SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934 For the fiscal year ended December 31, 2004

               TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

|_|   For the transition period from _________________ to __________________

                       Commission file number: 333-103781

                             ProUroCare Medical Inc.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

           Nevada                                               20-1212923
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                         One Carlson Parkway, Suite 124
                               Plymouth, MN 55447
                               ------------------
                    (Address of principal executive offices)

                                 (952) 476-9093
                                 --------------
               Registrant's telephone number, including area code

Securities to be registered pursuant to Section 12(b) of the Exchange Act:  None

Securities to be registered pursuant to Section 12(g) of the Act:  None


Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 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:  $0

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)      $16,785,668 as of March 3, 2005

State the number of shares outstanding of each of the issuer's classes of common
                   equity, as of the latest practicable date.

                  13,988,057 Common shares as of March 22, 2005


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                                TABLE OF CONTENTS

                                                                          Page

ITEM 1:    DESCRIPTION OF BUSINESS                                           3
ITEM 2:    DESCRIPTION OF PROPERTY                                          23
ITEM 3:    LEGAL PROCEEDINGS                                                23
ITEM 4:    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              24
ITEM 5:    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS         24
ITEM 6:    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION        26
ITEM 7:    FINANCIAL STATEMENTS                                             32
ITEM 8:    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                   AND FINANCIAL DISCLOSURES                                57
ITEM 8A:   CONTROLS AND PROCEDURES                                          57
ITEM 8B:   OTHER INFORMATION                                                57
ITEM 9:     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                   COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT        58
ITEM 10:   EXECUTIVE COMPENSATION                                           60
ITEM 11:   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                   MANAGEMENT                                               62
ITEM 12:   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   64
ITEM 13:   EXHIBITS                                                         67
ITEM 14:   PRINCIPAL ACCOUNTANT FEES AND SERVICES                           70


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                                     PART I

ITEM 1:  DESCRIPTION OF BUSINESS

      The business of the Company, which is the business of the Company's wholly
owned subsidiary ProUroCare Inc., is summarized below.


History

      The Company (formerly known as Global Internet Communications, Inc.) was
formed on February 26, 2003 as a Nevada corporation. Pursuant to an Agreement
and Plan of Merger and Reorganization dated as of April 5, 2004 (the "Merger
Agreement"), by and among the Company, GIC Acquisition Corp., a Minnesota
corporation and wholly owned subsidiary of the Company ("Acquisition Co."), and
ProUroCare Inc., a privately held Minnesota corporation ("PUC"), Acquisition Co.
merged with and into PUC, with PUC remaining as the surviving company and a
wholly owned operating subsidiary of the Company (such transaction is
hereinafter referred to as the "Merger"). The Merger was effective as of April
5, 2004, when articles of merger were filed with the Minnesota Secretary of
State. The Company entered into the Merger to acquire the business of PUC. At
the time of the Merger, the Company had no material assets or liabilities, and
since its formation in February 2003 had not begun operating activities.

      Effective upon the Merger, the legal existence of Acquisition Co. ceased,
and all 3,501,001 shares of common stock of PUC that were outstanding
immediately prior to the Merger and held by PUC shareholders were cancelled,
with one share of PUC common stock issued to the Company. Simultaneously, the
former shareholders of PUC common stock received an aggregate of 9,603,003
shares of common stock of the Company, representing approximately 82.1% of the
Company's common stock outstanding immediately after the Merger. As a result of
the Merger, PUC is now a wholly owned operating subsidiary of the Company, and
PUC's business is the Company's sole business enterprise. On April 26, 2004, the
Company changed its name to ProUroCare Medical Inc., pursuant to a short-form
merger with a wholly owned subsidiary formed for the sole purpose of effecting
the name change, as allowed under Nevada corporate law. On May 5, 2004 the
Company's trading symbol on the Over-The-Counter Bulletin Board changed to
"PRRC."

