
additional diagnostic imaging centers and for repaying our current liabilities
and long-term debt. During the next 12 months, we plan to finance our long-term
operations and capital requirements with the profits and funds generated from
the revenues of our diagnostic imaging centers. We may obtain future funding
through new private financings and public offerings of debt and equity
securities.

         We became profitable during the second quarter of 2000. Our growth is
dependent on the success of our diagnostic imaging centers.

Recent Accounting Pronouncements
--------------------------------

In June 2001, the FASB approved SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 requires companies to cease amortizing goodwill and other
intangible assets with indefinite lives after December 31, 2001. SFAS No. 142
also establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. At
December 31, 2002, we performed an assessment of whether there is an indication
that goodwill is impaired. Based on the assessment, there was no impairment of
goodwill as of December 31, 2002. Amortization expense related to goodwill was
$0 and $153,564 for the years ended December 31, 2002 and 2001.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 updates, clarifies, and simplifies existing accounting
pronouncements. This statement rescinds SFAS No. 4, which required all gains and
losses from extinguishments of debt to be aggregated and if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB No. 30 will now be used to classify those gains and losses. SFAS
No. 64 amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has been
rescinded. SFAS No. 44 has been rescinded as it is no longer necessary. SFAS No.
145 amends SFAS No. 13 to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions be accounted for in the
same manner as sale-lease transactions. This statement also makes technical
corrections to existing pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practice.
This statement is not applicable to the Company.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This statement requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF Issue 94-3, a liability
for an exit cost, as defined, was recognized at the date of an entity's
commitment to an exit plan. The provisions of this statement are effective for
exit or disposal activities that are initiated after December 31, 2002 with
earlier application encouraged. The Company does not expect adoption of SFAS No.
146 to have a material impact, if any, on its financial position or results of
operations.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair value
of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. This statement
requires that those transactions be accounted for in accordance with SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." In addition, this statement amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include certain financial
institution-related intangible assets. SFAS No. 147 is not applicable to the
Company.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation Transition and Disclosure," an amendment of SFAS No. 123. SFAS No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require more prominent and more frequent disclosures in financial statements
about the effects of stock-based compensation. This statement is effective for
financial statements for fiscal years ending after December 15, 2002. SFAS No.
148 will not have any impact on the Company's financial statements as management
does not intend to change to the fair value method.

                                       14
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

                                      INDEX
                                      -----
                                                                        Page No.
                                                                        --------

Independent Auditors' Report                                                F-1

Consolidated Balance Sheets as of December 31, 2002 and 2001                F-2

Consolidated Statements of Operations for the
Years Ended December 31, 2002 and 2001                                      F-4

Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2002 and 2001                                      F-5

Consolidated Statements of Cash Flows for the
Years Ended December 31, 2002 and 2001                                      F-7

Notes to Consolidated Financial Statements                                  F-10



ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                       15


<PAGE>


                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The directors and executive officers, on December 31, 2002, and their ages,
positions held with the Company, length of time in such positions, and term of
office are set forth below:

 Name and Age          Current Position          Director Since   Officer Since
 ------------          ----------------          --------------   -------------

 M. Lee Hulsebus       Chairman of the Board,       11/11/94          8/31/94
 Age 64                Chief Executive
 Officer

 Robert S. Muehlberg   President,                    3/11/99          5/14/01
 Age 49                Chief Operating Officer

 Ross S. Seibert       Chief Financial Officer                        2/21/00
 Age 40

 Don L. Arnwine        Director                       3/6/95
 Age 70

 Arthur E. Bradley     Director                      9/26/86
 Age 69

 Thomas E. Glasgow     Director                     11/11/94
 Age 49

 Stephen A McConnell   Director                      5/23/01
 Age 50

 Harvey C. Flodin       Director                     5/16/02
 Age 63

         The principal occupations and positions for the past several years of
each of the our executive officers and directors are as follows:

         M. Lee Hulsebus has been in the health care field since 1964. From
January 1990 until he joined Miracor in August 1994, he was the President and
owner of his own health care consulting firm. From 1990 to 1992, Mr. Hulsebus
also served as President and Chief Operating Officer of Sports Support, Inc., a
sports medicine company. From 1988 until 1990, he served as Medical Group
President (worldwide operations) for Teleflex, Inc. For 22 years prior to that,
Mr. Hulsebus was employed by Becton-Dickinson & Co. and C.R. Bard, Inc., both of
which are leading companies in the health care industry. Mr. Hulsebus has served
in the capacity of President/Chief Executive Officer since 1979 for various
companies.

        Robert S. Muehlberg has been President and Chief Operating Officer since
May 14, 2001. Prior to joining Miracor he served as President and Chief
Executive Officer of Envision Management, Inc., a company that provided
management and consulting services to the health care industry since 1997. Mr.
Muehlberg served as Chairman and Chief Executive Officer from 1994 until 1997 of
Medical Imaging Centers of America, Inc. (MICA), a company he joined in 1985.
Prior to joining MICA, Mr. Muehlberg held various management positions at
International Imaging, Inc., Chicago, IL and American Medical International
(AMI) Clearwater, FL. Mr. Muehlberg holds a Bachelor's degree in Health Science
from the University of Missouri and a Masters degree in Business Administration
from Nova Southeastern University.

         Ross S. Seibert, CPA, joined the Company in February 2000 as the Chief
Financial Officer. Mr. Seibert was with Deloitte & Touche since 1986 and served
as Senior Manager. He worked with a wide range of clients and has experience
with SEC reporting, mergers and acquisitions, internal controls and information
systems. He received a BS in accounting from Indiana University and an MBA in
finance from San Diego State University.

                                       16
<PAGE>

         Don L. Arnwine has been President of Arnwine Associates of Irving,
Texas, a company he founded to provide specialized advisory services to the
health care industry, since 1988. Mr. Arnwine served as Chairman and Chief
Executive Officer from 1985 until 1988 of Voluntary Hospitals of America (VHA),
a company he joined in 1982. Prior to joining VHA, Mr. Arnwine served as
President and Chief Executive Officer of Charleston Area Medical Center, a
1000-bed regional facility care center in the State of West Virginia. Mr.
Arnwine holds a BS degree in Business Administration from Oklahoma Central State
University and a Masters degree in Hospital Management from Northwestern
University.

         Arthur E. Bradley, DDS has been a practicing dentist since 1961. Dr.
Bradley has been involved for his own account in real estate investments for
twenty years and has been active in oil and gas investments for fifteen years.
Dr. Bradley graduated from the University of Mississippi at Hattiesburg and
obtained his degree in Dentistry from Loyola University Dental School.

         Thomas E. Glasgow is currently the Chairman and CEO of OneSource
Technology, Inc., a NASDAQ listed technical maintenance service and
manufacturing company based in Scottsdale, Arizona and Denver, Colorado. He is
also the owner of Integrated Trade Systems, Inc., a Lombard, Illinois
international logistics software company. He serves on the board of three
publicly traded companies and is active in the venture community. Prior to these
ventures Mr. Glasgow was a Director and Vice-President at Federal Express
Corporation where he served in various senior management capacities for 12
years. He holds an MBA from J.L. Kellogg - Northwestern University.

         Stephen A McConnell has been a Director of the Company since May 2001.
He is the President of Solano Ventures, a firm involved in private capital
investments. He is currently chairman of G-L Industries, LLC, a Salt Lake
City-based manufacturer of wood glu-lam beams used in the construction industry.
He has served, between 1991 and 1997, as Chairman of the Board and majority
stockholder in Mallco Lumber & Building Materials, Inc., a wholesale distributor
of construction lumber and doors. From 1991 to 1995, Mr. McConnell was President
of Belt Perry Associates, Inc., a property tax appeal firm. He was President and
Chief Executive Officer of N-W Group, Inc., a publicly held corporation, from
1985 through 1991. Mr. McConnell presently serves on the boards of Vodavi
Technology, Inc., Mobile Mini, Inc. and Capital Title Group, Inc. Mr. McConnell
holds a BA from Harvard College and an MBA from Harvard Business School.

         Harvey C. Flodin has for the past ten years operated a private
corporate law practice in San Diego, California specializing in the field of
healthcare. As part of his practice, he served as Corporate Counsel to InSight
Health Services, Inc. and Medical Imaging Centers of America, Inc., public
companies engaged in providing medical imaging services. Prior thereto, he had
been General Counsel to the Ventana Group, a San Diego based venture capital
firm. He also has served as Chief Operating Officer and General Counsel of
Cenco, Incorporated, a Chicago-based publicly traded company in the health
services field. In addition, he served as Corporate Counsel for Baxter
International, Inc., a publicly traded provider of medical products. He received
his J.D. from Duke University.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

        Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires our officers and directors and persons owning more than ten percent of
our common stock to file initial reports of ownership and changes in ownership
with the SEC. Additionally, Item 405 of Regulation S-B under the 34 Act requires
us to identify in our Form 10-KSB and proxy statement those individuals for whom
one of the above referenced reports was not filed on a timely basis during the
most recent year or prior years. Given these criteria, we have no one to
identify in this Form 10-KSB or in our proxy statement.


ITEM 10.  EXECUTIVE COMPENSATION

         The information required by this Item, which will be set forth under
the caption "Executive Compensation" in the Company's definitive Proxy Statement
for the 2003 Annual Meeting of Shareholders, is incorporated herein by
reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item, which will be set forth under
the caption "Voting Securities and Principal Holders Thereof" in the Company's
definitive Proxy Statement for the 2003 Annual Meeting of Shareholders, is
incorporated herein by reference.


                                       17
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In June 2001, we issued two convertible notes payable for $200,000 and
$75,000 to Robert S. Muehlberg, who subsequently became our president and a
director, related to the acquisitions of Envision Healthcare, LLC and Envision
Open MRI, LLC, respectively. At the noteholder's option, the noteholder may
elect to convert the outstanding balance of the notes into shares of the
Company's common stock at a conversion price of $0.75. The notes are interest
only at 10% for the first year with the principal to be paid down during the
following two years. In June 2002, we issued 25,000 shares of Restricted Rule
144 common stock valued at $3,250 as consideration for extending the monthly
interest only payments due dates by six months each with principal balance due
December 2004. The balance of these notes was $275,000 at December 31, 2002 and
2001.

         During the third quarter of 2000, we issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the ninth month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of our common stock. The aggregate payment amount due to the noteholders was
$37,500 plus accrued interest due April 15, 2001, July 15, 2001, October 15,
2001, and January 15, 2002. In April of 2001, we issued 56,250 shares of
Restricted Rule 144 common stock valued at $4,078 as consideration for extending
each due date by six months. In October 2001, we issued 100,000 shares of
Restricted Rule 144 common stock valued at approximately $8,500 as additional
consideration for extending the due dates of five of the six notes by an
additional twelve months. During the year ended December 31, 2002, $100,000 of
the notes was converted into 333,332 shares (at $.30 per share) of Restricted
Rule 144 common stock. The remaining $25,000 will be paid in quarterly
installments from October 2002 through July 2003. Thus, the balance of these
notes was $18,750 and $143,750 at December 31, 2002 and 2001, respectively.

