<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, 2003.

        [ ]     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:

         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 $19,199,560.

As of March 15, 2004, Registrant had outstanding 16,050,004 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 15, 2004)
was approximately $6,885,000.

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 2004
Annual Meeting of Stockholders to be held on May 13, 2004, 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............................................7

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

Item 8a.  Controls and Procedures...........................................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....................17

                                     PART IV

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

Item 14.  Principal Accountant Fees and Services............................19


<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. Since January 1994, we have been a medical based
company.

         Between 1994 and 1998, we engaged in the development of the Fluid Alarm
System, which monitored the integrity of infection control barriers worn during
medical procedures, and the Cell Recovery System, which was a cell "brushing"
and retrieval system that used an automated biopsy brush for the collection of
specimen cells for diagnostic purposes. We have the patent licensing rights
through the life of the patents which expire from 2008 to 2010. In 1998, we
wrote off our investments in each of these 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.

         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 October 1999, we
changed our name to Miracor Diagnostics, Inc. to reflect our focus in medical
diagnostic imaging. We currently own fifteen diagnostic centers in five states
as follows:

           Date Acquired/Opened             Diagnostic Center Location
           --------------------             ---------------------------
           July 1998                        Orlando, Florida
                                            Oak Brook, Illinois
                                            Sylvania, Ohio
           June 2001                        Laguna Niguel, California
                                            Long Beach, California
                                            Newport Beach, California (51%)
           October 2001                     Perrysburg, Ohio
           February 2002                    Woodridge, Illinois
           December 2002                    Coos Bay, Oregon
                                            Kissimmee, Florida
                                            Long Beach, California
                                            Carol Stream, Illinois
           January 2003                     Jacksonville, Florida
           June 2003                        Santa Barbara, California
           January 2004                     Orange Park, Florida

                                       1


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         In October 2003, Regional MRI of Jacksonville, Inc., one of our
wholly-owned subsidiaries, consolidated its operations from two medical
diagnostic centers to one.

         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.

         While we are focused on becoming profitable on our current operations,
we plan to seek, evaluate and, if such evaluation 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
objective of seeking long-term appreciation in market value of our common stock.
We will attempt to analyze all relevant factors and make a determination based
upon reasonable investigative measures and available data.

         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. We have signed a preliminary agreement to
raise $1,000,000 in equity. In addition, we are in negotiation to raise our line
of credit from $3,000,000 to $4,000,000. Our ability to obtain additional
sources of financing cannot be assured. Our growth is dependent upon our ability
to obtain additional funding to expand our existing operations and acquire other
diagnostic 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, 2003, we employed five full-time and two part-time
corporate employees and 102 full-time and 38 part-time employees at our fifteen
diagnostic imaging centers. None of our employees are covered by collective
bargaining contracts.

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

         At December 31, 2003, we had an accumulated deficit of approximately
$26,914,000 which includes losses from our prior operations and from our first
three years of operating in the medical diagnostic imaging business.

         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.

                                       2


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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 we are able to obtain additional capital through subsequent debt
or equity financings. There can be no assurance that borrowing capacity under
our 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.

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 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.

                                       3

<PAGE>

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 our 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.

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

                                       4

<PAGE>

         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 a party of acquiring control of 15% of
the outstanding voting power of the company without prior board of directors'
approval.

         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. At the present time, we are planning a private
placement to issue up to $1 million of preferred stock, which will be
convertible into 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, 2003, there were 3,875,835 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,
34% 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.

          In raising new financing, we may need to issue common stock at a
discount to the current market price and we may need to issue warrants to
complete such a transaction

                                       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 2001, we acquired Laguna Niguel MRI, Inc., an MRI center located in
Laguna Niguel, California; Envision Healthcare, LLC, an MRI center located in
Long Beach, California; and 51% of Envision Open MRI, LLC, an MRI center located
in Newport Beach, California. We also opened a start-up MRI center located in
Perrysburg, Ohio.

         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 $272,000 with monthly installment payment
of $5,728 over 60 months with an interest rate of 9.56%. We also financed other
medical equipment totaling $191,000 with another finance company.

         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 $1,545,966. 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 $1,006,765. 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 $749,705. 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%.

         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 $451,000 with various
finance companies.

         In June 2003, we opened a start-up diagnostic imaging center located in
Santa Barbara, California. We financed MRI equipment and tenant improvements
through a note payable to a finance company. The agreement has a carrying amount
of approximately $1,197,000 with a monthly installment payment of $25,537 over
66 months with an interest rate of 9.91%.

         While we are focused on becoming profitable on our current operations,
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.

                                       6

<PAGE>

         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 Events
-----------------
         In January 2004, we opened a start-up diagnostic imaging center located
in Orange Park, Florida. We financed MRI equipment and tenant improvements
pledged under a note payable with a finance company. The agreement has a
carrying amount of approximately 1,125,000 with a monthly installment payment of
$23,204 over 66 months.

         In March 2004, we executed a term sheet with a placement agent to
market, on a "best efforts basis," a maximum of $1 million in a private
placement transaction. The private placement will be marketed exclusively to
accredited investors. The securities will be a class of Preferred Stock to be
known as 3% Series A Preferred Stock. The 3% Series A Preferred Stock will be
convertible into Common Stock at any time, subject to certain limitations and is
automatically convertible into Common Stock two years from the date of the
closing of the private placement. The 3% Series A Preferred Stock will have
preferences in the payment of dividends and upon liquidation, as well as voting
and anti-dilution rights.

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 fifteen diagnostic
centers. Expiration dates on these medical office leases range from 2004 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 pledged 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 2004 to 2010. 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.

ITEM 3.  LEGAL PROCEEDINGS

        Effective on October 23, 2003, we entered into a Mutual Release and
Settlement Agreement with James V. Zelch, M.D., P.C. and J Z Investment Corp.
resolving two lawsuits between the Company and the Zelch entities.

         Miracor was sued in the Superior Court of the State of California, Los
Angeles County in a matter entitled: PETER FOLDVARY, M.D., P.C. V. MIRACOR
DIAGNOSTICS, INC. In that suit the plaintiff alleged acts of 'tortious
interference' by Miracor in connection with the activities of its wholly owned
subsidiary Envision Healthcare, Inc. On the basis of available information
counsel is of the opinion that there is no significant legal exposure to
Miracor.

         From time to time we have been named as a defendant in a lawsuit. As of
December 31, 2003, all such lawsuits have been dismissed or settled through
agreed-upon payment terms. There are no 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.

                                       7

<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 2003 and 2002.

                                    Bid Price
                                                   High                 Low
                                                  ----------------------------
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
2003
----
         First Quarter                            $ 0.34              $  0.23
         Second Quarter                           $ 0.30              $  0.16
         Third Quarter                            $ 0.31              $  0.21
         Fourth Quarter                           $ 0.49              $  0.24

         On March 15, 2004, the closing bid and asked prices of our common
stock, as listed on the over-the-counter NASD Bulletin Board, were $0.55 and
$0.60 per share, respectively.

         On March 15, 2004, we had approximately 1,255 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. If we close our planned private placement of our proposed 3%
Series A Preferred Stock, we will be required to pay dividends on this Preferred
Stock at the rate
of $0.002775 per share per quarter. Otherwise, earnings, if any, that we may
realize will be retained in the business for further development and expansion.

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.

                                       8

<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, 2003
we own 15 medical diagnostic centers in five states.

         While we are focused on becoming profitable on our current operations,
we plan to seek, evaluate and, if such evaluation 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. We have signed a preliminary agreement to
raise $1,000,000 in equity. In addition, we are in negotiation to raise our line
of credit from $3,000,000 to $4,000,000. Our ability to obtain additional
sources of financing cannot be assured. Our growth is dependent upon 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 principles 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.