      We are engaged in the business of developing and marketing innovative
products for the detection and treatment of male urologic prostate disease. PUC
was initially founded as a Minnesota corporation by shareholders of Clinical
Network Inc. ("Clinical Network") in August 1999. Clinical Network was
originally established in 1990 for the purpose of pursuing treatments for stress
urinary incontinence in women. In July 2001, Clinical Network began
collaborating with CS Medical Technologies, L.L.C. ("CS Medical"), a developer
of microwave treatment technology for prostate and cardiology treatments, for
the development of products for the male urology market. PUC's business plan and
operations began at that time by bringing together the capabilities and
expertise of Clinical Network in the urological field with the minimally
invasive microwave therapy technology developed by CS Medical to treat prostate
disease. PUC acquired the rights to this technology by a license, which covers
all of CS Medical's technology, know-how, and patents related to urologic
disorders that may be detected or treated using a catheter-based microwave
technology. CS Medical's technology allows the user to direct microwave energy
emitted at the end of a catheter in a specific direction, which is believed to
be a distinct advantage in the possible treatment of prostate disease. Further
development and clinical studies will be required to bring this technology to
market. The license required that PUC achieve a certain level of new capital
investment in 2002, which was accomplished, and pay royalties based on one-half
percent of the amount by which net sales of products using this technology
exceeds $500,000 per quarter.

      Also in July, 2001, PUC obtained an exclusive worldwide license relating
to an imaging system developed by Rensselaer Polytechnic Institute ("RPI") that
allows one to monitor microwave therapy changes to tissue in real time. The
agreement with RPI covers all of RPI's intellectual-property rights, including
its patent rights, to its electrical impedance tomography technology in the
field of diagnosis and treatment of urological conditions. The agreement
required PUC to make two $25,000 payments, which have been made, and calls for


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royalties ranging from 1 to 3% of sales, depending on specific application of
the technology, with minimum royalties of $20,000 per year beginning in July,
2005. It also requires that the Company begin its FDA application process no
later than July, 2006.

      In January 2002, PUC purchased certain assets (furniture and equipment)
from Profile L.L.C. ("Profile") and obtained a license from Profile providing
for worldwide exclusive rights to its prostate imaging system and related
patented technology. The field of use for the exclusive license is limited to
the diagnosis and treatment of enlarged prostate, prostate cancer, or other
conditions of or disorders of the prostate which may be diagnosed, imaged, or
treated using any diagnostic or imaging process. The license will terminate upon
the later of the date of expiration of the last to expire patent included in the
licensed technology or the date that the Company permanently ceases the sale of
devices using the technology. The license requires royalties ranging from 1.05%
to 3.05% of defined revenues.

      Profile's imaging system had been acquired by Profile from ArMed, where
the technology had been developed by Dr. Armen Sarvazyan. At the time PUC
acquire the technology, working prototypes of the system had been assembled, and
clinical studies demonstrating its capabilities had been performed. In 2004, the
Company entered into research and development agreements with Dr. Sarvazyan's
company, ARTANN Laboratories, Inc. to complete development and produce a limited
number of pre-clinical systems.

      The Company's rights and obligations under the licenses from Profile, CS
Medical and RPI are more fully described below under the caption "Intellectual
Property."

      PUC has continued to pursue the development of the technologies licensed
from Clinical Network, CS Medical, Profile and RPI, and has internally developed
technology for which a patent application has been filed. The Company began
development of a next-generation prototype system for its proposed initial
product, the ProUroScan, under contracts with Minnetronix, Inc. and Resistance
Technology Inc. This activity was largely funded by a previous private equity
offering of $1.1 million completed in 2002. This development activity was
curtailed during 2003 while the Company sought additional funding. In July 2004,
after completion of the Merger and a related private equity offering (the
"Private Placement"), the Company entered into a Development Agreement with
Artann Laboratories to develop pre-clinical systems.

      There has been little development work done by PUC on the therapeutic
products while the Company has sought to complete a joint development agreement
with a major therotheraphy system company. Although there can be no guarantee
that an agreement will be reached, we are currently involved in negotiations
with such a potential development partner.


The Disease

      Prostate disease is a persistent disease with a dramatically increasing
prevalence. It is currently estimated that over 100 million digital rectal
examinations are performed each year to assess for or monitor prostate disease
and that over 23 million men in the United States, Europe and Japan suffer from
moderate to severe symptoms of prostate disease. Benign prostatic hyperplasia
("BPH"), commonly known as "enlarged prostate," is the most common male
urological disease. BPH dramatically affects the quality of life of millions of
men by causing adverse changes in urinary voiding patterns.