         In September 1999, we issued $50,000 in principal amount of 10%
promissory notes payable, due March 31, 2000, to two directors and an individual
to finance operations. Pursuant to the loan agreements, total warrants to
purchase 40,000 shares of common stock at an exercise price of $0.625 per share
were issued. In connection with the issuance of the warrants to the individuals,
we are recognizing additional interest expense of $10,938, which is being
amortized over the terms of the loans. During the second quarter of 2000, we
paid $45,000 of the $50,000 short-term promissory notes payable along with
accrued interest payable of $2,785 in the form of $5,000 cash and 120,000 shares
of Restricted Rule 144 common stock. During 2002, we paid the remaining balance
of $5,000. The balance of these notes was $0 and $5,000 at December 31, 2002 and
2001, respectively.

                                          18


<PAGE>

                                     PART IV


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Reports on Form 8-K
-------------------

     None

Exhibits
-------------------

The following is a complete list of Exhibits as part of the Annual Report.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601(a) of
Regulation S-B, which are incorporated herein:

                                  EXHIBIT NO.
                                  -----------

1.5   Certificate of Designation with respect to the 6% Cumulative Convertible
      Series A Preferred Stock (1)

3.1   Articles of Incorporation of Gold Probe, Inc. a Utah corporation, filed
      February 6, 1980 (2)

3.2   Certificate of Amendment to the Articles of Incorporation of Gold Probe,
      Inc. filed January 27, 1982 (2)

3.3   Certificate of Amendment to the Articles of Incorporation of Hailey Energy
      Corporation filed October 26, 1986 (2)

3.4   Certificate of Amendment to the Articles of Incorporation of Hailey Energy
      Corporation filed November 2, 1990 (2)

3.5   Certificate of Amendment to the Articles of Incorporation of Hailey Energy
      Corporation filed November 17, 1992 (2)

3.6   Certificate of Amendment to the Articles of Incorporation of Cytoprobe
      Corporation filed May 18, 1995 (3)

3.7   Certificate of Amendment to the Articles of Incorporation of Medical
      Device Technologies, Inc. filed December 14, 1995 (3)

3.8   Certificate of Amendment to the Articles of Incorporation of Medical
      Device Technologies, Inc. filed January 17, 1996 (4)

3.9   Certificate of Amendment to the Articles of Incorporation of Medical
      Device Technologies, Inc. filed January 19, 1996 (4)

3.10  By-Laws of Medical Device Technologies, Inc. (2)

3.11  Certificate of Amendment to the Articles of Incorporation of Medical
      Device Technologies, Inc. filed August 5, 1999. (5)

3.12  By-Laws of Miracor Diagnostics, Inc. dated March, 2000. (5)

3.13  Amended and Restated By-Laws of Miracor Diagnostics, Inc., dated November
      11, 2002.

4.1   Specimen certificate for 6% Cumulative Convertible Series A Preferred
      Stock (1)

4.2   Form of Representative's Warrant Agreement, including form of Specimen
      Certificate for Representative's Warrant. (1)

4.3   Form of Warrant Agreement dated October 31, 1994 by and between the
      Company and the holders of the 1994 Unit Warrants for the purchase of
      259,375 shares. (2)

4.6   Form of Stock Purchase Warrant dated April 13, 2000 between the Company
      and Swartz Private Equity, LLC. (5)

4.7   Registration Rights Agreement dated April 13, 2000 between the Company and
      Swartz Private Equity, LLC related to the registration of shares. (5)


                                       19
<PAGE>

10.1  Agreement and Plan of Merger, dated February 9, 2000. (6)

10.2  Stock Purchase Agreement with MedSource Holdings, Ltd, dated February 9,
      2000. (6)

10.3  Stock Purchase Agreement with Jamac Enterprises, Ltd., dated February 9,
      2000. (6)

10.4  Ultra Settlement Agreement, dated August 10, 2001. (7)

10.5  Equity Purchase Agreement with Envision Open MRI, LLC, dated May 25, 2001.
      (7)

10.6  Equity Purchase Agreement with Envision Healthcare, LLC, dated May 25,
      2001. (7)

10.7  Asset Purchase Agreement with U.S. Diagnostics, Inc, dated May 29, 2001.
      (7)

10.8  Asset Purchase Agreement with Woodridge Open MRI, LLC, dated January 18,
      2002. (7)

10.9  Capital Stock Purchase Agreement with South Coast Radiologists Holding,
      Inc., dated December 3, 2002.

10.10 Partnership Interest Purchase Agreement with PG Diagnostic Imaging, LLC,
      dated December 3, 2002.

10.11 Asset Purchase Agreement with New View Diagnostics, Inc., dated December
      13, 2002.

99.1  Certification of Chief Executive Officer

99.2  Certification of Chief Financial Officer

-------------------------------

(1)   Previously filed as an exhibit to Registration Statement on Form S-1,
      dated June 24, 1996, registration no. 333-02727 .
(2)   Previously filed as an exhibit to Registration Form S-3, dated May 15,
      1996, Registration no. 333-1150.
(3)   Previously filed as an exhibit to the Company's Form 8-K Report dated
      January 15, 1996
(4)   Previously filed as an exhibit to the Company's Form 8-K Report dated
      January 31, 1996
(5)   Previously filed as an exhibit to the Company's Form SB-2, dated June 15,
      2000, Registration no. 333-39406.
(6)   Previously filed as an exhibit to the Company's Annual Report Form 10-KSB
      Report dated April 11, 2001.
(7)   Previously filed as an exhibit to the Company's Annual Report Form 10-KSB
      Report dated March 29, 2002.


                                       20

<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

MIRACOR DIAGNOSTICS, INC.

      SIGNATURE                        TITLE                            DATE
      ---------                        -----                            ----

/s/ M. Lee Hulsebus        Chairman of the Board,               March 28, 2003
------------------------   Chief Executive Officer
    M. Lee Hulsebus

/s/ Robert S. Muehlberg    President,                           March 28, 2003
------------------------   Chief Operating Officer
    Robert S. Muehlberg

/s/ Ross S. Seibert        Chief Financial Officer              March 28, 2003
------------------------
    Ross S. Seibert

/s/ Don L. Arnwine         Director                             March 28, 2003
------------------------
    Don L. Arnwine

/s/ Arthur E. Bradley      Director                             March 28, 2003
------------------------
    Arthur E. Bradley

/s/ Thomas E. Glasgow      Director                             March 28, 2003
------------------------
    Thomas E. Glasgow

/s/ Stephen A McConnell    Director                             March 28, 2003
------------------------
    Stephen A McConnell

/s/ Harvey C. Flodin       Director                             March 28, 2003
------------------------
    Harvey C. Flodin


                                          21


<PAGE>


CERTIFICATIONS

I, M. Lee Hulsebus, certify that:

         1.       I have reviewed the report being filed on Form 10-KSB by
                  Miracor Diagnostics, Inc.;

         2.       Based on my knowledge, the report does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading with respect to the period covered by the report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in the report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of Miracor Diagnostics, Inc. as of,
                  and for, the periods presented in the report;

         4.       I and the other certifying officer are responsible for
                  establishing and maintaining disclosure controls and
                  procedures (as such term is defined in Regulation 13a-14 of
                  the Securities Exchange Act of 1934) for Miracor Diagnostics,
                  Inc. and have:

                  i.       Designed such disclosure controls and procedures to
                           ensure that material information relating to Miracor
                           Diagnostics, Inc., including its consolidated
                           subsidiaries, is made known to us by others within
                           those entities, particularly during the period in
                           which the periodic reports are being prepared;

                  ii.      Evaluated the effectiveness of Miracor Diagnostics,
                           Inc.'s disclosure controls and procedures as of a
                           date within 90 days prior to the filing date of the
                           report ("Evaluation Date"); and

                  iii.     Presented in the report our conclusions about the
                           effectiveness of the disclosure controls and
                           procedures based on our evaluation as of the
                           Evaluation Date;

         5.       I and the other certifying officer have disclosed, based on
                  our most recent evaluation, to the Miracor Diagnostics, Inc.
                  auditors and the audit committee of the board of directors:

                  i.       All significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect Miracor Diagnostics, Inc.'s ability to record,
                           process, summarize and report financial data and have
                           identified for Miracor Diagnostics, Inc.'s auditors
                           any material weaknesses in internal controls; and

                  ii.      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the issuer's internal controls; and

         6.       I and the other certifying officer have indicated in the
                  report whether or not there were significant changes in
                  internal controls or in other factors that could significantly
                  affect internal controls subsequent to the date of our most
                  recent evaluation, including any corrective actions with
                  regard to significant deficiencies and material weaknesses.



Date:  March 28, 2003
                                                         /s/ M. Lee Hulsebus
                                                         -----------------------
                                                         M. Lee Hulsebus,
                                                         Chief Executive Officer
                                         22



<PAGE>

I, Ross S. Seibert, certify that:

         1.       I have reviewed the report being filed on Form 10-KSB by
                  Miracor Diagnostics, Inc.;

         2.       Based on my knowledge, the report does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading with respect to the period covered by the report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in the report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of Miracor Diagnostics, Inc. as of,
                  and for, the periods presented in the report;

         4.       I and the other certifying officer are responsible for
                  establishing and maintaining disclosure controls and
                  procedures (as such term is defined in Regulation 13a-14 of
                  the Securities Exchange Act of 1934) for Miracor Diagnostics,
                  Inc. and have:

                  i.       Designed such disclosure controls and procedures to
                           ensure that material information relating to Miracor
                           Diagnostics, Inc., including its consolidated
                           subsidiaries, is made known to us by others within
                           those entities, particularly during the period in
                           which the periodic reports are being prepared;

                  ii.      Evaluated the effectiveness of Miracor Diagnostics,
                           Inc.'s disclosure controls and procedures as of a
                           date within 90 days prior to the filing date of the
                           report ("Evaluation Date"); and

                  iii.     Presented in the report our conclusions about the
                           effectiveness of the disclosure controls and
                           procedures based on our evaluation as of the
                           Evaluation Date;

         5.       I and the other certifying officer have disclosed, based on
                  our most recent evaluation, to the Miracor Diagnostics, Inc.
                  auditors and the audit committee of the board of directors:

                  i.       All significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect Miracor Diagnostics, Inc.'s ability to record,
                           process, summarize and report financial data and have
                           identified for Miracor Diagnostics, Inc.'s auditors
                           any material weaknesses in internal controls; and

                  ii.      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the issuer's internal controls; and

         6.       I and the other certifying officer have indicated in the
                  report whether or not there were significant changes in
                  internal controls or in other factors that could significantly
                  affect internal controls subsequent to the date of our most
                  recent evaluation, including any corrective actions with
                  regard to significant deficiencies and material weaknesses.



Date:  March 28, 2003
                                                         /s/ Ross S. Seibert
                                                         -----------------------
                                                         Ross S. Seibert,
                                                         Chief Financial Officer


                                         23

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

The Board of Directors
Miracor Diagnostics, Inc.
San Diego, California

We have audited the accompanying consolidated balance sheets of Miracor
Diagnostics, Inc. and subsidiaries (the "Company") as of December 31, 2002 and
2001, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Miracor Diagnostics,
Inc. and subsidiaries at December 31, 2002 and 2001, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

By /s/ PARKS, TSCHOPP, WHITCOMB & ORR, P.A.
   ----------------------------------------
       PARKS, TSCHOPP, WHITCOMB & ORR, P.A.