         Goodwill at December 31, 2003 was $8,813,944. Goodwill is recorded as a
result of acquiring diagnostic centers. The centers are grouped by region into
reporting units. We evaluate goodwill, at a minimum, on an annual basis and
whenever events and changes in circumstances suggest that the carrying amount
may not be recoverable in accordance with Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets." Impairment of
goodwill is tested at the reporting unit level by comparing the reporting unit's
carrying amount, including goodwill, to the fair value of the reporting unit.
The fair values of the reporting units are estimated using a combination of the
income or discounted cash flows approach and the market approach, which uses
comparable market data. If the carrying amount of the reporting unit exceeds its
fair value, goodwill is potentially impaired and a second test is performed to
measure the amount of impairment loss, if any.

         For the years ended December 31, 2003 and 2002, we recorded no
impairment of goodwill. However, if our estimates or the related assumptions
change in the future, we may be required to record impairment charges to reduce
the carrying amount of goodwill.

                                       9

<PAGE>

         When we provide a diagnostic procedure, a receivable is recorded
representing the amount we expect to receive for the performance of that
procedure. The expected amount is based upon many factors including
reimbursement rates of payors (insurance companies, Medicare, Medicaid, health
maintenance organizations and patient co-pays, etc.) and historical collections
based upon the type of procedure and payor. Several times a year, we evaluate
the collectibility of accounts receivable and adjust the amount of revenue
recognized to reflect increased collections and/or write-offs of uncollectible
accounts based on the changes in our assumptions.

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

         Year ended December 31, 2003 compared to year ended December 31, 2002.

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

         Net patient service revenue for the year ended December 31, 2003 was
$19,199,560 compared to $12,040,908 for the year ended December 31, 2002. The
increase of 59.5% is primarily attributed to:

         -        the start-up diagnostic imaging center located in Santa
                  Barbara, California in June 2003 which contributed $345,192
                  of net revenue and
         -        the new locations started up or acquired in late 2002 and
                  early 2003 including sites located in Jacksonville and
                  Kissimmee, Florida; Coos Bay, Oregon; Long Beach, California
                  and Carol Stream, Illinois which contributed an increase in
                  net revenue of $7,290,231.

         This increase was partly offset by a decrease in revenue of $476,772 at
our existing locations. 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, 2003 and 2002.

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

         Costs of services were $10,799,094 for the year ended December 31, 2003
as compared to $5,455,245 for the year ended December 31, 2002. The increase of
98% is attributed to:

         -        the start-up diagnostic imaging center located in Santa
                  Barbara, California in June 2003 which had $216,413 in
                  operating costs,
         -        the new locations started up or acquired in late 2002 and
                  early 2003 including sites located in Jacksonville and
                  Kissimmee, Florida; Coos Bay, Oregon; Long Beach, California
                  and Carol Stream, Illinois which had an increase of $4,462,615
                  in operating costs and
         -        the existing sites which had an increase of $664,820 in
                  operating costs.

         Selling, general and administrative costs were $8,543,051 in 2003 as
compared to $5,447,138 in 2002, representing an increase of 56.8%. These
increases were primarily attributed to additional costs related to start-up
centers which have certain fixed expenses such as payroll, facility and
equipment leases and operating supplies regardless of scan volume and the level
of revenue.

Net Income/(Loss)
-----------------

         Net loss for the year ended December 31, 2003 was $1,724,227 as
compared to the net income of $278,541 for the year ended December 31, 2002. The
decrease was primarily attributable to a decrease in scan volume at certain
locations and to increased operating costs associated with the 2002 acquisitions
as well as expenses associated with the 2002 and 2003 start-up diagnostic
imaging centers located in Santa Barbara and Long Beach, California; Kissimmee
and Jacksonville, Florida; Carol Stream, Illinois and Coos Bay, Oregon. As noted
in Operating Expenses above, start-up centers have certain fixed expenses
regardless of the level of revenue; however, we expect the revenues for the
start-up diagnostic imaging centers to increase as the centers' operations
mature.

                                       10

<PAGE>

         Basic and diluted loss per common share were $0.11 for the year ended
December 31, 2003 compared to the basic and diluted earnings per common share of
$0.02 for the year ended December 31, 2002.

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, 2003 was $455,453 as compared to $379,201 at December 31, 2002, representing
a 20.1% increase.

         For the year ended December 31, 2003, we received $1,286,580 from
increases in our line of credit and $1,250,000 from issuance of a convertible
note payable. During the year ended December 31, 2003, we made the following
cash payments: $650,528 of principal payments on notes payable, $133,333 of
principal payments on notes payable to related parties, $1,765,527 of principal
payments on capital lease obligations and purchased equipment of $133,144. In
addition during the year ended December 31, 2003, operating activities provided
$222,204 of net cash, which included a net loss of $1,724,227. Accounts
receivable increased by $849,921; accounts payable and accrued expenses
increased by $620,499; other net assets (excluding cash) decreased by $235,970
and minority interest decreased by $21,858. The following items decreased net
income but did not affect cash:

         -        $121,031 in common stock paid for services in lieu of cash,
         -        $2,198,982 in depreciation and amortization, and
         -        $113,669 in negative amortization of interest on notes
                  payable.

         Changes in current assets and current liabilities resulted in a
negative working capital position of $2,306,606 at December 31, 2003 as compared
to a negative working capital of $662,937 at December 31, 2002. As our liquidity
is limited, we need to become profitable and may be required to obtain funds to
maintain our existing business and to acquire additional diagnostic centers. No
assurances can be given that such funds can be obtained.

         We have a line of credit with DVI Business Credit (DVI) at prime plus
3%, which under its terms, we may borrow up to $3,000,000 or the "borrowing
base" as defined, balance due July 2004, renewable for consecutive one-year
periods. On September 2003, DVI filed Chapter 11 bankruptcy. Thereafter, DVI
restricted the line of credit to the balance on that date, which was
approximately $2,300,000. This restriction was partially lifted in November
2003. The borrowing base at December 31, 2003 was $3,063,758. At December 31,
2003 and December 31, 2002, the outstanding balance was $2,756,883 and
$1,470,303, respectively. Having received debtor-in-possession financing, DVI
continues to service the line of credit by passing through to us all of our
accounts receivables collected in its lockboxes. We are actively seeking to
secure financing to replace the line of credit and to potentially raise the line
of credit from $3,000,000 to $4,000,000.

        In March 2004, we executed a term sheet with a placement agent to
market, on a "best efforts basis," a maximum of $1 million in a private
placement transaction. The private placement will be marketed exclusively to
accredited investors. The securities will be a class of Preferred Stock to be
known as 3% Series A Preferred Stock. The 3% Series A Preferred Stock will be
convertible into Common Stock at any time, subject to certain limitations and is
automatically convertible into Common Stock two years from the date of the
closing of the private placement. The 3% Series A Preferred Stock will have
preferences in the payment of dividends and upon liquidation, as well as voting
and anti-dilution rights. No assurances can be given that these financings can
be obtained.

                                       11

<PAGE>

The following describes our start-ups and acquisitions since January 2002:

         In February 2002, we opened a diagnostic imaging 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 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
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 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%. We also financed other
medical equipment totaling $191,000 with another finance company.

         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 $1,545,966. 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 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 partnership was immediately dissolved upon acquisition. The
carrying amount was $2,117,567 and goodwill associated with the transaction was
recorded at $1,006,765. 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 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 $749,705. 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 equipment is pledged as collateral for the note payable.

         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 $451,000 with various
finance companies.