Initial Product Offerings


ProUroScan

      ProUroCare's first product will be the ProUroScan, which is being designed
as a unique diagnostic-imaging system that enables physicians to accurately
display and chart a prostate examination for disease screening and diagnosis.
Such screening is currently accomplished during a digital rectal examination
("DRE"). A DRE is a qualitative and subjective test in which a physician wearing
a latex glove inserts a lubricated finger into the anus to feel or palpate the


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prostate gland for abnormalities. The clinician must rely on his or her
experience and the sensitivity of their finger to estimate the size of the
prostate and detect hardness or nodules within the prostate that may indicate
the presence of potentially life-threatening disease. Based on pre-clinical data
obtained from testing on both models and actual patients in clinical settings,
ProUroCare believes the ProUroScan's proprietary imaging system will produce a
digital image of the prostate showing the size of the prostate and the location
of soft-tissue hardness or nodules within the prostate. We believe that the
ProUroScan will enable a physician to detect hardness in the prostate more
accurately than with their finger, assess areas of the prostate that the
physician cannot reach with their finger, and produce quantifiable and chartable
results.

      While other imaging technologies such as x-ray and ultrasound exhibit
difficulties in identifying abnormalities such as soft-tissue hardness
(nodules), the ProUroScan imaging system is being designed to detect certain
abnormalities that are commonly missed by other diagnostic techniques. These
abnormalities include areas on the surface or within the prostate where the
tissue has a different level of elasticity or surface stress patterns when
compared with the rest of the gland, which can be precursors to a more clearly
defined hardened area or nodule. ProUroCare expects that the ProUroScan will
also be a safer diagnostic test when compared to methods using radiation or
other high-energy diagnostic tools, and will lead to better healthcare for those
instances where palpation of the prostate is indicated. Furthermore, the
ProUroScan offers the advantage of being able to create an electronic record
that can be stored within the system, printed and used for comparisons with new
images created at a later date. No such electronic records or color images are
possible when performing a traditional DRE.

      The ProUroScan system will consist of a probe, a central processing unit
containing proprietary algorithms, a computer with color monitor and keyboard, a
color printer, single-use disposable sheaths to cover the tip of the probe, and
a cart. The ProUroScan probe is specially designed for the rectal anatomy to
minimize discomfort. It is ergonomic for the clinician and similar to a
traditional DRE for the patient. The probe utilizes pressure sensors located on
the end of the probe to palpate the prostate. The probe's positioning system
will ensure that the person administering the test examines the entire surface
of the prostate. The sensors on the very end of the probe are designed to
facilitate location of the prostate.

      The probe attaches to the central processing unit which converts the
information from the probe sensors with proprietary algorithms and then
translates the data into a multicolor image on the monitor. A standard diagram
of the prostate will appear on the monitor along with a special cursor enabling
the clinician to know where the probe is located within the patient's body and
to guide him or her across the posterior surface of the gland.

      To perform a test, the clinician must first place a single-use disposable
sheath on the end of the probe and cover it with a lubricant. The tip of the
probe is then inserted into the patient's anus and palpates the prostate. As the
prostate is palpated, a color image of the prostate is produced and displayed on
the computer monitor, along with indicators of the amount of pressure being
applied to help guide the clinician. Differences in tissue density will be
depicted on the monitor in different colors. Total testing time for a healthy
prostate is estimated to be 15 seconds or less.

      Ideally, the ProUroScan will be administered by the trained physician or
technician on all patients in need of a prostate exam. Standardizing the
procedure will virtually eliminate the differences in abilities between
physicians in this otherwise subjective procedure. The system will also be more
sensitive and have the ability to detect nodules that are smaller than the
normal human finger can detect, thereby improving the quality of the screening
process. It will also enable physicians to literally see the differences in
tissue density on the color monitor instead of a traditional DRE that is "blind"
and relies exclusively on the clinician's sense of touch. The procedure will be
advantageous for the physician because it may reduce or help to limit
malpractice lawsuits. The system will create a hard copy of the prostate
screening which can be placed into the patient's file. This will be advantageous
for the physician on multiple fronts, as it gives the physician the ability to
compare and contrast the patient's results from year to year, and to get second
opinions on the patient's status in regards to the screening.