Maitland, Florida
March 6, 2003

                                       F-1

<PAGE>
<TABLE>
                             MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS

                                     December 31, 2002 and 2001
<CAPTION>

                                                                        2002              2001
                                                                  -------------      -------------
<S>                                                               <C>                <C>
ASSETS
------
Current assets:
     Cash and cash equivalents                                    $    379,201       $    363,478
     Accounts receivable (net of contractual adjustments and
       allowances of $6,411,520 and $3,669,281)                      5,184,413          4,040,179
     Prepaid expenses and other assets                                 119,767             28,246
                                                                  -------------      -------------
               Total current assets                                  5,683,381          4,431,903
                                                                  -------------      -------------

Property and equipment:
     Equipment under capital leases                                  7,279,709          6,121,120
     Machinery and equipment                                         3,702,989            439,164
     Leasehold improvements                                          1,096,671            771,671
     Furniture and fixtures                                             92,767             66,455
                                                                  -------------      -------------
                                                                    12,172,136          7,398,410

          Less accumulated depreciation                             (4,988,554)        (3,699,021)
                                                                  -------------      -------------
Net property and equipment                                           7,183,582          3,699,389

Goodwill                                                             8,959,513          5,281,748

Other assets                                                           294,481            154,842
                                                                  -------------      -------------
               Total assets                                       $ 22,120,957       $ 13,567,882
                                                                  =============      =============

</TABLE>

See notes to consolidated financial statements.

                                                F-2

<PAGE>
<TABLE>

                            MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                                   CONSOLIDATED BALANCE SHEETS

                                    December 31, 2002 and 2001
<CAPTION>

                                                                    2002               2001
                                                                -------------      -------------
<S>                                                             <C>                <C>

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
     Accounts payable                                           $  1,130,135       $    721,642
     Accrued expenses                                              1,249,290            763,927
     Line of credit                                                1,470,303          1,292,012
     Notes payable, related parties - current portion                156,250            135,208
     Notes payable - current portion                                 653,964            630,781
     Capital lease obligations - current portion                   1,686,376          1,203,839
                                                                -------------      -------------
               Total current liabilities                           6,346,318          4,747,409

Other liabilities:
     Notes payable, related parties - long term                      137,500            288,542
     Notes payable - long term                                     8,061,895          1,123,873
     Capital lease obligations - long term                         2,889,051          3,327,165
                                                                -------------      -------------
               Total liabilities                                  17,434,764          9,486,989
                                                                -------------      -------------

Minority interest                                                     21,858             24,861
                                                                -------------      -------------
Commitments and contingencies (note 8)

Stockholders' equity
     Preferred stock, $.01 par value (10,000,000 shares
         authorized; 0 shares issued and outstanding)                    --                  --
     Common stock, $.15 par value (100,000,000 shares
         authorized; 15,111,182 and 13,783,865 outstanding)        2,266,677          2,067,580
     Warrants                                                        122,750            122,750
     Additional paid-in capital                                   27,457,295         27,320,340
     Deferred stock compensation                                       7,750             14,040
     Accumulated deficit                                         (25,190,137)       (25,468,678)
                                                                -------------      -------------
               Total stockholders' equity                          4,664,335          4,056,032
                                                                -------------      -------------
               Total liabilities and stockholders' equity       $ 22,120,957       $ 13,567,882
                                                                =============      =============

</TABLE>

See notes to consolidated financial statements.

                                               F-3

<PAGE>


                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     Years ended December 31, 2002 and 2001

                                                      2002              2001
                                                 -------------     -------------

Net patient service revenue                      $ 12,040,908      $  9,344,867

Operating expenses:
  Costs of services                                 5,455,245         3,663,131
  Selling, general and administrative expenses      5,447,138         4,549,651
                                                 -------------     -------------
Total operating expenses                           10,902,383         8,212,782
                                                 -------------     -------------

 Income from operations                             1,138,525         1,132,085

 Interest expense                                    (862,987)         (735,755)
                                                 -------------     -------------
Income before minority interest                       275,538           396,330

Minority interest                                       3,003          (66,507)
                                                 -------------     -------------
Net Income                                       $    278,541      $    329,823
                                                 =============     =============

Earnings per share:

Earnings per share-basic                         $       0.02      $       0.02
Earnings per share-diluted                       $       0.02      $       0.02
Weighted average shares outstanding-basic          14,480,763        13,272,926
Weighted average shares outstanding-diluted        15,052,297        13,479,941

See notes to consolidated financial statements.

                                       F-4


<PAGE>

<TABLE>

                                      MIRACOR DIAGNOSTICS, INC.

                                          AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               Years ended December 31, 2002 and 2001

<CAPTION>
                                                                  COMMON STOCK            ADDITIONAL
                                                           ----------------------------    PAID-IN
                                                              SHARES        AMOUNT         CAPITAL
                                                           -------------  -------------  -------------
<S>                                                          <C>          <C>            <C>
Balance, January 1, 2001                                     14,039,035   $  2,105,855   $ 29,573,173

Common stock issued for compensation, interest,
     services and principal of trade notes payable            2,161,395        324,210        (25,231)

Common stock sold                                                83,335         12,500          2,500

Common stock issued from the Employee Incentive Stock
     Option Plan and Deferred Stock Compensation Plan            34,500          5,175         46,194

Common stock cancelled related to the relinquishing of
     interest in Ultra Open MRI Holding Corporation          (2,534,400)      (380,160)    (2,276,296)

Accrued stock compensation                                           --             --             --

Net income                                                           --             --             --
                                                           -------------  -------------  -------------
Balance, December 31, 2001                                   13,783,865   $  2,067,580   $ 27,320,340
                                                           =============  =============  =============
</TABLE>
(continued below)


<TABLE>
<CAPTION>
                                                                           DEFERRED        ACCUMULATED
                                                             WARRANTS     COMPENSATION       DEFICIT      TOTAL
                                                           -------------  -------------   -------------   ------------
<S>                                                        <C>            <C>             <C>             <C>
Balance, January 1, 2001                                   $    122,750   $     52,737    $(25,798,501)   $ 6,056,014

Common stock issued for compensation, interest,
     services and principal of trade notes payable                   --             --              --        298,979

Common stock sold                                                    --             --              --         15,000

Common stock issued from the Employee Incentive Stock
     Option Plan and Deferred Stock Compensation Plan                --        (51,369)             --             --
Common stock cancelled related to the relinquishing of
     interest in Ultra Open MRI Holding Corporation                  --             --              --     (2,656,456)

Accrued stock compensation                                           --         12,672              --         12,672

Net income                                                           --             --         329,823        329,823
                                                           -------------  -------------   -------------   ------------
Balance, December 31, 2001                                 $    122,750   $     14,040    $(25,468,678)   $ 4,056,032
                                                           =============  =============   =============   ===========

See notes to consolidated financial statements.

                                                      F-5
</TABLE>

<PAGE>
<TABLE>


                                      MIRACOR DIAGNOSTICS, INC.

                                          AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               Years ended December 31, 2002 and 2001

<CAPTION>
                                                            COMMON STOCK         ADDITIONAL
                                                     --------------------------    PAID-IN
                                                        SHARES        AMOUNT       CAPITAL
                                                     ------------  ------------  ------------
<S>                                                   <C>          <C>           <C>
Balance, January 1, 2002                              13,783,865   $ 2,067,580   $27,320,340

Common stock issued for compensation, interest,
     services and principal of trade notes payable       924,485       138,672        74,017

Restricted rule 144 common stock issued for the
     conversion of principal balances on related
     party notes short-term payable                      333,332        50,000        50,000

Common stock issued from the Deferred Stock
     Compensation Plan                                    69,500        10,425        12,938

Accrued stock compensation                                    --            --            --

Net income                                                    --            --            --
                                                     ------------  ------------  ------------
Balance, December 31, 2002                            15,111,182   $ 2,266,677   $27,457,295
                                                     ============  ============  ============
</TABLE>
(continued below)

<TABLE>
<CAPTION>
                                                                      DEFERRED      ACCUMULATED
                                                       WARRANTS     COMPENSATION       DEFICIT         TOTAL
                                                     -------------  -------------   -------------   -------------
<S>                                                  <C>            <C>             <C>             <C>
Balance, January 1, 2002                             $    122,750   $     14,040    $(25,468,678)   $  4,056,032

Common stock issued for compensation, interest,
     services and principal of trade notes payable             --             --              --         212,689

Restricted rule 144 common stock issued for the
     conversion of principal balances on related
     party notes short-term payable                            --             --              --         100,000


Common stock issued from the Deferred Stock
     Compensation Plan                                         --        (23,363)             --              --

Accrued stock compensation                                     --         17,073              --          17,073

Net income                                                     --             --         278,541         278,541
                                                     -------------  -------------   -------------   -------------
Balance, December 31, 2002                          $    122,750   $      7,750    $(25,190,137)   $   4,664,335
                                                     =============  =============   =============   =============

See notes to consolidated financial statements.


                                                 F-6

</TABLE>

<PAGE>
<TABLE>

                                      MIRACOR DIAGNOSTICS, INC.

                                          AND SUBSIDIARIES

                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                               Years ended December 31, 2002 and 2001
<CAPTION>
                                                                                     2002              2001
                                                                                 ------------      ------------
<S>                                                                              <C>               <C>
Cash flows from operating activities:
     Net income                                                                  $   278,541       $   329,823
     Adjustments to reconcile net income to net cash
         provided by operating activities:
           Stock paid for services and interest                                      188,189           260,211
           Compensation recognized relating to
              accrued employee stock grants and warrants                              17,073            12,671
           Minority interest                                                          (3,003)           66,507
           Depreciation and amortization                                           1,290,558         1,048,508
           Changes in assets and liabilities excluding net assets acquired:
              Accounts receivable                                                   (501,163)         (321,423)
              Other assets                                                           199,815           (42,058)
              Accounts payable and accrued expenses                                  389,106          (381,231)
                                                                                 ------------      ------------
                     Net cash provided by operating activities                     1,859,116           973,008
                                                                                 ------------      ------------

Cash flows from investing activities:
     Purchase of property and equipment                                             (107,284)         (58,034)
     Cash acquired in purchase of companies                                            8,517           67,352
     Cash forfeited in Ultra settlement                                                    -           (36,615)
                                                                                 ------------      ------------

                     Net cash used in investing activities                           (98,767)          (27,297)
                                                                                 ------------      ------------

Cash flows from financing activities:
     Increase in line of credit                                                      178,291           448,534
     Proceeds from notes payable                                                           -           150,000
     Principal payments on notes payable, related parties                            (30,000)          (31,926)
     Principal payments on notes payable                                            (462,162)         (612,512)
     Principal payments on capital lease obligations                              (1,430,755)         (833,666)
     Proceeds from issuing common stock                                                    -            15,000
                                                                                 ------------      ------------

           Net cash used in financing activities                                  (1,744,626)         (864,570)
                                                                                 ------------      ------------

Net increase in cash and cash equivalents                                             15,723            81,141

Cash and cash equivalents, beginning of year                                         363,478           282,337
                                                                                 ------------      ------------

Cash and cash equivalents, end of year                                           $   379,201       $   363,478
                                                                                 ============      ============
</TABLE>

See notes to consolidated financial statements.