         In June 2003, we opened a start-up diagnostic imaging center located in
Santa Barbara, California. We financed MRI equipment and tenant improvements
through a note payable to a finance company. The agreement has a carrying amount
of approximately $1,197,000 with a monthly installment payment of $25,537 over
66 months with an interest rate of 9.91%.

         In June 2003, we secured financing from an investment company. The
convertible note totaled $1,250,000 with interest of 12% to be paid quarterly.
The principal amount may be prepaid at anytime and is due June 2007. After June
2006, the note holder may convert any portion of the outstanding balance into
common stock at $0.25 per share. The noteholder was awarded warrants to purchase
400,000 shares of common stock at an exercise price of $0.26 per share over the
five year life of the warrants. In addition, individuals who brokered the
transaction were awarded warrants to purchase 212,500 shares of common stock at
an exercise price of $0.25 per share over the five year life of the warrants.
Lender and finder fees to execute the convertible note totaled $146,250.

         In October 2003, Regional MRI of Jacksonville, Inc., one of our
wholly-owned subsidiaries, consolidated its operations from two medical
diagnostic centers to one.

                                       12

<PAGE>

PLAN OF OPERATION

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

         Cash requirements during the next year will be for funding growth of
the operation and expansion of our existing centers, 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 cash flow generated from the
revenues of our diagnostic imaging centers. We are in negotiation to raise our
line of credit from $3,000,000 to $4,000,000.

         In March 2004, we executed a term sheet with a placement agent to
market, on a "best efforts basis," a maximum of $1 million in a private
placement transaction. The private placement will be marketed exclusively to
accredited investors. The securities will be a class of Preferred Stock to be
known as 3% Series A Preferred Stock. The 3% Series A Preferred Stock will be
convertible into Common Stock at any time, subject to certain limitations and is
automatically convertible into Common Stock two years from the date of the
closing of the private placement. The 3% Series A Preferred Stock will have
preferences in the payment of dividends and upon liquidation, as well as voting
and anti-dilution rights. No assurances can be given that these financings can
be obtained.

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, 2003, 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, 2003.

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.

                                       13

<PAGE>

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.

ITEM 7.  FINANCIAL STATEMENTS

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

Independent Auditors' Report                                                F-1

Consolidated Balance Sheets as of December 31, 2003 and 2002                F-2

Consolidated Statements of Operations for the
Years Ended December 31, 2003 and 2002                                      F-4

Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2003 and 2002                                      F-5

Consolidated Statements of Cash Flows for the
Years Ended December 31, 2003 and 2002                                      F-7

Notes to Consolidated Financial Statements                                  F-9

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

None.

ITEM 8a. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, our Chief Executive Officer
and our Chief Financial Officer evaluated the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a-15b
under the Securities Exchange Act of 1934. Based on their review of our
disclosure controls and procedures, they have concluded that our disclosure
controls and procedures are effective in timely alerting each of them to
material information relating to us that is required to be included in our
periodic SEC filings. Further, there were no significant changes in the internal
controls or in other factors that could significantly affect these disclosure
controls after the evaluation date and the date of this report.

                                       14

<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, 2003, 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 65                Chief Executive
 Officer

 Robert S. Muehlberg   President,                    3/11/99          5/14/01
 Age 50                Chief Operating Officer

 Ross S. Seibert       Chief Financial Officer                        2/21/00
 Age 41

 Don L. Arnwine        Director                       3/6/95
 Age 71

 Thomas E. Glasgow     Director                     11/11/94
 Age 50

 Stephen A McConnell   Director                      5/23/01
 Age 51

 Harvey C. Flodin      Director                      5/16/02
 Age 64

         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 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 for 13 years. 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.

                                       15

<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.

         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., Capital Title Group, Inc., and Inn Suites
Hospitality Trust. 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 2004 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 2004 Annual Meeting of Shareholders, is
incorporated herein by reference.

                                       16

<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. In November 2003, we negotiated to suspend principal payments for
one year. The balance of these notes was $160,417 at December 31, 2003 and
$275,000 at December 31, 2002.

         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 $0 and $18,750 at December 31, 2003 and 2002, respectively.

                                       17

<PAGE>

                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

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

     We filed current reports on Form 8-K dated March 19, 2004, November 11,
2003, August 14, 2003, June 23, 2003 and May 13, 2003.

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. (7)

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)

                                       18

<PAGE>

4.8   Form of Common Stock Purchase Warrant dated June 17, 2003 between the
      Company and Global Capital Funding Group, LP.

4.9   Specimen Form of Common Stock Purchase Warrant dated June 11, 2003.

10.1  Equity Purchase Agreement with Envision Open MRI, LLC, dated May 25, 2001.
      (6)

10.2  Equity Purchase Agreement with Envision Healthcare, LLC, dated May 25,
      2001. (6)

10.3  Asset Purchase Agreement with U.S. Diagnostics, Inc, dated May 29, 2001.
      (6)

10.4  Asset Purchase Agreement with Woodridge Open MRI, LLC, dated January 18,
      2002. (6)

10.5  Capital Stock Purchase Agreement with South Coast Radiologists Holding,
      Inc., dated December 3, 2002. (7)

10.6  Partnership Interest Purchase Agreement with PG Diagnostic Imaging, LLC,
      dated December 3, 2002. (7)

10.7  Asset Purchase Agreement with New View Diagnostics, Inc., dated December
      13, 2002. (7)

31.1  Certification of Chief Executive Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)

31.2  Certification of Chief Financial Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)

32.1  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

(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 March 29, 2002.
(7)   Previously filed as an exhibit to the Company's Annual Report Form 10-KSB
      Report dated March 30, 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees: Our auditors are Tschopp, Whitcomb, & Orr, P.A. and their
subcontractor Chastang, Ferrell, Sims and Eiserman, L.L.C., located at 2600
Maitland Center Parkway Suite 330, Maitland, FL 23751 and 1400 W. Fairbanks Ave
Suite 102, Winterpark, FL 32789.

We paid them $162,974 in audit and review fees for the year ended December 31,
2003, and $111,000 for the year ended December 31, 2002.

Tax Fees: We paid to Deloitte & Touche LLP at 701 "B" Street Suite 1900, San
Diego, CA 92101 $46,405 in fees related to tax compliance, tax advice, and tax
planning for the year ended December 31, 2003, and $28,500 for the year ended
December 31, 2002.

The Audit Committee pre-approves all audit and permissible non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. Pre-approval is
generally provided for up to one year, and any pre-approval is detailed as to
the particular service or category of services and is generally subject to a
specific budget. The independent auditors and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent auditors in accordance with this pre-approval, and
the fees for the services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis

                                       19

<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 29, 2004
------------------------   Chief Executive Officer
    M. Lee Hulsebus

/s/ Robert S. Muehlberg    President,                           March 29, 2004
------------------------   Chief Operating Officer
    Robert S. Muehlberg

/s/ Ross S. Seibert        Chief Financial Officer              March 29, 2004
------------------------
    Ross S. Seibert

/s/ Don L. Arnwine         Director                             March 29, 2004
------------------------
    Don L. Arnwine

/s/ Thomas E. Glasgow      Director                             March 29, 2004
------------------------
    Thomas E. Glasgow

/s/ Stephen A McConnell    Director                             March 29, 2004
------------------------
    Stephen A McConnell

/s/ Harvey C. Flodin       Director                             March 29, 2004
------------------------
    Harvey C. Flodin

                                       20

<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, 2003 and
2002, 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, 2003 and 2002, 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/ TSCHOPP, WHITCOMB & ORR, P.A.
   ----------------------------------------
       TSCHOPP, WHITCOMB & ORR, P.A.