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      The Company expects the ProUroScan to be different from almost all
products currently in the market. The closest comparison can be made to an
examination using a transrectal ultrasound device. Transrectal ultrasound
("TRUS") is a test that uses a rectal probe and sound wave echoes to create an
image of the prostate gland, thus allowing visual inspection for abnormal
conditions. While well established as a highly accurate test, TRUS is used
primarily as a guide for prostate biopsies, and is seldom used as a screening
test. It is a very expensive test, costing hundreds of dollars per use, and
requiring approximately 20-40 minutes to perform. The Company anticipates that
the ProUroScan will use mechanical imaging rather than sound waves echoes, have
a probe that will be smaller than that of an ultrasound probe, will be performed
in seconds, and at a much lower cost. The results of the test will be displayed
in color, making the results of the diagnostic test easier to interpret. The
ProUroScan will not be used as a guide during prostate biopsies nor will it have
any therapeutic applications.

      The Company anticipates that the majority of its revenue will be generated
by usage fees based on consumption of the Company's proprietary non-latex,
single-use disposable sheaths. The specially designed sheaths prevent
contamination and will have an adapter attached to its base that will initiate
system functionality and prevent reuse. The systems themselves likely will be
placed in clinics under a variety of programs, including operating leases,
financing leases, outright sale, or placements paid for by premiums paid on the
usage of the system.

      ProUroCare intends to position this product as an improvement over the
traditional DRE that is subjective, non-specific, not standardized and cannot be
documented with color images. The ProUroScan will be marketed towards primary
care physicians. Such physicians do not perform DRE procedures as frequently as
urologists and therefore do not have the same level of expertise in performing
prostate exams, nor the costly ultrasound instrumentation or training to operate
them. The Company believes the ProUroScan will help ensure that primary care
physicians screen more effectively and quickly refer appropriate patients to
urologists for more definitive testing.

      The ProUroScan is currently in the product development stage. The design
specifications are nearly finalized and performance characteristics are
generally known. Further development work in the areas of positioning system
refinement, software, user interface, and sensor production, among others, must
be completed before the system can be commercialized. As discussed below,
earlier versions of the system have been tested with positive results.

      Feasibility of ProUroScan - Preliminary Lab Studies. Two working
prototypes and key components of a third ProUroScan system were assembled to
prove the feasibility of the device, to perform clinical studies, and to provide
a means to test and develop future systems. Initial lab studies with the
prototypes have demonstrated quantifiable positive results. During testing, a
number of researchers and doctors were asked to palpate different anatomically
correct prostate models or "phantom" prostates through an intermediate layer of
soft silicone and record their observations. These phantoms contained nodule(s)
of various sizes at various depths and locations within the prostate. Multiple
operators and multiple phantoms were used to collect data to assess the accuracy
and precision of the system with the same operator and between operators.
Specific parameters including width and length of the model, presence and
location of nodules, depth of median groove, and asymmetry of the model were
noted. The ProUroScan was then used to examine the models, and was found to
evaluate all geometrical parameters more accurately than the human finger,
suggesting the opportunity for earlier detection of prostate disease and
improved therapy outcomes.

      Upon completion of development work by Artann Laboratories (see "Research
and Development Status," below), two next generation working systems were
delivered to the Company in November 2004. The new systems are expected to be
further refined in collaboration with a medical-device development company
during 2005, and then be used to gather the clinical data necessary for our
510(k) submission to the FDA.

      Pre-Clinical Trial and Regulatory Status. Initial human clinical testing
of ProUroScan demonstrated a direct comparison to TRUS, a test that utilizes a
rectal probe using sound wave echoes to create an image of the prostate gland in


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order to visually inspect for abnormal conditions. During February 2000, the
device was put through a series of trials in clinical settings, conducted at the
Veterans Administration Medical Center in Minneapolis, Minnesota, and the Grand
Strand Urology Clinic in Myrtle Beach, South Carolina, which included testing of
human participants. During these trials, traditional DRE, TRUS scans, and the
ProUroScan system tests were performed on each of the eight patients studied.
Following these tests, radical prostatectomies (i.e., prostate removals) were
performed on the subjects and the histopathologies (i.e., disease
manifestations) of the excised prostates were compared to the earlier findings.