                                                 F-7

<PAGE>

                               MIRACOR DIAGNOSTICS, INC.

                                    AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                         Years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>

                                                               2002            2001
                                                           -----------     -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<S>                                                        <C>             <C>
PAYMENTS FOR:
     Interest                                              $  808,836      $  741,334
     Income taxes                                          $   11,908      $      800

SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:

STOCK ISSUED FOR:
     COMPENSATION AND SERVICES:
     Legal, professional and employee services             $  139,581      $  227,937
     Directors' fees                                           46,608          16,043
     Interest expense on notes payable                              -          16,231
                                                           -----------     -----------
                                                              188,189         260,211
                                                           -----------     -----------
     OTHER:
     Principal payments on notes payable                       24,500          38,768
                                                           -----------     -----------
                                                           $  212,689      $  298,979
                                                           ===========     ===========
</TABLE>

During the first quarter of 2000, the Company acquired the net assets of Ultra
Open MRI Holding Corporation ("Ultra") in exchange for 2,534,400 shares of
Restricted Rule 144 common stock and a note payable of $380,160. During 2001,
the transaction was rescinded pursuant to a settlement agreement. The Company
relinquished its holdings in Ultra, cancelled the 2,534,400 shares of the
Company's common stock and was released of the outstanding note payable
obligation in return (See note 2).

The net assets acquired were as follows:

<TABLE>
<CAPTION>
  <S>                                     <C>               <C>                          <C>
  Cash                                    $      1,083      Common stock issued          $  1,520,640
  Accounts receivable                          814,917      Due to shareholders               380,160
  Property and equipment                       970,025      Direct costs of acquisition        92,646
  Other assets                                  31,963      Minority interest                 112,223
  Accounts payable and other liabilities       (93,916)     Goodwill                       (1,544,553)
  Capital lease obligations                   (943,135)
  Notes payable                               (146,421)
  Lines of credit                              (73,400)
                                          -------------                                  -------------
                                          $    561,116                                   $    561,116
                                          =============                                  =============
</TABLE>

During the second quarter of 2001, the Company acquired the net assets of Laguna
Niguel MRI, Inc. in exchange for a note payable of $1,250,000, the net assets of
Envision Healthcare, LLC in exchange for a convertible note payable of $200,000
and the net assets of Envision Open MRI, LLC in exchange for a convertible note
payable of $75,000 (See note 2).

                                       F-8

<PAGE>

                           MIRACOR DIAGNOSTICS, INC.

                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Years ended December 31, 2002 and 2001

The net assets acquired for the above three acquisitions were as follows:

<TABLE>
<CAPTION>
  <S>                                     <C>               <C>                                  <C>
  Cash                                    $     67,352      Note Payable to a finance company    $  1,250,000
  Accounts receivable                          837,694      Due to officer/director                   275,000
  Property and equipment                     1,024,646      Direct costs of acquisition                54,653
  Other assets                                   5,361      Minority interest                           6,640
  Accounts payable and other liabilities      (257,794)     Goodwill                                 (998,566)
  Capital lease obligations                   (992,021)
  Notes payable                                (97,511)
                                          -------------                                          -------------
                                          $    587,727                                           $    587,727
                                          =============                                          =============
</TABLE>

In February 2002, the Company opened its ninth diagnostic center located in
Woodridge, Illinois through an asset purchase agreement. Associated with this
transaction, the Company recorded total assets, including MRI equipment, of
approximately $836,000, a capital lease liability of $1,066,000 and goodwill of
$230,000. The capital lease agreement includes a monthly installment payment of
$30,050 over 44 months with an interest rate of 12.18%.

In September 2002, the Company purchased new MRI equipment for its Laguna Niguel
center funded by a note payable. Upon purchase of this equipment, an existing
note payable was refinanced and included with the purchase price of the new
equipment. The total note payable was for $2,806,846 and included equipment and
leasehold improvements totaling approximately $1,590,000, a refinanced note
payable of approximately $1,074,000, and loan fees and interest of $143,000. The
terms are interest-only for 3 months, followed by 75 monthly installments of
$50,680, including interest at 9.85% (see note 5).

In December 2002, the Company opened a start-up diagnostic imaging center
located in Kissimmee, Florida. The Company financed medical equipment pledged
under a capital lease with a finance company. The agreement finances MRI
equipment with a carrying amount of approximately $272,000 with a monthly
installment payment of $5,728 over 60 months with an interest rate of 9.56%.

In December 2002, the Company assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
note payable to a finance company has a monthly installment payment of $32,194
over 84 months with an interest rate of 8.54% (See note 2). The new equipment is
pledged as collateral for the note payable.


The net assets assumed for the above transaction were as follows:
<TABLE>
<CAPTION>
  <S>                                     <C>               <C>                                  <C>

  Cash                                    $        500      Note Payable to a finance company    $  1,882,433
  Accounts receivable                          105,362      Goodwill                               (1,635,008)
  Property and equipment                       470,500
  Other assets                                  17,676
  Accounts payable and other liabilities      (209,786)
  Capital lease obligations                   (136,827)
                                          -------------                                          -------------
                                          $    247,425                                           $    247,425
                                          =============                                          =============
</TABLE>

In December 2002, the Company assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The note payable to a finance company has a monthly installment
payment of $36,215 over 84 months with an interest rate of 8.54%.(See note 2)


                                       F-9

<PAGE>

The net assets assumed for the above transaction were as follows:
<TABLE>
<CAPTION>
  <S>                                     <C>               <C>                                  <C>
  Cash                                    $        200      Note Payable to a finance company    $  2,117,567
  Accounts receivable                          421,627      Goodwill                               (1,045,049)
  Property and equipment                       585,000
  Other assets                                 283,495
  Accounts payable and other liabilities      (217,804)
                                          -------------                                          -------------
                                          $  1,072,518                                           $  1,072,518
                                          =============                                          =============

</TABLE>

In December 2002, the Company acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The note payable to a
finance company has a monthly installment payment of $35,596 over 72 months with
an interest rate of 10.84%.(See note 2)

The net assets acquired for the above acquisition were as follows:
<TABLE>
<CAPTION>
  <S>                                     <C>               <C>                                  <C>
  Cash                                    $      7,817     Note Payable to a finance company    $  1,750,000
  Accounts receivable                          116,082     Goodwill                                 (767,948)
  Property and equipment                       910,500
  Accounts payable and other liabilities       (52,347)
                                          -------------                                          -------------
                                          $    982,052                                           $    982,052
                                          =============                                          =============
</TABLE>

During the years ended December 31, 2002 and 2001, deferred compensation expense
of $17,073 and $12,672, respectively, were recorded relating to accrued employee
stock grants in order to value such shares at the estimated fair market value at
the date of grant.

Pursuant to employee agreements, 157,500 shares of accrued employee common stock
grants were issued during the year ended December 31, 2002. Accordingly,
deferred stock compensation of $23,363 was reclassified to common stock and
additional paid-in capital during 2002. Pursuant to employee agreements, 34,500
shares of accrued employee common stock grants were issued and 536 shares of
accrued employee common stock grants were cancelled during the year ended
December 31, 2001. Accordingly, deferred stock compensation of $51,369 was
reclassified to common stock and additional paid-in capital during the year
ended December 31, 2001.

In 2001, the Company entered into four capital lease agreements with a financing
company. One of the agreements finances medical equipment with a purchase price
of $78,970 over a 67 month period with interest of 11.54% and a monthly payment
of $1,654. The other agreement finances leasehold improvements of $75,500 over a
67 month period with interest of 11.55% and a monthly payment of $1,622. The
third agreement finances medical equipment with a purchase price of $1,113,000
over a 67 month period with interest of 11.54% and a monthly payment of $23,615.
The last agreement finances medical equipment with a purchase price of $40,800
over a 60 month period with interest of 5.81% and a monthly payment of $785.

During the first quarter of 2001, the Company issued a $150,000 note payable at
a 15% interest rate, originally due August 28, 2001, to a corporation. The
noteholder was awarded warrants to purchase 400,000 shares of common stock at an
exercise price of $0.219 per share. On August 28, 2001, the Company awarded the
noteholder warrants to purchase 75,000 shares of common stock at an exercise
price of $0.219 per share as consideration for extending the due date by three
months. During November 2001, the note was paid in full.


                                      F-10
<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


During the third quarter of 2000, the Company issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the nine month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of the Company's common stock. The amount payable to the noteholders in
aggregate is $37,500 plus accrued interest originally due April 15, 2001, July
15, 2001, October 15, 2001, and January 15, 2002. In April of 2001, the Company
issued 56,250 shares of Restricted Rule 144 common stock valued at $4,078 as
consideration for extending each due date by six months. In October 2001, the
Company issued 100,000 shares of Restricted Rule 144 common stock valued at
approximately $8,500 as additional consideration for extending the due dates of
five of the six notes by an additional twelve months. During the year ended
December 31, 2002, $100,000 of the notes was converted into 333,332 shares (at
$.30 per share) of Restricted Rule 144 common stock. The remaining $25,000 will
be paid in quarterly installments from October 2002 through July 2003. Thus, the
balance of these notes was $18,750 and $143,750 at December 31, 2002 and 2001,
respectively.


See notes to consolidated financial statements.



                                       F-11


<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    ------------------------------------------

(a) DESCRIPTION OF BUSINESS

Miracor Diagnostics, Inc. and subsidiaries (the "Company") is a public company
incorporated in Utah on February 6, 1980 and headquartered in San Diego,
California.

Prior to 1992, the Company was in the exploration and production of hydrocarbons
business. As of June 1, 1992, the Company re-entered the development stage.
Effective January 1, 1994, the Company completed the divestiture of all oil and
gas properties and was no longer in the hydrocarbon business. Since that time,
the Company has been exclusively a medical based company.

Between 1994 and 1998, the Company engaged in the development of the following
innovative medical devices:

         1.       The Fluid Alarm System (FAS) monitored the integrity of
                  infection control barriers, such as surgical gloves and gowns
                  worn during medical procedures. The Company received FDA
                  clearance for the FAS during the year ended December 31, 1995.
                  The Company has the patent licensing rights through 2005 with
                  an option to extend such rights through the life of the
                  patent, 2010.

         2.       The Cell Recovery System (CRS), was a cell "brushing" and
                  retrieval system that used an automated biopsy brush for the
                  collection of specimen cells for diagnostic purposes,
                  primarily (but not limited to) cancer detection. The Company
                  received FDA clearance for the CRS in March 1996. The Company
                  initiated further clinical trials on the CRS in 1997. The
                  Company owns 50% of the patent. Additionally, the Company has
                  the patent licensing rights through the life of the patent,
                  2008.

In 1998, coincident with the purchase of Vision Diagnostics, Inc. and
Affiliates, the Company recorded impairment losses associated with the FAS and
the CRS licenses. However, the Company may elect to reintroduce or sell either
product at a later date although there are no plans to do so at this time. The
Company's accumulated deficit primarily arose while in the hydrocarbon and
medical device businesses.

In 1998, the Company redefined our business focus from medical devices to
medical diagnostic imaging services and emerged as an operating company through
the acquisition of medical diagnostic imaging centers in Orlando and
Jacksonville, Florida; Toledo, Ohio and Oak Brook, Illinois.