Maitland, Florida
March 12, 2004

                                       F-1

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

                                    CONSOLIDATED BALANCE SHEETS

                                     December 31, 2003 and 2002
<CAPTION>

                                                                        2003              2002
                                                                  -------------      -------------
<S>                                                               <C>                <C>
ASSETS
------
Current assets:
     Cash and cash equivalents                                    $    455,453       $    379,201
     Accounts receivable (net of contractual adjustments and
       allowances of $8,374,078 and $6,411,520)                      6,034,334          5,184,413
     Prepaid expenses and other assets                                 211,337            119,767
                                                                  -------------      -------------
               Total current assets                                  6,701,124          5,683,381
                                                                  -------------      -------------

Property and equipment:
     Equipment under capital leases                                  8,616,368          7,279,709
     Machinery and equipment                                         4,454,016          3,702,989
     Leasehold improvements                                          1,312,204          1,096,671
     Furniture and fixtures                                            112,151             92,767
                                                                  -------------      -------------
                                                                    14,494,739         12,172,136

          Less accumulated depreciation                             (6,500,490)        (4,988,554)
                                                                  -------------      -------------
Net property and equipment                                           7,994,249          7,183,582

Goodwill                                                             8,813,944          8,959,513

Other assets                                                           581,385            294,481
                                                                  -------------      -------------
               Total assets                                       $ 24,090,702       $ 22,120,957
                                                                  =============      =============

</TABLE>

See notes to consolidated financial statements.

                                                F-2

<PAGE>
<TABLE>

                            MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                                   CONSOLIDATED BALANCE SHEETS

                                    December 31, 2003 and 2002
<CAPTION>

                                                                     2003               2002
                                                                -------------      -------------
<S>                                                             <C>                <C>

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

Current liabilities:
     Accounts payable                                           $  1,384,511       $  1,130,135
     Accrued expenses                                              1,615,414          1,249,290
     Line of credit                                                2,756,883          1,470,303
     Notes payable, related parties - current portion                 22,917            156,250
     Notes payable - current portion                               1,444,556            653,964
     Capital lease obligations - current portion                   1,783,449          1,686,376
                                                                -------------      -------------
               Total current liabilities                           9,007,730          6,346,318

Other liabilities:
     Notes payable, related parties - long term                      137,500            137,500
     Notes payable - long term                                     9,202,851          8,061,895
     Capital lease obligations - long term                         2,681,482          2,889,051
                                                                -------------      -------------
               Total liabilities                                  21,029,563         17,434,764
                                                                -------------      -------------

Minority interest                                                         --             21,858
                                                                -------------      -------------
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; 15,968,054 and 15,111,182 outstanding)        2,395,208          2,266,677
     Warrants                                                        122,750            122,750
     Additional paid-in capital                                   27,457,545         27,457,295
     Deferred stock compensation                                          --              7,750
     Accumulated deficit                                         (26,914,364)       (25,190,137)
                                                                -------------      -------------
               Total stockholders' equity                          3,061,139          4,664,335
                                                                -------------      -------------
               Total liabilities and stockholders' equity       $ 24,090,702       $ 22,120,957
                                                                =============      =============

</TABLE>

See notes to consolidated financial statements.

                                               F-3

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     Years ended December 31, 2003 and 2002

                                                      2003              2002
                                                 -------------     -------------

Net patient service revenue                      $ 19,199,560      $ 12,040,908

Operating expenses:
  Costs of services                                10,799,094         5,455,245
  Selling, general and administrative expenses      8,543,051         5,447,138
                                                 -------------     -------------
Total operating expenses                           19,342,145        10,902,383
                                                 -------------     -------------

 Income (loss) from operations                       (142,585)        1,138,525

 Interest expense                                  (1,603,500)         (862,987)
                                                 -------------     -------------
Income (loss) before minority interest             (1,746,085)          275,538

Minority interest                                      21,858             3,003
                                                 -------------     -------------
Net Income (loss)                                $ (1,724,227)      $   278,541
                                                 =============     =============

Earnings (loss) per share:

Earnings (loss) per share-basic                  $      (0.11)     $       0.02
Earnings (loss) per share-diluted                $      (0.11)     $       0.02
Weighted average shares outstanding-basic          15,440,846        14,480,763
Weighted average shares outstanding-diluted        15,440,846        15,052,297

See notes to consolidated financial statements.

                                       F-4

<PAGE>
<TABLE>

                            MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               Years ended December 31, 2003 and 2002

<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-5

</TABLE>

<PAGE>

<TABLE>

                             MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                               Years ended December 31, 2003 and 2002

<CAPTION>
                                                                  COMMON STOCK            ADDITIONAL
                                                           ----------------------------    PAID-IN
                                                              SHARES        AMOUNT         CAPITAL
                                                           -------------  -------------  -------------
<S>                                                          <C>          <C>            <C>
Balance, January 1, 2003                                     15,111,182   $  2,266,677   $ 27,457,295

Common stock issued for compensation, legal
     and other professional services                            479,375         71,907         49,124

Common stock issued from the exercise of warrants               327,497         49,124        (49,124)

Common stock issued from the Employee Incentive Stock
     Option Plan and Deferred Stock Compensation Plan            50,000          7,500            250

Net loss                                                             --             --             --
                                                           -------------  -------------  -------------
Balance, December 31, 2003                                   15,968,054   $  2,395,208   $ 27,457,545
                                                           =============  =============  =============
</TABLE>
(continued below)

<TABLE>
<CAPTION>
                                                                           DEFERRED        ACCUMULATED
                                                             WARRANTS     COMPENSATION       DEFICIT          TOTAL
                                                           -------------  -------------   -------------   ------------
<S>                                                        <C>            <C>             <C>             <C>
Balance, January 1, 2003                                   $    122,750   $      7,750    $(25,190,137)   $ 4,664,335

Common stock issued for compensation, legal
    and other professional services                                  --             --              --        121,031

Common stock issued from the exercise of warrants                    --             --              --             --

Common stock issued from the Employee Incentive Stock
     Option Plan and Deferred Stock Compensation Plan                --         (7,750)             --             --

Net loss                                                             --             --      (1,724,227)   (1,724,227)
                                                           -------------  -------------   -------------   ------------
Balance, December 31, 2003                                 $    122,750   $         --    $(26,914,364)   $ 3,061,139
                                                           =============  =============   =============   ============

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, 2003 and 2002
<CAPTION>
                                                                                     2003              2002
                                                                                 ------------      ------------
<S>                                                                              <C>               <C>
Cash flows from operating activities:
     Net income (loss)                                                           $(1,724,227)      $   278,541
     Adjustments to reconcile net income to net cash
         provided by operating activities:
           Stock paid for services                                                   121,031           188,189
           Compensation recognized relating to
              accrued employee stock grants and warrants                                  --            17,073
           Minority interest                                                         (21,858)           (3,003)
           Depreciation and amortization                                           2,198,982         1,290,558
           Negative Amortization                                                     113,667                --
           Changes in assets and liabilities excluding net assets acquired:
              Accounts receivable                                                   (849,921)         (501,163)
              Other assets                                                          (235,970)          199,815
              Accounts payable and accrued expenses                                  620,500           389,106
                                                                                 ------------      ------------
                     Net cash provided by operating activities                       222,204         1,859,116
                                                                                 ------------      ------------

Cash flows from investing activities:
     Purchase of property and equipment                                             (133,144)         (107,284)
     Cash acquired in purchase of companies                                               --             8,517
                                                                                 ------------      ------------

                     Net cash used in investing activities                          (133,144)          (98,767)
                                                                                 ------------      ------------

Cash flows from financing activities:
     Increase in line of credit                                                    1,286,580           178,291
     Proceeds from notes payable                                                   1,250,000                --
     Principal payments on notes payable, related parties                           (133,333)          (30,000)
     Principal payments on notes payable                                            (650,528)         (462,162)
     Principal payments on capital lease obligations                              (1,765,527)       (1,430,755)
                                                                                 ------------      ------------

           Net cash used in financing activities                                     (12,808)       (1,744,626)
                                                                                 ------------      ------------

Net increase in cash and cash equivalents                                             76,252            15,723

Cash and cash equivalents, beginning of year                                         379,201           363,478
                                                                                 ------------      ------------

Cash and cash equivalents, end of year                                           $   455,453       $   379,201
                                                                                 ============      ============
</TABLE>

See notes to consolidated financial statements.