      Results of the trials compared ProUroScan to traditional DRE and to TRUS.
The initial results indicated that the ProUroScan directly correlated to the
physician-conducted DRE results and also demonstrated a significant correlation
to each patient's historical and current prostate disease status. The ProUroScan
also identified areas of hardness that traditional DREs did not detect. In one
instance, the ProUroScan detected an abnormality that was undetected by TRUS. In
another instance, TRUS detected two abnormalities and ProUroScan only identified
one abnormality.

      The analysis of the results of the initial clinical trials demonstrated
that the ProUroScan was fully functional, exhibiting no hardware malfunctions
during the model and patient examinations. The ProUroScan was able to detect and
process patient data from locations within the prostate not detected during a
normal DRE examination. The physicians conducting the trial using the ProUroScan
determined the system to be both accurate and useful in detecting potential
prostate disease based upon the size of the prostate and presence of nodules in
areas of the prostate that were missed or not available to a physician during a
normal DRE examination. Additional trials have not been performed since those in
2000.

      Although the results of these studies were very positive, they have not
been confirmed by an independent study. Our targeted customers may not accept
our interpretation of these results and may require independent verification.

      The Company has developed a preliminary clinical protocol to gather the
data needed to file a 510(k) application with the FDA. A series of human
clinical studies comparing the results generated by the ProUroScan system to the
results of standard digital rectal exams, TRUS exams, PSA tests, prostate
biopsies and excised prostates will be conducted prior to filing the 510(k). In
addition, "box studies" will be conducted which correlates the findings of a
regular DRE with the ProUroScan on various man-made anatomically correct
prostate models that contain tissue abnormalities or nodules of varying sizes,
varying locations and varying depths. The box studies will be utilized to
determine the sensitivity and reproducibility of the system in the hands of
multiple operators. ProUroCare expects that the series of human clinical studies
and box studies will take approximately two to three months to conduct. The FDA
requires each testing facility's Institutional Review Board ("IRB") to approve
all biomedical research involving human research subjects to protect the rights
and welfare of all participants. IRB approval has been granted for the first
ProUroScan studies at the Minneapolis Veteran's Administration hospital and at
the Robert Wood Johnson University Hospital in New Brunswick, New Jersey.

      We took delivery of two working, pre-clinical ProUroScan systems from
Artann Laboratories in late November, 2004. These systems are being evaluated by
our development partner Minnetronix, Inc., who is particularly experienced and
knowledgeable in the development and production of medical devices. Based on
their judgment of the ProUroScan's current development status and the amount of
remaining work to be done, we anticipate that these systems can be refined and
made ready for clinical trials during 2005. On advice from one of our regulatory
consultants, Mr. William F. Jackson, and consistent with a meeting we had with
the FDA on October 4, 2002, we intend to file a 510(k) application with FDA for
approval after completing the required clinical studies. According to Mr.
Jackson, 90-180 days is a reasonable timeframe for this type of filing to be
approved. For more information, please see "Government Regulation" below.


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      The regulatory strategy for the ProUroScan has been developed jointly with
outside consulting groups specializing in working with the FDA, including Nancy
L. Buck of Buck and Beardsley in Washington, D.C. and William Jackson of W. F.
Jackson Associates of St. Paul, Minnesota. Mrs. Buck, former general counsel to
the FDA, consulted for ArMed, where the Company's technology had originally been
developed before being acquired by Profile and subsequently licensed to the
Company. According to Mr. Jackson, his firm has filed 340 510(k) applications
with the FDA, including many urology-based applications, of which 333 have been
approved, four are currently being reviewed by the FDA, and three were rejected
and not resubmitted.

      Simultaneous with the FDA submission, ProUroCare expects to apply for a CE
(Conformite Europeene) mark, a mark displayed prominently on products indicating
compliance with the European regulatory directives. Products bearing the CE mark
may be sold freely throughout all countries within the European Union.
ProUroCare will utilize the services of a TUV notified body or a company
approved by TUV (Technischen Uberwachungsvereine or Technical Inspections
Organizations), a German company specializing in compliance with European
regulatory directives, to obtain CE mark approval. It is believed the CE mark
approval process will be similar in duration to the FDA 510(k) process, or
approximately six months.