In February 2000, the Company closed the acquisition of 80% of three centers
located in Palm Harbor, St. Petersburg and Tampa, Florida as well as the holding
company, Ultra Open MRI Holding Corporation ("Ultra"). During 2001, the
transaction was rescinded pursuant to a settlement agreement. Effective February
28, 2001, the Company relinquished its holdings in Ultra and cancelled
approximately 2.5 million shares of common stock in return, described in note 2.



                                         F-12

<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


(1) CONTINUED
    ---------

In June 2001, the Company acquired three MRI centers located in California.
Laguna Niguel MRI, Inc. is an MRI center located in Laguna Niguel,California.
Envision Healthcare, LLC, is an MRI center located in Long Beach, California.
The Company also acquired 51% of Envision Open MRI, LLC, an MRI center located
in Newport Beach, California.

In October 2001 the Company established a start-up MRI center located in
Perrysburg, Ohio. In February 2002, the Company opened a diagnostic center
located in Woodridge, Illinois through an asset purchase agreement.

In December 2002, the company opened a start-up diagnostic imaging center
located in
Kissimmee, Florida and acquired three new diagnostic centers located in Coos
Bay, Oregon; Long Beach, California and Carol Stream, Illinois.

As of December 31, 2002, the Company provides medical diagnostic imaging
services through the operation of its thirteen diagnostic centers in five
states. Additionally, the Company identified suitable acquisition targets to
position the Company for growth.

                                      F-13


<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(1) CONTINUED
    ---------

(b) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is being provided on a
straight line basis over the estimated useful lives of the related assets which
range from three to nine years.

(c) INCOME TAXES

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes", (SFAS No. 109). This
statement employs an asset and liability approach for financial accounting and
reporting of deferred income taxes. Generally, SFAS No. 109 allows for
recognition of deferred tax assets in the current period for the future benefit
of net operating loss carryforwards and items for which expenses have been
recognized for financial statement purposes but will be deductible in future
periods. A valuation allowance is recognized if, on the weight of available
evidence, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.

(d) CASH FLOWS

For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.

(e) REVENUE RECOGNITION

During 2002 and 2001, the principal source of revenue is from diagnostic imaging
which is recognized as performed, net of contractual adjustments. The Company is
presently operating in this one business segment and only in the United States.

(f) FINANCIAL INSTRUMENTS FAIR VALUE, CONCENTRATION OF BUSINESS AND CREDIT RISKS

The carrying amount reported in the balance sheet for cash, accounts receivable,
accounts payable and accrued expenses approximates fair value because of the
immediate or short-term maturity of these financial instruments. The carrying
amount reported in the accompanying balance sheet for notes payable approximates
fair value because the actual interest rates do not significantly differ from
current rates offered for instruments with similar characteristics. Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist principally of accounts receivable. The Company operates and
grants credit to customers in Oregon, California, Florida, Illinois, and Ohio.
In addition, the Company files claims with numerous insurance carriers, managed
care groups, Medicare and Medicaid located throughout the United States.

Consequently, the Company's ability to collect the amounts due from customers,
managed care groups, insurance companies and government agencies may be affected
by economic fluctuation and governmental regulations in the healthcare industry.

(g) LONG-LIVED ASSETS

The Company periodically evaluates the recoverability of its long-lived assets
based on expected undiscounted cash flows and will recognize impairment of the
carrying value of long-lived assets, if any is indicated, based on the fair
value of such assets.


                                      F-14


<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


(1) CONTINUED
    ---------

(h) USE OF ESTIMATES

Management of the Company has made certain estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent assets
and liabilities to prepare these financial statements in conformity with
accounting principles generally accepted in the United States of America. Actual
results could differ from those estimates.

(i) EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing net income available to common
stockholders by the weighted average common shares outstanding for the period.
Diluted earnings per share is computed giving effect to all potentially dilutive
common shares. Potentially dilutive common shares may consist of incremental
shares issuable upon the exercise of stock options, adjusted for the assumed
repurchase of the common stock, at the average market price, from the exercise
proceeds and also may include incremental shares issuable in connection with
convertible securities. The following table sets forth the computations of basic
and diluted earnings per share for the year ended December 31, 2002 and 2001:

                                                  2002            2001
                                              ------------    ------------
Basic earnings per share:
Net income available to common shareholders   $   278,541     $   329,823
                                              ------------    ------------
Weighted average shares outstanding            14,480,763      13,272,926

Basic earnings per share                      $      0.02     $      0.02
                                              ============    ============

Diluted earnings per share:
Net income available to common shareholders   $   278,541    $    329,823
                                              ------------    ------------
Adjusted net income available to common
   shareholders assuming conversion               278,541         329,823
                                              ------------    ------------

Weighted average shares outstanding            14,480,763      13,272,926

Effect of dilutive securities:
    Warrants                                      521,526         189,515
    Employee stock options                              8              --
    Employee stock-based compensation awards       50,000          17,500
                                              ------------    ------------
Adjusted weighted average shares outstanding
    and assumed conversions                    15,052,297      13,479,941
                                              ============    ============

Diluted earnings per share                    $      0.02     $      0.02
                                              ============    ============

Options and warrants to purchase 1,331,644 shares of common stock, at prices
ranging from $0.27 to $28.00 per share, were outstanding during the year but not
included in the December 31, 2002 computations of diluted earnings per share,
because the exercise prices were greater than the average market price of the
common shares. The options and warrants, which expire on dates ranging from
August 1, 2003 to August 30, 2010, were still outstanding at December 31, 2002.

Options and warrants to purchase 1,528,894 shares of common stock, at prices
ranging from $0.20 to $28.00 per share, were outstanding during the year but not
included in the December 31, 2001 computations of diluted earnings per share,
because the exercise prices were greater than the average market price of the
common shares.


                                      F-15


<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


 (2) ACQUISITIONS AND START-UPS
    --------------------------

During 1998, the Company acquired either the stock or substantially all of the
assets and liabilities of Vision Diagnostics, Inc. and Affiliates ("Vision").
Vision was in the business of providing medical diagnostic services. The
affiliated group of companies includes Vision Diagnostic, Inc., Regional MRI of
Orlando, Inc., Regional MRI of Jacksonville, Inc., Regional MRI of Toledo, Inc.
and West Regional MRI Limited Partnership. This acquisition included medical
diagnostic imaging centers in Orlando and Jacksonville, Florida; Toledo, Ohio
and Oak Brook, Illinois.

In February 2000, the Company acquired 80% ownership in Ultra Open MRI Holding
Corporation with a combination of 20% in the form of a payable and 80% in
Restricted Rule 144 common stock. The purchase price was $1,900,800 and goodwill
associated with this transaction was recorded at $1,544,553 which included
direct costs associated with the purchase. Total assets were approximately $1.8
million and total liabilities were approximately $1.3 million as of February 9,
2000. The notes payable to the principals were due in variable payments totaling
$380,160 plus accrued interest through November 9, 2001. During the first
quarter of the year ended December 31, 2001, the Company paid principal of
$25,676 along with accrued interest of $22,324.

During 2001, the Ultra purchase transaction was rescinded pursuant to a
settlement agreement. Effective February 28, 2001, the Company relinquished its
holdings in Ultra and cancelled 2,534,400 shares of the Company's common stock
in return. As a result of this rescinded transaction, common stock and
additional paid-in capital were reduced by $2,656,456. The revenues and expenses
of Ultra for the two month period ended February 28, 2001 were $695,327 and
$453,893, respectively, and are included in the Company's consolidated financial
statements. The principals' share of the corporation's net income has been
presented as
minority interest share of income in the accompanying consolidated statement of
operations for the year ended December 31, 2001. The assets and liabilities of
Ultra as well as related notes payable, goodwill associated with the
acquisition, and all other Ultra related balances are not included in the
consolidated financial statements of the Company after February 28, 2001.
Resulting from the Ultra settlement, the weighted average number of shares
outstanding computations for the year ended December 31, 2001 include the
cancellation of the 2,534,400 common shares as of February 28, 2001.

In June 2001, the Company acquired Laguna Niguel MRI, Inc., an MRI center
located in Laguna Niguel, California. The acquisition was funded via third party
financing. The purchase price was $1,250,000 and goodwill associated with the
transaction was recorded at $906,793 which included direct costs associated with
the purchase. Total assets were approximately $575,000 and total liabilities
were approximately $177,000. The note payable to the third party, along with
accrued interest is payable over 5 years. In September 2002, this note was
refinanced into a new note payable which also included the purchase price of new
MRI equipment (see note 5).

In June 2001, the Company acquired Envision Healthcare, LLC, an MRI center
located in Long Beach, California. The center was acquired from a
director/officer of the Company. The acquisition was funded via seller's
financing. The purchase price was $200,000 and goodwill associated with the
transaction was recorded at $84,773. Total assets were approximately $803,500
and total liabilities were approximately $688,000. The note payable to the
seller, along with accrued interest was payable over 3 years (see note 6). In
June 2002, the note was extended six months.


                                      F-16


<PAGE>
                           MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(2) CONTINUED
    ---------

In June 2001, the Company acquired 51% of Envision Open MRI, LLC, an MRI center
located in Newport Beach, California. The center was acquired from a
director/officer of the Company. The acquisition was funded via seller's
financing. The purchase price was $75,000 and goodwill associated with the
transaction was recorded at $7,000. Total assets were approximately $558,000 and
total liabilities were approximately $426,000. The note payable to the seller,
along with accrued interest was payable over 3 years (see note 6). In June 2002,
the note was extended six months. The remaining minority principal's share of
the shareholders' capital had been reflected as a minority interest on the
accompanying consolidated balance sheet at December 31, 2001 and 2002. This
principal's share of the center's net income (loss) has been presented as
minority interest share of income in the accompanying consolidated statements of
operations for the years ended December 31, 2002 and 2001.

Had the acquisitions occurred January 1, 2001, consolidated net revenue for the
year ended December 31, 2001 would have been approximately $10.4 million, net
income would have been approximately $550,000 and net income per share would
have been $0.04. These pro forma results are unaudited.

In February 2002, the Company assumed the operations of a diagnostic center
located in Woodridge, Illinois through an asset purchase agreement. Associated
with this transaction, total assets of approximately $836,000, a capital lease
liability of $1,066,000 and goodwill of $230,000 were recorded. The MRI
equipment and other medical equipment pledged under a capital lease through a
finance company with a monthly installment payment of $30,050 over 44 months
with an interest rate of 12.18%.

In December 2002, the Company assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
carrying amount was $1,882,433 and goodwill associated with the transaction was
recorded at $1,635,008. Total assets were approximately $594,000 and total
liabilities were approximately $347,000. The note payable to a finance company
has a monthly installment payment of $32,194 over 84 months with an interest
rate of 8.54%.

In December 2002, the Company assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The carrying amount was $2,117,567 and goodwill associated with the
transaction was recorded at $1,045,049. Total assets were approximately
$1,290,000 and total liabilities were approximately $219,000. The note payable
to a finance company has a monthly installment payment of $36,215 over 84 months
with an interest rate of 8.54%.

In December 2002, the Company acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The purchase price was
$1,750,000 and goodwill associated with the transaction was recorded at
approximately $768,000. Total assets were approximately $1,034,000 and total
liabilities were approximately $52,000. The note payable to a finance company
has a monthly installment payment of $35,596 over 72 months with an interest
rate of 10.84%.