                                                 F-7

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Years ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                               2003            2002
                                                           -----------     -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<S>                                                        <C>             <C>
PAYMENTS FOR:
     Interest                                              $1,603,500      $  808,836
     Income taxes                                          $   19,939      $   11,908

SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:

STOCK ISSUED FOR:
     COMPENSATION AND SERVICES:
     Legal, professional and employee services             $   67,246      $  139,581
     Directors' fees                                           53,785          48,608
                                                           -----------     -----------
                                                              121,031         188,189
                                                           -----------     -----------
     OTHER:
     Principal payments on notes payable                           --          24,500
                                                           -----------     -----------
                                                           $  121,031      $  212,689
                                                           ===========     ===========

Equipment Financed Using Notes Payable                     $1,218,410      $7,339,806
                                                           ===========     ===========

Equipment Financed Using Capital Leases                    $1,655,031      $1,475,176
                                                           ===========     ===========
</TABLE>
In December 2002, the Company assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. 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                               (1,545,966)
  Property and equipment                       470,500
  Other assets                                  17,676
  Accounts payable and other liabilities      (120,744)
  Capital lease obligations                   (136,827)
                                          -------------                                          -------------
                                          $    336,467                                           $    336,467
                                          =============                                          =============
</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 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                               (1,006,765)
  Property and equipment                       585,000
  Other assets                                 283,495
  Accounts payable and other liabilities      (179,520)
                                          -------------                                          -------------
                                          $  1,110,802                                           $  1,110,802
                                          =============                                          =============
</TABLE>

                                                   F-8


<PAGE>
                                MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 Years ended December 31, 2003 and 2002

In December 2002, the Company acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. 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                                  (749,705)
  Property and equipment                       910,500
  Accounts payable and other liabilities       (34,104)
                                          -------------                                          -------------
                                          $  1,000,295                                            $ 1,000,295
                                          =============                                          =============
</TABLE>
During the years ended December 31, 2003 and 2002, deferred compensation expense
of $0 and $17,073, 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, 50,000 shares of accrued employee common stock
grants were issued during the year ended December 31, 2003. Accordingly,
deferred stock compensation of $7,750 was reclassified to common stock and
additional paid-in capital during the year ended December 31, 2003. 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.

See notes to consolidated financial statements.

                                       F-9

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

(a) DESCRIPTION OF BUSINESS

Miracor Diagnostics, Inc. was incorporated on February 6, 1980, under the laws
of the state of Utah. Since January 1994, the Company has been a medical based
company.

Between 1994 and 1998, the Company engaged in the development of the Fluid Alarm
System, which monitored the integrity of infection control barriers worn during
medical procedures, and the Cell Recovery System, which was a cell "brushing"
and retrieval system that used an automated biopsy brush for the collection of
specimen cells for diagnostic purposes. The Company has the patent licensing
rights through the life of the patents which expire from 2008 to 2010. In 1998,
the Company wrote off their investments in each of these licenses. However, the
Company may elect to reintroduce or sell either product at a later date,
although the Company has no plans to do so at this time.

In 1998, the Company redefined their 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 October 1999, the
Company changed their name to Miracor Diagnostics, Inc. to reflect their focus
in medical diagnostic imaging. The Company now owns fifteen diagnostic centers
in five states as follows:

           Date Acquired/Opened             Diagnostic Center Location
           --------------------             ---------------------------
           July 1998                        Orlando, Florida
                                            Oak Brook, Illinois
                                            Sylvania, Ohio
           June 2001                        Laguna Niguel, California
                                            Long Beach, California
                                            Newport Beach, California (51%)
           October 2001                     Perrysburg, Ohio
           February 2002                    Woodridge, Illinois
           December 2002                    Coos Bay, Oregon
                                            Kissimmee, Florida
                                            Long Beach, California
                                            Carol Stream, Illinois
           January 2003                     Jacksonville, Florida
           June 2003                        Santa Barbara, California
           January 2004                     Orange Park, Florida

In October 2003, Regional MRI of Jacksonville, Inc., a wholly-owned subsidiary
of the Company, consolidated its operations from two medical diagnostic centers
to one.

The Company provides medical diagnostic imaging services through the operation
of its fifteen diagnostic centers in five states. Additionally, the Company
continues to identify suitable acquisition targets to position the Company for
growth.

(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.

                                         F-10

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

(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 AND ACCOUNTS RECEIVABLE

During 2003 and 2002, 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.

When the Company provides a diagnostic procedure, a receivable is recorded
representing the amount the Company expects to receive for the performance of
that procedure. The expected amount is based upon many factors including
reimbursement rates of payors (insurance companies, Medicare, Medicaid, health
maintenance organizations and patient co-pays, etc.) and historical collections
based upon the type of procedure and payor. Several times a year, the Company
evaluates the collectibility of accounts receivable and adjusts the amount of
revenue recognized to reflect increased collections and/or write-offs of
uncollectible accounts based on the changes in the Company's assumptions.

(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
amounts reported in the accompanying balance sheet for notes payable and capital
lease obligations 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 intermediaries
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) GOODWILL AND LONG-LIVED ASSETS

Goodwill at December 31, 2003 was $8,813,944. Goodwill is recorded as a result
of acquiring diagnostic centers. The centers are grouped by region into
reporting units. The Company evaluates goodwill, at a minimum, on an annual
basis and whenever events and changes in circumstances suggest that the carrying
amount may not be recoverable in accordance with Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Impairment
of goodwill is tested at the reporting unit level by comparing the reporting
unit's carrying amount, including goodwill, to the fair value of the reporting
unit. The fair values of the reporting units are estimated using a combination
of the income or discounted cash flows approach and the market approach, which
uses comparable market data. If the carrying amount of the reporting unit
exceeds its fair value, goodwill is potentially impaired and a second test is
performed to measure the amount of impairment loss, if any.

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.

(h) MARKETING

Marketing costs and promotions are expensed as incurred. Marketing expense for
the years ended December 31, 2003 and 2002 was $358,372 and $283,903
respectively.

                                      F-11

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

(i) 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.

(j) EARNINGS(LOSS)PER COMMON SHARE

Basic earnings (loss) per share is computed by dividing net income available to
common stockholders by the weighted average common shares outstanding for the
period. Diluted earnings (loss) 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 (loss) per share for the
year ended December 31, 2003 and 2002:

                                                        2003            2002
                                                    ------------    ------------
Basic earnings (loss) per share:
Net income (loss) available to common shareholders  $(1,724,227)    $   278,541
                                                    ------------    ------------
Weighted average shares outstanding                  15,440,846      14,480,763

Basic earnings (loss) per share                     $     (0.11)    $      0.02
                                                    ============    ============

Diluted earnings (loss) per share:
Net income (loss) available to common shareholders  $(1,724,227)    $   278,541
                                                    ------------    ------------
Adjusted net income (loss) available to common
   shareholders assuming conversion                  (1,724,227)        278,541
                                                    ------------    ------------

Weighted average shares outstanding                  15,440,846      14,480,763

Effect of dilutive securities:
    Warrants                                                 --         521,526
    Employee stock options                                   --               8
    Employee stock-based compensation awards                 --          50,000
                                                    ------------    ------------
Adjusted weighted average shares outstanding
    and assumed conversions                          15,440,846      15,052,297
                                                    ============    ============

Diluted earnings (loss) per share                   $     (0.11)    $      0.02
                                                    ============    ============

Options and warrants to purchase 3,744,830 shares of common stock, at prices
ranging from $0.01 to $1.00 per share, were outstanding during the year but not
included in the December 31, 2003 computations of diluted loss per share,
because inclusion of such securities would have an antidilutive effect on loss
per share. The options and warrants, which expire on dates ranging from March
31, 2004 to August 31, 2013, were still outstanding at December 31, 2003.

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.

                                      F-12

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

Acquisitions

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 2001, the Company acquired Laguna Niguel MRI, Inc., a diagnostic imaging
center located in Laguna Niguel, California, Envision Healthcare, LLC, a
diagnostic imaging center located in Long Beach, California. And 51% of Envision
Open MRI, LLC, a diagnostic imaging center located in Newport Beach, California.

The minority principal's share of Envision Open MRI, LLC's shareholders' capital
has been reflected as minority interest on the accompanying consolidated balance
sheets. During the year ended December 31, 2003, losses applicable to the
minority interest in the center exceeded the minority interest in the equity
capital of the center by $17,968. This excess and any further losses applicable
to the minority interest was and will be charged against the majority interest
as there is no obligation of the minority interest to make good such losses.
However, if future earnings do materialize, the Company will be credited to the
extent of such losses previously absorbed. Thus, the balance of minority
interest was $0 and $21,858 at December 31, 2003 and December 31, 2002,
respectively. The minority principal's share of the center's net income (loss)
has been presented as minority interest share of income (loss) in the
accompanying consolidated statements of operations for years ended December 31,
2003 and 2002.

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 $229,760 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 $1,545,966. 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 $1,006,765. 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
$749,705. 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, 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.

                                      F-13

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

Start-ups

In October 2001, the Company opened a start-up diagnostic imaging center located
in Perrysburg, Ohio.

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%. The
Company also financed other medical equipment totaling $191,000 with another
finance company.

In 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 of approximately
$451,000 with various finance companies.

In June 2003, the Company opened a start-up diagnostic imaging center located in
Santa Barbara, California. The Company financed MRI equipment and tenant
improvements through a note payable to a finance company. The agreement has a
carrying amount of approximately $1,197,000 with a monthly installment payment
of $25,537 over 66 months with an interest rate of 9.91%.

(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 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 $3,532,196. The
excess of the consideration paid over the fair value of the net assets acquired
has been recorded as goodwill.

Goodwill is recorded as a result of acquiring diagnostic centers. The centers
are grouped by region into reporting units. The Company evaluates goodwill, at a
minimum, on an annual basis and whenever events and changes in circumstances
suggest that the carrying amount may not be recoverable in accordance with
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets." Impairment of goodwill is tested at the reporting unit level
by comparing the reporting unit's carrying amount, including goodwill, to the
fair value of the reporting unit. The fair values of the reporting units are
estimated using a combination of the income or discounted cash flows approach
and the market approach, which uses comparable market data. If the carrying
amount of the reporting unit exceeds its fair value, goodwill is potentially
impaired and a second test is performed to measure the amount of impairment
loss, if any.

For the years ended December 31, 2003 and 2002, the Company recorded no
impairment of goodwill. However, if the estimates or the related assumptions
change in the future, the Company may be required to record impairment charges
to reduce the carrying amount of goodwill.

                                      F-14

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

The Company has a line of credit with DVI Business Credit (DVI) at prime plus
3%, which under its terms, the Company may borrow up to $3,000,000 or the
"borrowing base" as defined, balance due July 2004, renewable for consecutive
one-year periods. On September 2003, DVI filed Chapter 11 bankruptcy.
Thereafter, DVI restricted the line of credit to the balance on that date, which
was approximately $2,300,000. This restriction was partially lifted in November
2003 resulting in a balance of approximately $2,700,000. The borrowing base at
December 31, 2003 was $3,063,758. At December 31, 2003 and December 31, 2002,
the outstanding balance was $2,756,883 and $1,470,303, respectively. Having
received debtor-in-possession financing, DVI continues to service the line of
credit by passing through to the Company all of its accounts receivables
collected in DVI lockboxes. The Company is actively seeking to secure financing
to replace the line of credit and to potentially raise the line of credit from
$3,000,000 to $4,000,000.

(5) NOTES PAYABLE
    -------------
Notes payable consisted of the following at December 31:
<TABLE>
<CAPTION>
                         Interest      Monthly                         Foot-     December 31,  December 31,
   Type of Lender          Rate        Payment       Due Date          note          2003           2002
   ---------------      ----------    ---------    --------------      ----      ------------   ------------
   <S>                     <C>          <C>          <C>                  <C>    <C>            <C>
   Finance Company          9.85%       $50,680      April 2009           A      $ 2,545,004    $ 2,829,885
   Finance Company          8.54%        36,215      January 2010         B        2,078,006      2,117,567
   Finance Company          8.54%        32,194      January 2010         C        1,847,265      1,882,433
   Finance Company         10.84%        35,596      December 2008        D        1,643,090      1,757,906
   Investment Company      12.00%            --      June 2007            E        1,250,000             --
   Finance Company          9.91%        25,537      January 2009         F        1,205,041             --
   Finance Company         10.50%         1,434      December 2005        -           30,917         44,117
   Finance Company         10.50%         2,975      August 2004          -           22,325         53,859
   Finance Company         10.20%           464      April 2008           -           19,421             --
   Finance Company         10.50%         2,150      March 2004           -            6,337         30,092
                                                                                 ------------   ------------
                                                                                 $10,647,407    $ 8,715,859

   Less current portion                                                           (1,444,556)      (653,964)
                                                                                 ------------   ------------
   Long term portion                                                             $ 9,202,851    $ 8,061,895
                                                                                 ============   ============
</TABLE>

A) In September 2002, the Company purchased 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
equipment. The total note payable was $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
equipment is pledged as collateral for the note payable.

B) In December 2002, the Company assumed the operations of a diagnostic center
located in Long Beach, California, through a partnership interest purchase
agreement. The center's medical equipment is pledged as collateral for the note
payable.

C) In December 2002, the Company assumed the operations of a diagnostic center
located in Coos Bay, Oregon, through a capital stock purchase agreement. The
center's medical equipment is pledged as collateral for the note payable.

                                      F-15

<PAGE>
                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

D) In December 2002, the Company acquired a diagnostic center located in Carol
Stream, Illinois through an asset purchase agreement. The center's medical
equipment is pledged as collateral for the note payable.

E) In June 2003, the Company obtained financing from an investment company. The
unsecured convertible note totaled $1,250,000 with interest of 12% to be paid
quarterly. The principal amount may be prepaid at anytime and is due June 2007.
After June 2006, the note holder may convert any portion of the outstanding
balance into common stock at $0.25 per share. Lender and finder fees to execute
the convertible note totaled $146,250.

F) In June 2003, the Company opened a start-up diagnostic imaging center located
in Santa Barbara, California. The Company financed MRI equipment and tenant
improvements through a note payable to a finance company. The MRI equipment is
pledged as collateral for the note payable.

At December 31, 2003, future minimum annual principal payments on the notes
payable are as follows:

                        Year-ending December 31,
                        ------------------------
                                  2004                            $ 1,444,556
                                  2005                              1,496,444
                                  2006                              1,628,168
                                  2007                              3,041,087
                                  2008                              1,966,633
                                  2009                              1,002,595
                                  2010                                 67,924
                                                                  ------------
                                                                  $10,647,407
                                                                  ============

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

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. 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 $0.30 per
share) of Restricted Rule 144 common stock. The balance of these notes was
$18,750 at December 31, 2002. In July 2003 these notes were paid in full.