Had the acquisitions occurred January 1, 2001, consolidated net revenue for the
year ended December 31, 2001 would have been approximately $16.6 million, net
income would have been approximately $229,000 and net income per share would
have been $0.02. These pro forma results are unaudited.

Had the acquisitions occurred January 1, 2002, consolidated net revenue for the
year ended December 31, 2002 would have been approximately $17.5 million, net
loss would have been approximately $184,000 and net loss per share would have
been ($0.01). These pro forma results are unaudited.

In October 2001, the Company opened a start-up diagnostic imaging center located
in Perrysburg, Ohio. The Company financed medical equipment pledged under a
capital lease with a finance company. The agreement finances medical equipment
with a purchase price of $1,113,000 over a 67 month period with interest of
11.54% and a monthly payment of $23,615.

In December 2002, the Company opened a start-up diagnostic imaging center
located in Kissimmee, Florida. The Company financed medical equipment pledged
under a capital lease with a finance company. The agreement finances MRI
equipment with a carrying amount of approximately $272,000 with a monthly
installment payment of $5,728 over 60 months with an interest rate of 9.56%.


                                      F-17
<PAGE>
                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(3) GOODWILL
    --------

In June 2001, the Financial Accounting Standards Board (FASB) approved SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires companies to
cease amortizing goodwill and other intangible assets with indefinite lives
after December 31, 2001. During the year ended December 31, 2001 as in prior
years, the Company did amortize goodwill on the basis noted below.

In connection with the Vision Diagnostics Inc. and Ultra acquisitions,
consideration paid exceeded the estimated fair value of the assets acquired
(including estimated liabilities assumed as part of the transaction) by
approximately $6,100,000. The excess of the consideration paid over the fair
value of the net assets acquired has been recorded as goodwill and was amortized
on a straight line basis over 40 years. During 2001, the Ultra transaction was
rescinded pursuant to a settlement agreement. Effective February 28, 2001, the
Company relinquished its holdings in Ultra and cancelled approximately 2.5
million shares of the Company's common stock in return. Goodwill associated with
this acquisition of $1,544,553 is not included in the consolidated financial
statements of the Company after February 28, 2001.

In connection with the 2001 acquisitions of Laguna Niguel MRI, Inc., Envision
Open MRI, LLC and Envision Healthcare, LLC consideration paid exceeded the
estimated fair value of the assets acquired (including estimated liabilities
assumed as part of the transaction) by approximately $998,566. The excess of the
consideration paid over the fair value of the net assets acquired has been
recorded as goodwill which was being amortized on a straight line basis over 20
years.

In connection with the 2002 acquisitions in Woodridge and Carol Stream,
Illinois; Long Beach, California and Coos Bay, Oregon consideration paid
exceeded the estimated fair value of the assets acquired (including estimated
liabilities assumed as part of the transaction) by approximately 3,677,765. The
excess of the consideration paid over the fair value of the net assets acquired
has been recorded as goodwill.

At December 31, 2002, the Company has goodwill in the amount of $8,959,513,
which is subject to the provisions of Statement 142. At December 31, 2002, the
Company performed an assessment of whether there is an indication that goodwill
is impaired. Based on the assessment, there was no impairment of goodwill as of
December 31, 2002. Amortization expense related to goodwill was $0 and $153,564
for the years ended December 31, 2002 and 2001.

(4) LINE OF CREDIT
    --------------

The Company has a line of credit with a finance company at prime plus 3% under
which the Company may borrow up to $2,000,000 or the "borrowing base" as
defined, balance due July 2004, renewable for consecutive one-year periods. The
borrowing base at December 31, 2002 was $1,990,695. At December 31, 2002 and
2001, the outstanding balance was $1,470,303 and $1,292,012, respectively. In
March 2003, the Company obtained an increase in the line of credit to
$3,000,000.

                                      F-18

<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(5) NOTES PAYABLE
    -------------
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
                                                                                       2002           2001
                                                                                   ------------   ------------
   <S>                                                                             <C>            <C>


   Note payable to a finance company, interest at 9.85%, monthly payment of
   payments of $50,680, due April 2009 (see below)                                 $ 2,829,885   $       --

   Note payable to a finance company, interest at 8.54%, monthly payment of
   payments of $36,215, due December 2009 (see below)                                2,117,567           --

   Note payable to a finance company, interest at 8.54%, monthly payment of
   payments of $32,194, due December 2009 (see below)                                1,882,433           --

   Note payable to a finance company, interest at 10.84%, monthly payment of
   payments of $35,596, due December 2008 (see below)                                1,757,906           --

   Note payable to a finance company, interest at 10.5%, monthly payments of
   $2,975, due August 2004                                                              53,859         82,262

   Note payable to a finance company, interest at 10.84%, monthly payments of
   $1,434, due December 2005                                                            44,117         56,007

   Note payable to a finance company, interest at 10.5%, monthly payments of
   $2,150, due March 2004                                                               30,092         51,488

   Note payable to a finance company, interest at 11.23%, monthly payment of
   $29,357, due May 2006, refinanced in 2002                                               --       1,222,249

   Note payable to individuals, interest at 8.5%, quarterly payments of
   $41,665, paid off in 2002                                                               --         150,532

   Note payable to a finance company, interest at 10%, monthly payments of
   $10,000, paid off in 2002                                                               --          85,577

   Note payable to a bank, interest at 10.5%, monthly payments of $3,027,
   paid off in 2002                                                                        --          31,561

   Note payable to an individual, interest at 2.79%, monthly payments of $2,500,
   Paid off in 2002                                                                        --          29,553

   Note payable to an individual, monthly payments of $5,000, paid off in 2002             --          24,813

   Note payable to bank, interest at 12%, monthly payments of $5,283, paid
   off in 2002                                                                             --          20,612
                                                                                    -----------   ------------
                                                                                   $ 8,715,859    $ 1,754,654

   Less current portion                                                               (653,964)      (630,781)
                                                                                   ------------   ------------
   Long term portion                                                               $ 8,061,895    $  1,123,873
                                                                                   ============   ============
</TABLE>

In September 2002, the Company purchased new MRI equipment for its Laguna Niguel
center funded by a note payable. Upon purchase of this equipment, an existing
note payable was refinanced and included with the purchase price of the new
equipment. The total note payable was for $2,806,846 and included equipment and
leasehold improvements totaling approximately $1,590,000, a refinanced note
payable of approximately $1,074,000, and loan fees and interest of $143,000. The
terms are interest-only for 3 months, followed by 75 monthly installments of
$50,680, including interest at 9.85%. The new equipment is pledged as collateral
for the note payable.


                                      F-19

<PAGE>

                           MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(5) CONTINUED
    ---------

In December 2002, the Company assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The note payable to a finance company has a monthly installment
payment of $36,215 over 84 months with an interest rate of 8.54%. The new
equipment is pledged as collateral for the note payable.

In December 2002, the Company assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
note payable to a finance company has a monthly installment payment of $32,194
over 84 months with an interest rate of 8.54%. The new equipment is pledged as
collateral for the note payable.

In December 2002, the Company acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The note payable to a
finance company has a monthly installment payment of $35,596 over 72 months with
an interest rate of 10.84%. The new equipment is pledged as collateral for the
note payable.

At December 31, 2002, future minimum annual principal payments on the notes
payable are as follows:

                        Year-ending December 31,
                        ------------------------
                                  2003                            $   653,964
                                  2004                              1,194,721
                                  2005                              1,281,880
                                  2006                              1,391,272
                                  2007                              1,529,535
                                  Thereafter                        2,664,487

                                                                   -----------
                                                                   $8,715,859
                                                                   ===========

(6) NOTES PAYABLE TO RELATED PARTIES
    --------------------------------

In September 1999, the Company issued $50,000 in principal amount of 10%
short-term promissory notes payable, due March 31, 2000, to two directors and an
individual to finance operations. The individual lenders, including the
directors, were awarded total warrants to purchase 40,000 shares of common stock
at an exercise price of $0.625 per share. In connection with the issuance of the
warrants, the Company is recognizing additional interest expense of $10,938,
which is being amortized over the terms of the loans. During the second quarter
of 2000, the Company paid $45,000 of these $50,000 related party short-term
promissory notes payable along with accrued interest payable of $2,785 in the
form of $5,000 cash and 120,000 shares of Restricted Rule 144 common stock.
During 2002, the Company paid the remaining balance of $5,000. Thus, the balance
of these notes was $0 and $5,000 at December 31, 2002 and 2001, respectively.

Related to the February 2000 acquisition of Ultra, the Company issued notes
payable to the principals which were due in variable payments totaling $380,160
plus accrued interest through November 9, 2001. During the first quarter of the
year ended December 31, 2001, the Company paid principal of $25,676 along with
accrued interest of $22,324. During 2001, the purchase transaction was rescinded
pursuant to a settlement agreement. Effective February 28, 2001, the Company
relinquished its holdings in Ultra and cancelled approximately 2.5 million
shares of common stock in return. The notes payable associated with the
acquisition were cancelled and are not included in the consolidated financial
statements of the Company after February 28, 2001 (See note 2).

During the third quarter of 2000, the Company issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the ninth month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of the Company's common stock. The aggregate payment amount due to the
noteholders was $37,500 plus accrued interest due April 15, 2001, July 15, 2001,
October 15, 2001, and January 15, 2002. In April 2001, the Company issued 56,250
shares of Restricted Rule 144 common stock valued at $4,078 as consideration for
extending each due date by six months. In October 2001, the Company issued
100,000 shares of Restricted Rule 144 common stock valued at approximately
$8,500 as additional consideration for extending the due dates of five of the
six notes by an additional twelve months. During the year ended

                                      F-20
<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(6) Continued

December 31, 2002, $100,000 of the notes was converted into 333,332 shares (at
$.30 per share) of Restricted Rule 144 common stock. The remaining $25,000 will
be paid in quarterly installments from October 2002 through July 2003. Thus, the
balance of these notes was $18,750 and $143,750 at December 31, 2002 and 2001,
respectively.

In June 2001, the Company issued two convertible notes payable for $200,000 and
$75,000 to an officer/director related to its acquisition of Envision
Healthcare, LLC and Envision Open MRI, LLC, respectively. At the noteholder's
option, the noteholder may elect to convert the outstanding balance of the notes
into shares of the Company's common stock at a conversion price of $0.75. The
notes are interest only at 10% for the first year with the principal to be paid
down during the following two years. In June 2002, the Company issued 25,000
shares of Restricted Rule 144 common stock valued at $3,250 as consideration for
extending the monthly interest only payments due dates by six
months each with principal balance due December 2004. At December 31, 2002 the
balance of these notes was $275,000.

At December 31, 2002, future minimum annual principal payments on the related
party notes payable are as follows:

                        Year-ending December 31,
                        ------------------------
                                  2003                            $   156,250
                                  2004                                137,500
                                                                   -----------
                                                                   $  293,750
                                                                   ===========

(7) LEASES
    ------

The Company is currently leasing several of its MRI machines and other
diagnostic equipment under capital lease agreements and its offices under
operating leases which expire at various dates.