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. In November 2003, the Company negotiated to
suspend principal payments for one year. At December 31, 2003 and December 31,
2002 the balance of these notes was $160,417 and $275,000, respectively.

                                      F-16

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(6) CONTINUED
    ---------

At December 31, 2003, future minimum annual principal payments on the related
party notes payable are as follows:

                        Year-ending December 31,
                        ------------------------
                                   2004                            $   22,917
                                   2005                               137,500
                                                                   -----------
                                                                   $  160,417
                                                                   ===========

(7) LEASES
    ------
Capital Lease obligations consisted of the following at December 31:

<TABLE>
<CAPTION>
                         Interest      Monthly                             December 31,  December 31,
   Type of Lender          Rate        Payment       Due Date                   2003           2002
   ---------------      ----------    ---------    --------------          ------------   ------------
   <S>                     <C>          <C>          <C>                   <C>            <C>
   Finance Company         11.54%       $23,615      April 2007            $   865,245    $ 1,010,386
   Finance Company          2.33%        15,675      May 2008                  788,606             --
   Finance Company         12.18%        30,050      September 2005            613,645        839,087
   Finance Company          8.48%        16,469      February 2006             366,970        514,970
   Finance Company          9.56%         5,728      January 2008              231,615        272,349
   Finance Company          9.78%         4,203      May 2008                  180,304             --
   Finance Company          6.10%         7,175      February 2006             174,317        247,338
   Finance Company          8.71%         3,582      June 2008                 159,549             --
   Finance Company          5.97%        15,852      October 2004              142,842        305,152
   Finance Company          4.33%        11,879      January 2005              140,089        263,714
   Finance Company          4.20%        17,752      July 2004                 115,603        307,314
   Finance Company         12.92%        27,892      March 2004                131,324        373,796
   Finance Company          3.67%         1,369      June 2008                  68,032             --
   Finance Company          6.25%         1,260      June 2008                  59,172             --
   Finance Company         11.54%         1,654      March 2007                 58,069         70,433
   Finance Company         11.55%         1,622      February 2007              54,499         66,883
   Finance Company          4.76%         1,142      April 2008                 53,591             --
   Finance Company          5.75%         3,529      February 2005              47,299         84,875
   Finance Company          7.03%           886      September 2008             44,101         51,952
   Finance Company         10.99%           807      March 2008                 33,258             --
   Finance Company          7.80%           591      August 2008                27,720             --
   Finance Company         10.43%           568      July 2008                  24,755             --
   Finance Company          9.45%         1,053      December 2005              22,945             --
   Finance Company          5.81%           785      July 2006                  22,551         30,413
   Finance Company          8.79%           508      June 2008                  22,101             --
   Finance Company          9.64%           421      December 2007              16,729             --
   Finance Company         12.50%            --           --                        --        136,765
                                                                           ------------   ------------
                                                                           $ 4,464,931    $ 4,575,427

   Less current portion                                                     (1,783,449)    (1,686,376)
                                                                           ------------   ------------
   Long term portion                                                       $ 2,681,482    $ 2,889,051
                                                                           ============   ============
</TABLE>

Capital leases are collateralized by various medical equipment including MRI,
CT, X-ray, Mammography, Ultrasound, Bone Densitometry and Laser Imager equipment
and by tenant improvements.

The Company is currently leasing several of its offices under operating leases
which expire at various dates.

                                      F-17

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(7) CONTINUED
    ---------

At December 31, 2003, 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>
                                  2004                               $1,981,322          $1,558,304
                                  2005                                1,358,755           1,219,354
                                  2006                                  816,367             944,602
                                  2007                                  543,558             590,197
                                  2008                                  169,909             293,978
                               Thereafter                                    --             204,361
                                                                     -----------         -----------

      Total minimum lease payments                                    4,869,911          $4,810,796
      Less amounts representing interest (at rates of 2.33% to                           ===========
      12.92%)                                                           404,980
                                                                     -----------

      Present value of net minimum lease payments                     4,464,931

          Less current portion                                        1,783,449
                                                                     -----------

      Capital lease obligations - long term                          $2,681,482
                                                                     ===========
</TABLE>

Rent expense for operating leases, including month to month leases, was
$1,500,657 and $621,483 for the years ended December 31, 2003 and 2002,
respectively.

(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 2004, 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, 2007.

                                      F-18

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(8) CONTINUED
    ---------

In May 2002, the Company entered into an employment agreement with the
President. The agreement provides for an eighteen-month severance upon
involuntary termination. In March 2004, the term of the President's employment
agreement was extended for an additional one (1) year period, or until May 20,
2007.

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 2004, the term of the Chief Financial
Officer's employment agreement was extended for an additional one (1) year
period, or until May 20, 2006.

The above employment agreements obligate the Company for approximately
$1,620,000 beyond December 31, 2003.

LEGAL MATTERS

         Effective on October 23, 2003, the Company entered into a Mutual
Release and Settlement Agreement with James V. Zelch, M.D., P.C. and J Z
Investment Corp. resolving two lawsuits between the Company and the Zelch
entities.

         The Company was sued in the Superior Court of the State of California,
Los Angeles County in a matter entitled: PETER FOLDVARY, M.D., P.C. V. MIRACOR
DIAGNOSTICS, INC. In that suit the plaintiff alleged acts of 'tortious
interference' by the Company in connection with the activities of its wholly
owned subsidiary Envision Healthcare, Inc. On the basis of available information
counsel is of the opinion that there is no significant legal exposure to the
Company

         From time to time the Company has been named as a defendant in a
lawsuit. As of December 31, 2003, all such lawsuits have been dismissed or
settled through agreed-upon payment terms. There are no legal proceedings, to
which the Company is a party, which could have a material adverse effect on the
Company's business, financial condition or operating results.

(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, 2003 and December 31, 2002,
respectively.

COMMON STOCK

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 was paid in quarterly installments
from October 2002 through July 2003. Thus, the balance of these notes was $0 and
$18,750 at December 31, 2003 and 2002, respectively.

                                      F-19

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(9) CONTINUED
    ---------

In June 2003, the Company secured financing from an investment company. The
convertible note totaled $1,250,000 with interest of 12% to be paid quarterly.
The principal amount may be prepaid at anytime and is due June 2007. After June
2006, the note holder may convert any portion of the outstanding balance into
common stock at $0.25 per share. The noteholder was issued warrants to purchase
400,000 shares of common stock at an exercise price of $0.26 per share over the
five year life of the warrants. In addition, individuals who founded the
transaction were awarded warrants to purchase 212,500 shares of common stock at
an exercise price of $0.25 per share over the five year life of the warrants.
Lender and finder fees to execute the convertible note totaled $146,250.

In 2000, the Company entered into and subsequently terminated an investment
agreement with Swartz Private Equity LLC ("Swartz"). The investment agreement
entitled the Company, at the Company's option, to issue and sell its common
stock for up to an aggregate of $15 million from time-to-time during a
three-year period through April 2003. The registration statement went effective
on July 12, 2000. During 2000 pursuant to this agreement, the Company sold
202,430 shares of common stock and issued 779,024 warrants to purchase shares of
the Company's common stock at exercise prices ranging from $0.10 to $0.28 with
exercise periods of five years from date of grant. The sale of stock has been
recorded net of related offering costs of approximately $35,000. This equity
financing agreement did not provide the necessary resources to pursue the
Company's acquisition strategy; therefore, the agreement was terminated
effective October 16, 2000. On November 4, 2003, 511,194 of the warrants were
exercised into 327,497 shares of common stock with exercise prices ranging from
$0.10 to $0.17 with the difference of 183,697 warrants terminated pursuant to a
cashless exercise provision.

(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, 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 granted                                            775,000         0.24
Options expired                                            (60,000)        0.54
Options exercised                                                -            -
Warrants granted                                           612,500         0.26
Warrants exercised                                        (327,497)        0.16
Warrants cancelled                                        (183,841)        0.18
                                                        -----------
Balance outstanding, December 31, 2003                   3,744,830        $0.32
                                                        ===========

Options and warrants exercisable                         2,411,205        $0.33

                                      F-20

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

Compensation expense was not recorded for any issuance of options and warrants
to officers or employees in 2003 and 2002 as the fair market value of the
options and warrants was at or below the exercise price on their respective
dates of issuance.

Information relating to options and warrants at December 31, 2003 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          0.2       $ 0.01            100,000      $0.01
           0.10            11,341          1.7         0.10             11,341       0.10
           0.15           130,329          1.7         0.15            130,329       0.15
           0.16           125,000          1.2         0.16            125,000       0.16
           0.17             1,160          1.7         0.17              1,160       0.17
           0.20           175,000          2.0         0.20            175,000       0.20
           0.22           475,000          2.1         0.22            475,000       0.22
           0.23            50,000          9.7         0.23                 --       0.23
           0.24           700,000          9.5         0.24                 --       0.24
           0.25           212,500          4.5         0.25            212,500       0.26
           0.26           465,000          9.1         0.26            448,750       0.26
           0.27           700,000          8.2         0.27            225,000       0.27
           0.69           294,500          6.0         0.69            220,875       0.69
           0.81           230,000          5.0         0.81            230,000       0.81
           1.00            75,000          6.2         1.00             56,250       1.00
                        ---------                                    ---------
                        3,744,830          6.4       $ 0.32          2,411,205      $0.33
                        =========                                    =========
</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,
2003 and 2002 would have been the pro forma amounts presented below:

<TABLE>
<CAPTION>
                                                               2003              2002
                                                           ------------     ------------
<S>                                                        <C>              <C>
Net income (loss)
     As reported                                           $ (1,724,227)     $  278,541
     Pro forma                                               (2,008,246)        209,911

Net income (loss) attributable to common stockholders
     As reported                                             (1,724,227)        278,541
     Pro forma                                               (2,008,246)        209,911

Basic and diluted earnings (loss) per share
     As reported                                           $      (0.11)     $     0.02
     Pro forma                                             $      (0.13)     $     0.01
</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, 2003 and 2002: expected life
ranging from 5 to 10 years; expected volatility of 50%; risk-free interest rate
ranging from 3.3% to 6.7%; and a 0% dividend yield. The weighted average fair
value at the date of grant of the options and warrants granted during 2003 and
2002 approximated $0.20 and $0.23, respectively.

                                      F-21

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

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.

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

On October 1, 2003, the Company's board of directors approved the registration
of 500,000 shares of common stock under Form S-8, pursuant to the Company's 2003
Stock Compensation Plan, whereby services are obtained in exchange for issuance
of free trading stock of the Company. As of December 31, 2003, 417,338 shares
remain available under this registration which may be awarded until October 1,
2008. During the years ended December 31, 2003 and 2002, 504,375 and 656,750
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, 2003 and 2002, 25,000 and 267,735 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, 50,000 shares of accrued employee common stock
grants were issued during the year ended December 31, 2003. Accordingly,
deferred stock compensation of $7,750 was reclassified to common stock and
additional paid-in capital during the year ended December 31, 2003. 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 years ended December 31, 2003 and 2002, deferred compensation expense
of $0 and $17,073, 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.

In 2000, the board of directors approved the registration of 1,500,000 shares of
common stock to be issued pursuant to the 1997 Stock Option Plan. In May 2003,
the Company's shareholders approved an amendment to the 1997 Stock Option Plan
raising the number of shares to 3,000,000. The board of directors approved the
registration of such shares in October 2003.

(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.

                                      F-22

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(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 $160,417 and
$275,000 at December 31, 2003 and 2002, respectively.

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 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 was paid in quarterly installments
from October 2002 through July 2003. Thus, the balance of these notes was $0 and
$18,750 at December 31, 2003 and 2002, respectively.

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

The components of the net deferred income tax balances are as follows at
December 31:

                                                   2003              2002
Deferred income tax assets (liabilities):      -------------     ------------

   Net operating loss carryforwards            $  2,109,000      $ 1,453,000
   Depreciation and amortization                 (1,139,000)      (1,000,000)
                                                ------------     ------------
   Net deferred income tax assets                   970,000          453,000

   Less deferred income tax asset
     Valuation allowance                           (970,000)        (453,000)
                                                ------------     ------------

   Net deferred income tax balance              $         -      $        -
                                                ============     ============

At December 31, 2003, the Company had approximately $5,600,000 in federal and
$2,840,000 in state net operating loss carryforwards to offset future taxable
income. These carryforwards will expire in various years through 2023.

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, 2003, it cannot
be determined if it is more likely than not that the Company will generate
sufficient future taxable income before 2023, 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, 2003 and 2002.

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-23

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

(15) SUMMARIZED QUARTERLY DATA (UNAUDITED)

Following is a summary of the quarterly results of operations for the years
ended December 31, 2003 and 2002 (in 000's except per share data and average
shares outstanding):

<TABLE>
<CAPTION>
                                                            Quarter ended
                              ------------------------------------------------------------------------
                                 March           June        September      December
                                  31              30             30             31            Total
                              ------------   ------------   ------------   ------------   ------------
<S>                           <C>            <C>            <C>            <C>            <C>
2003
----
Net revenue                   $     4,307    $     4,896    $     5,155    $     4,842    $     19,200
Income/(loss) from Operations        (110)            32             92           (157)           (143)
Net loss                             (472)          (323)          (343)          (586)         (1,724)
Basic loss per share                (0.03)         (0.02)         (0.02)         (0.04)          (0.11)
Diluted loss per share              (0.03)         (0.02)         (0.02)         (0.04)          (0.11)
Basic and diluted weighted
  average shares outstanding   15,193,466     15,352,157     15,439,064     15,806,813      15,440,846

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      0.01           0.01           0.01          (0.01)           0.02
Diluted earnings (loss) per share    0.01           0.01           0.01          (0.01)           0.02
Basic weighted average
   shares outstanding          13,935,823     14,310,520     14,609,372     15,053,642      14,480,763
Diluted weighted average
   shares outstanding          14,475,488     14,960,804     15,150,584     15,053,642      15,052,297

</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, 2003, 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, 2003. Amortization expense related to
goodwill was $0 for the years ended December 31, 2003 and 2002.

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.

                                      F-24

<PAGE>

                   MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 For the years ended December 31, 2003 and 2002

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

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, 2003 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.

(17) SUBSEQUENT EVENTS
     -----------------

In January 2004, the Company opened a start-up diagnostic imaging center located
in Orange Park, Florida. The Company financed MRI equipment and tenant
improvements pledged under a note payable with a finance company. The agreement
has a carrying amount of approximately $1,125,000 with a monthly installment
payment of $23,204 over 66 months.

In March 2004, the Company executed a term sheet with a placement agent to
market, on a "best efforts basis," a maximum of $1 million in a private
placement transaction. The private placement will be marketed exclusively to
accredited investors. The securities will be a class of Preferred Stock to be
known as 3% Series A Preferred Stock. The 3% Series A Preferred Stock will be
convertible into Common Stock at any time, subject to certain limitations and is
automatically convertible into Common Stock two years from the date of the
closing of the private placement. The 3% Series A Preferred Stock will have
preferences in the payment of dividends and upon liquidation, as well as voting
and anti-dilution rights.

                                      F-25