At December 31, 2002, future minimum annual rental commitments under
noncancellable lease obligations are as follows:

<TABLE>
<CAPTION>
                                                                       Capital            Operating
                        Year-ending December 31,                        Leases              Leases
                        ------------------------                     -----------         -----------
                               <S>                                   <C>                 <C>
                                  2003                               $2,114,292           1,458,863
                                  2004                                1,618,467           1,259,656
                                  2005                                  984,597             914,012
                                  2006                                  454,845             703,812
                                  2007                                  271,382             449,213
                               Thereafter                                13,702             336,407
                                                                     -----------         -----------

      Total minimum lease payments                                    5,457,285          $5,121,963
      Less amounts representing interest (at rates of 4.2% to                            ===========
      12.92%)                                                           881,858
                                                                     -----------

      Present value of net minimum lease payments                     4,575,427

          Less current portion                                        1,686,376
                                                                     -----------

      Capital lease obligations - long term                          $2,889,051
                                                                     ===========
</TABLE>

Rent expense for operating leases, including month to month leases, was $621,483
and $534,804 for the years ended December 31, 2002 and 2001, respectively.


                                      F-21
<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(8) COMMITMENTS AND CONTINGENCIES
    -----------------------------

EMPLOYEE AGREEMENTS

In August 1994, the Company entered into an employment and severance agreement
with the Chief Executive Officer. The severance agreement provides, among other
things, that in the event a change in control of the Company occurs or the Chief
Executive Officer is involuntarily terminated, suffers a disability while
employed by the Company or dies while employed by the Company, then the Chief
Executive Officer is entitled to receive certain benefits from the Company. Such
benefits may include some or all of the following: an amount based on the base
salary as provided for in the employment agreement; an amount based on the bonus
paid or payable to the Chief Executive Officer as provided for in the employment
agreement; the right to receive common stock that shall vest immediately; and
the right to exercise any warrants or stock options held by or granted to the
Chief Executive Officer under the employment agreement or any stock option plan
of the Company or both, health insurance and disability insurance. The Chief
Executive Officer will not receive any benefits upon voluntarily termination of
employment with the Company or if the Company terminates the Chief Executive
Officer "for cause", which is defined as the conviction of the Chief Executive
Officer after appeal of a felony.

In March 2003, the term of the Chief Executive Officer's employment agreement
and severance agreement were extended for an additional one (1) year period, or
until August 31, 2006.

In May 2002, the Company entered into an employment agreement with the
President. The term of the employment agreement is three years and shall
terminate on May 20, 2005. The agreement provides for an eighteen-month
severance upon involuntary termination. In March 2003, the term of the
President`s employment agreement extended for an additional one (1) year period,
or until May 20, 2006.

In May 2002, the Company entered into an employment agreement with the Chief
Financial Officer. The term of the employment agreement is two years and shall
terminate on May 20, 2004. The agreement provides for a twelve-month severance
upon involuntary termination. In March 2003, the term of the President`s
employment agreement extended for an additional one (1) year period, or until
May 20, 2006.

LEGAL MATTERS

A suit in the Court of Common Pleas, Cuyahoga, Ohio was commenced by Plaintiff
James V. Zelch and his wholly owned entity, J.Z. Investments, Inc., against the
Company and three of its MRI site subsidiary entities, namely, Regional MRI of
Orlando, Inc., Regional MRI of Toledo, Inc., and West Regional MRI Limited
Partnership, seeking the payment of fees for radiological diagnostic services
allegedly rendered to patients of the aforementioned MRI Sites at a time prior
to the Company's purchase of these MRI site entities. The Company has contested
this lawsuit. However, a default judgment for $187,102 was entered which the
Company has claimed on an appeal to the Ohio Court of Appeals that the judgment
should have been vacated and set aside by the lower court. A Decision of the
Ohio Court of Appeals dated March 20, 2003 has reversed the judgment against the
Company in its entirety, and remanded the case back to the trial Court with
instructions to conduct an evidentiary hearing on the scope and meaning of two
release documents given to the Company by the Plaintiffs.

From time to time, the Company has been named as a defendant in a lawsuit. As of
December 31, 2002, all such lawsuits have been dismissed or settled through
agreed-upon payment terms, except for as noted above. There are no other
material legal proceedings, to which the Company is a party, which could have a
material adverse effect on its business, financial condition or operating
results.

                                      F-22


<PAGE>

                            MIRACOR DIAGNOSTICS, INC.

                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


(9) STOCKHOLDERS' EQUITY
     --------------------

PREFERRED STOCK

In April 1995, the Company authorized 10,000,000 shares of $.01 par value
preferred stock. The preferred stock may be issued in one or more classes or
series with such designations, rights, preferences and restrictions as may be
determined from time to time by the Board of Directors. There are no outstanding
shares of preferred stock as of December 31, 2002 and December 31, 2001,
respectively.

COMMON STOCK

In February 2000, the Company acquired 80% ownership in Ultra Open MRI Holding
Corporation with a payment combination of a $380,160 note payable and 2,534,400
shares of Restricted Rule 144 common stock. During 2001, the Company
relinquished its holdings in Ultra pursuant to a settlement agreement and
cancelled the 2,534,400 shares of the Company's common stock. As a result of
this transaction, common stock and additional paid-in capital were reduced by
$2,656,456 (see note 2). Resulting from the Ultra settlement, the weighted
average number of shares outstanding calculation for the year ended December 31,
2001 includes the cancellation of approximately 2.5 million common shares as of
February 28, 2001.

During the third quarter of 2000, the Company issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the ninth month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of our common stock. The aggregate payment amount due to the noteholders was
$37,500 plus accrued interest due April 15, 2001, July 15, 2001, October 15,
2001, and January 15, 2002. In April 2001, the Company issued 56,250 shares of
Restricted Rule 144 common stock valued at $4,078 as consideration for extending
each due date by six months. In October 2001, the Company issued 100,000 shares
of Restricted Rule 144 common stock valued at approximately $8,500 as
consideration for extending the due dates of five of the six notes by an
additional twelve months. During the year ended December 31, 2002, $100,000 of
the notes was converted into 333,332 shares (at $.30 per share) of Restricted
Rule 144 common stock. The remaining $25,000 will be paid in quarterly
installments from October 2002 through July 2003. Thus, the balance of these
notes was $18,750 and $143,750 at December 31, 2002 and 2001, respectively.

During the first quarter of 2001, the Company issued a $150,000 note payable at
a 15% interest rate, originally due August 28, 2001, to a corporation. The
noteholder was awarded warrants to purchase 400,000 shares of common stock at an
exercise price of $0.219 per share. On August 28, 2001, the Company awarded the
noteholder warrants to purchase 75,000 shares of common stock at an exercise
price of $0.219 per share as consideration for extending the due date by three
months. During November 2001, the note was paid in full.

Pursuant to an investment letter dated March 5, 2001 with an individual, the
Company received $15,000 for the purchase of 83,335 shares of Restricted Rule
144 common stock at purchase price of $0.18 per share. All such shares have been
issued.


                                      F-23

<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(10) OPTIONS AND WARRANTS
     --------------------

The Company has issued options and warrants in connection with various private
placements, certain debt securities and certain other agreements with
compensation to employees and consultants. The Company's options and warrants
allow the holder to purchase one share of the Company's common stock at a
specified price.

Options and warrants granted and issued by the Company consisted of:

                                                                      Weighted
                                                                       Average
                                                          Number       Price
                                                        -----------  -----------

Balance outstanding, December 31, 2000                    2,082,311       $0.52
                                                        ===========

Options granted                                                  -            -
Options expired                                           (144,250)        0.74
Options exercised                                                -            -
Warrants granted                                           475,000         0.22
Warrants expired                                            (5,143)       28.00
                                                        -----------
Balance outstanding, December 31, 2001                   2,407,918        $0.35
                                                        ===========

Options granted                                            600,000         0.27
Options expired                                            (39,250)        0.70
Options exercised                                                -            -
Warrants granted                                                 -            -
Warrants expired                                           (40,000)        0.63
                                                        -----------
Balance outstanding, December 31, 2002                   2,928,668        $0.33
                                                        ===========

Options and warrants exercisable                         1,991,418        $0.29

Compensation expense was not recorded for any issuance of options and warrants
to officers or employees in 2002 and 2001 as the fair market value of the
options and warrants was at or below the exercise price on their respective
dates of issuance.

                                      F-24


<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                For the years ended December 31, 2002 and 2001


(10) CONTINUED
     ---------

Information relating to options and warrants at December 31, 2002 summarized by
exercise price is as follows:
<TABLE>
<CAPTION>

                Outstanding                                                 Exercisable
                                            Weighted Average             Weighted Average
      Exercise Price       Equiv.          Life       Exercise          Equiv.      Exercise
        Per Share          Shares         (Year)       Price            Shares       Price
        ---------          ------         ------       -----            ------       -----
      <S>                 <C>              <C>        <C>              <C>           <C>
      $    0.01           100,000          1.2       $ 0.01            100,000      $0.01
           0.10            20,413          2.7         0.10             20,413       0.10
           0.15           136,523          2.7         0.15            136,523       0.15
           0.16           620,000          2.2         0.16            620,000       0.16
           0.17             2,088          2.7         0.17              2,088       0.17
           0.20           175,000          3.0         0.20            175,000       0.20
           0.22           475,000          3.1         0.22            475,000       0.22
           0.26            65,000          7.5         0.26             32,500       0.26
           0.27           700,000          9.2         0.27             50,000       0.27
           0.69           309,500          7.0         0.69            154,750       0.69
           0.81           250,000          6.0         0.81            187,500       0.81
           1.00            75,000          7.2         1.00             37,500       1.00
          28.00               144          0.7        28.00                144      28.00
                        ---------                                    ---------
                        2,928,668          5.1       $ 0.33          1,991,418      $0.29
                        =========                                    =========
</TABLE>

Had compensation cost for stock-based compensation been determined based on the
fair value at the grant dates consistent with the method of SFAS No. 123, the
Company's net income and earnings per share for the years ended December 31,
2002 and 2001 would have been the pro forma amounts presented below:

<TABLE>
<CAPTION>
                                                               2002              2001
                                                           ------------     ------------
<S>                                                        <C>              <C>
Net income
     As reported                                           $   278,541      $   329,823
     Pro forma                                                 179,721          261,654

Net income attributable to common stockholders
     As reported                                               278,541          329,823
     Pro forma                                                 179,721          261,654

Basic and diluted earnings per share
     As reported                                           $      0.02      $      0.02
     Pro forma                                             $      0.01      $      0.02
</TABLE>

The fair value of options and warrants is estimated on the date of grants
utilizing the Black-Scholes option pricing model with the following weighted
average assumptions for years ended December 31, 2002 and 2001: expected life of
10 years; expected volatility of 90%; risk-free interest rate of 5.25%; and a 0%
dividend yield. The weighted average fair value at the date of grant of the
options and warrants granted during 2002 and 2001 approximated $0.27 and $.22
per option and warrant, respectively.

Due to the fact that the Company's warrants vest over several years and
additional awards are made each year, the above pro forma numbers are not
indicative of the financial impact had the disclosure provisions of SFAS No. 123
been applicable to all years of previous warrant grants.


                                      F-25

<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                For the years ended December 31, 2002 and 2001


 (11) COMPENSATORY STOCK BENEFIT PLANS
     --------------------------------

On May 16, 2002, the Company's board of directors approved the registration of
950,000 shares of common stock under Form S-8, whereby services are obtained in
exchange for issuance of free trading stock of the Company. As of December 31,
2002, 421,713 shares remain available under this registration which may be
awarded until May 16, 2007. During the years ended December 31, 2002 and 2001,
656,750 and 1,217,845 shares, respectively, of common stock under Form S-8
registrations were issued for directors fees, compensation, and legal and
professional services provided to the Company.

During the years ended December 31, 2002 and 2001, 267,735 and 943,550 shares,
respectively, of Restricted Rule 144 common stock were issued for employee
bonuses, compensation, interest, principal of trade notes payable, and legal and
professional services provided to the Company.

Pursuant to employee agreements, 157,500 shares of accrued employee common stock
grants were issued during the year ended December 31, 2002. Accordingly,
deferred stock compensation of $23,363 was reclassified to common stock and
additional paid-in capital during 2002.

During the year ended December 31, 2001, 34,500 shares of accrued employee
common stock grants were issued pursuant to employee agreements and 536 shares
of accrued common stock grants were cancelled. Accordingly, deferred stock
compensation of $51,369 was reclassified to common stock and additional paid-in
capital during the year end December 31, 2001.

During the years ended December 31, 2002 and 2001, deferred compensation expense
of $17,073 and $12,672, respectively, were recorded relating to accrued employee
stock grants in order to value such shares at the estimated fair market value at
the date of grant.

Compensation recognized relating to accrued employee stock grants and warrants
is based on the pro-rata common stock and warrants earned and the market value
of the Company's stock at the time of issuance (fair value method) and amortized
over the applicable period.

On August 28, 2000, the Company's board of directors approved the registration
of 2,500,000 shares of common stock to be issued pursuant to the Company's 2000
Stock Compensation Plan II and the 1997 Stock Option Plan. Shares may be awarded
under the 2000 Stock Compensation Plan II until August 28, 2005.


                                      F-26

<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001


(12) EMPLOYEE BENEFIT PLAN
     ---------------------

On November 1, 2000, the Company adopted the 401(k) Profit Sharing Plan and
Trust (the "Plan") for employees of the Company. The Plan allows employees who
satisfy the age and service requirements to contribute up to 15% of pre-tax
wages, limited to the maximum amount permitted under federal law. The Company
has made no contributions to the Plan.

(13) RELATED PARTY TRANSACTIONS
     --------------------------

In June 2001, the Company issued two convertible notes payable for $200,000 and
$75,000 to an officer/director related to its acquisition of Envision
Healthcare, LLC and Envision Open MRI, LLC, respectively. At the noteholder's
option, the noteholder may elect to convert the outstanding balance of the notes
into shares of the Company's common stock at a conversion price of $0.75. The
notes are interest only at 10% for the first year with the principal to be paid
down during the following two years. In June 2002, the Company issued 25,000
shares of Restricted Rule 144 common stock valued at $3,250 as consideration for
extending the monthly interest only payments due dates by six months each with
principal balance due December 2004. The balance of these notes was $275,000 at
December 31, 2002 and 2001.

During the third quarter of 2000, the Company issued $150,000 of 12% convertible
notes payable, due January 15, 2002, to six officers and directors to alleviate
a negative cash position. Upon the ninth month anniversary of the note, each
noteholder was able to convert all (but not part) of the note into 83,333 shares
of our common stock. The aggregate payment amount due to the noteholders was
$37,500 plus accrued interest due April15, 2001, July 15, 2001, October 15,
2001, and January 15, 2002. In April 2001, the Company issued 56,250 shares of
Restricted Rule 144 common stock valued at $4,078 as consideration for extending
each due date by six months. In October 2001, the Company issued 100,000 shares
of Restricted Rule 144 common stock valued at approximately $8,500 as additional
consideration for extending the due dates of five of the six notes by an
additional twelve months. During the year ended December 31, 2002, $100,000 of
the notes was converted into 333,332 shares (at $.30 per share) of Restricted
Rule 144 common stock. The remaining $25,000 will be paid in quarterly
installments from October 2002 through July 2003. Thus, the balance of these
notes was $18,750 and $143,750 at December 31, 2002 and 2001, respectively.

In September 1999, the Company issued $50,000 in principal amount of 10%
short-term promissory notes payable, due March 31, 2000, to two directors and an
individual to finance operations. The individual lenders, including the
directors, were awarded total warrants to purchase 40,000 shares of common stock
at an exercise price of $0.625 per share. In connection with the issuance of the
warrants, the Company is recognizing additional interest expense of $10,938,
which is being amortized over the terms of the loans. During the second quarter
of 2000, the Company paid $45,000 of these $50,000 related party short-term
promissory notes payable along with accrued interest payable of $2,785 in the
form of $5,000 cash and 120,000 shares of Restricted Rule 144 common stock.
During 2002, the Company paid the remaining balance of $5,000. Thus, the balance
of these notes was $0 and $5,000 at December 31, 2002 and 2001, respectively.

Related to the February 2000 acquisition of Ultra, the Company issued notes
payable to the principals which were due in variable payments totaling $380,160
plus accrued interest through November 9, 2001. During the year ended December
31, 2000, the Company paid principal of $62,500 along with accrued interest of
$7,603. The balance of these notes was $317,660 at December 31, 2000. During the
first quarter of the year ended December 31, 2001, the Company paid principal of
$25,676 along with accrued interest of $22,324. During 2001, the purchase
transaction was rescinded pursuant to a settlement agreement. Effective February
28, 2001, the Company relinquished its holdings in Ultra and cancelled
approximately 2.5 million shares of common stock in return. The notes payable
associated with the acquisition were cancelled and are not included in the
consolidated financial statements of the Company after February 28, 2001 (See
note 2).

                                      F-27

<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(14) INCOME TAXES
     ------------

At December 31, 2002, the Company had approximately $3,400,000 in federal and
$5,700,000 in state net operating loss carryforwards to offset future taxable
income. These carryforwards will expire in various years through 2019. The tax
effects of the net operating loss carryforwards are as follows:

                                  DECEMBER 31,
                                                    2002             2001
                                                ------------     ------------

Net operating loss carryforwards                $ 1,292,000      $ 1,416,000
                                                ------------     ------------
                                                  1,292,000        1,416,000

                       Valuation allowance       (1,292,000)      (1,416,000)
                                                ------------     ------------

          Total                                 $         -      $         -
                                                ============     ============


The Company provides a valuation allowance for deferred tax assets when it is
more likely than not, based on available evidence, that some portion or all of
the deferred tax assets will not be realized. As of December 31, 2002, it cannot
be determined if it is more likely than not that the Company will generate
sufficient future taxable income before 2019, the year after which all current
available net operating loss carryforwards expire, to utilize all of the
Company's deferred assets. A valuation allowance has been recognized for the
full amount of the deferred tax asset at December 31, 2002 and 2001.

Income tax expense attributable to income before income taxes differs from the
amount computed by applying the US Federal income tax rate of 34% to income from
operations before income taxes principally as a result of use of net operating
loss carryforwards and changes in the valuation allowance.


                                      F-28


<PAGE>
                           MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(15) SUMMARIZED QUARTERLY DATA (UNAUDITED)

Following is a summary of the quarterly results of operations for the years
ended December 31, 2002 and 2001 (in 000's except per share data and average
shares outstanding):

<TABLE>
<CAPTION>
                                                            Quarter ended
                              ------------------------------------------------------------------------
                                 March           June        September      December
                                  31              30             30             31            Total
                              ------------   ------------   ------------   ------------   ------------
2002
----
Net revenue                   $     2,732    $     2,932    $     2,999    $     3,378    $     12,041
Income from Operations                347            383            333             76           1,139
Net income (loss)                     128            175            130           (154)            279
Basic earnings (loss) per share       .01            .01            .01           (.01)            .02
Diluted earnings(loss) per share      .01            .01            .01           (.01)            .02
Weighted average shares
   Outstanding                  13,272,926     14,310,520     14,609,372     15,053,642     14,480,763

2001
----
<S>                           <C>            <C>            <C>            <C>            <C>
Net revenue                   $     2,309    $     1,961    $     2,402    $     2,673    $     9,345
Income from
   Operations                         315            275            276            266          1,132
Net income                             97            108             61             65            330
Basic earnings per share              .01            .01            .01            .01            .02
Diluted earnings per share            .01            .01            .01            .01            .02
Weighted average shares
   Outstanding                 13,496,455     12,799,044     13,184,712     13,611,202     13,272,926

</TABLE>

(16) Recent Accounting Pronouncements
     --------------------------------

In June 2001, the FASB approved SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 requires companies to cease amortizing goodwill and other
intangible assets with indefinite lives after December 31, 2001. SFAS No. 142
also establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. At
December 31, 2002, the Company performed an assessment of whether there is an
indication that goodwill is impaired. Based on the assessment, there was no
impairment of goodwill as of December 31, 2002. Amortization expense related to
goodwill was $0 and $153,564 for the years ended December 31, 2002 and 2001.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 updates, clarifies, and simplifies existing accounting
pronouncements. This statement rescinds SFAS No. 4, which required all gains and
losses from extinguishments of debt to be aggregated and if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB No. 30 will now be used to classify those gains and losses. SFAS
No. 64 amended SFAS No. 4 and is no longer necessary as SFAS No. 4 has been
rescinded. SFAS No. 44 has been rescinded as it is no longer necessary. SFAS No.
145 amends SFAS No. 13 to require that certain lease modifications that have
economic effects similar to sale- leaseback transactions be accounted for in the
same manner as sale-lease transactions. This statement also makes technical
corrections to existing pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practice.
This statement is not applicable to the Company.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This statement requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF Issue 94-3, a liability
for an exit cost, as defined, was recognized at the date of an entity's
commitment to an exit plan. The provisions of this statement are effective for
exit or disposal activities that are initiated after December 31, 2002 with
earlier application encouraged. The Company does not expect adoption of SFAS No.
146 to have a material impact, if any, on its financial position or results of
operations.


                                  F-29
<PAGE>

                            MIRACOR DIAGNOSTICS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2002 and 2001

(16) CONTINUED
     ---------

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions."  SFAS No. 147 removes the requirement in SFAS No. 72
and Interpretation 9 thereto, to recognize and amortize any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. This statement
requires that those transactions be accounted for in accordance with SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  In addition, this statement amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include certain financial
institution-related intangible assets.  SFAS No. 147 is not applicable to the
Company.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation Transition and Disclosure," an amendment of SFAS No. 123. SFAS No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require more prominent and more frequent disclosures in financial statements
about the effects of stock-based compensation. This statement is effective for
financial statements for fiscal years ending after December 15, 2002. SFAS No.
148 will not have any impact on the Company's financial statements as management
does not intend to change to the fair value method.

 (17) SUBSEQUENT EVENT
     ----------------

         Effective January 2003, the Company opened a start-up diagnostic
imaging center located in Jacksonville, Florida. The Company financed MRI
equipment pledged under a capital lease with a finance company. The agreement
has a carrying amount of approximately $950,000 with a monthly installment
payment of $16,182 over 66 months. The Company also financed other medical
equipment totaling $165,000 with various finance companies.



                                      F-30