      Research and Development Status. The Company anticipates that it will
spend between $1.4 and $1.8 million on research and product development over the
next 12 months. The Company's efforts in this regard will primarily be focused
on bringing to market the ProUroScan. Over the past three years, the Company
estimates that it has spent approximately $2.2 million on research and
development activities, including approximately $838,000 and $361,000 during the
years ended December 31, 2004 and 2003, respectively. Much of this work was
performed under contracted research and development agreements with third
parties; approximately $1.8 million of the $2.2 million spent on research and
development activities over the past three years was so contracted.

      The Company will complete its research and development by utilizing two
contract medical research and development companies, Artiann Laboratories Inc.
("Artann") and Minnetronix, Inc. Currently, two development agreements exist
between ProUroCare and Artann. Artann's founder, President and Chief Scientific
Officer is Armen Sarvazyan, Ph.D., D.Sc., who was the original inventor of the
ProUroScan technology. He has 30 years' experience in biomechanical design,
construction and clinical testing of medical diagnostic instrumentation, has
published over 200 scientific papers, and edited six books in the fields of
biophysics and acoustics. Dr. Sarvazyan is widely considered an expert in the
field of biomedical engineering and soft-tissue mechanics. He founded the
Bioacoustics Laboratory at Rutgers University and was invited to Rutgers as a
Research Professor. Artann has approximately eight to ten scientists and
engineers that work on a variety of medical and non-medical products. They are
largely funded by federal grants from the National Institute of Health and the
Defense Department. The Company expects that the majority of work to be
conducted by Artann under the research and development agreements will occur at
Artann's New Jersey facilities.

      Under the first agreement, the "Development Agreement," Artann developed
two working, pre-clinical ProUroScan systems. These systems were delivered to
ProUroCare in late November 2004. ProUroCare paid Artann $180,000 for this
development work. The Development Agreement also provides that Artann will
provide, at no additional charge, consulting and advisory services in the
development of systems for use in clinical trials. The Company intends to use
data obtained from these clinical trials to support its 510(k) application with
the FDA.

      Under the second agreement, called the "Research and Development
Agreement," the Company has agreed to work with Artann for the development of
the ProUroScan and other to-be-determined technologies in the urologic field.
Under this agreement, any intellectual property and know-how resulting from the
advancement of the ProUroScan will be assigned to ProUroCare. For its role,
Artann will receive a total of $250,000 (plus incentives as explained below) to
fully develop the ProUroScan system, payable upon certain milestone events. A
payment of $50,000 was made to Artann upon the execution of the agreement. In
December, 2004 the Company paid Artann $110,000 following the shipment of the
ProUroScan prototypes in accordance with the Development Agreement (including a
$10,000 bonus for delivery of the systems ahead of schedule). The Company will
pay Artann an additional $50,000 upon the filing of a patent or patents relating
to a new probe-positioning technology, and the final $50,000 will be paid upon
issuance of the patent(s) to ProUroCare. Artann will also receive additional
compensation in the form of five-year warrants to purchase up to 500,000 shares


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of Company common stock, similarly issuable upon certain milestone events.
Warrants for the purchase of 100,000 shares at a per-share price of $2.00 were
issued upon the execution of the agreement. Warrants for the purchase of 200,000
shares were issued in December 2004 following the shipment of the ProUroScan
systems under the Development Agreement, and were expensed as research and
development expenses. The final 200,000 warrants will be issued, contingent on
the delivery of the clinical systems, in two equal 100,000-share installments on
the one-year and two-year anniversaries of the Research and Development
Agreement.

      The Company contracted the services of Minnetronix, Inc. in 2002 and 2003
for the early stages of ProUroScan's development, and has engaged them again to
bring the pre-clinical prototypes developed by Artann Laboratories to a final
production design that will be ready for clinical trials. Minnetronix is an
FDA-registered manufacturer that specializes in bringing medical devices to
market. Founded in January 1996, Minnetronix currently employs more than 60
people and has contracted with companies such as Medtronic, 3M, BeneCor Heart
Systems, BioMedix, CardioFocus and others for the development of sophisticated
medical devices including a blood pump controller to treat congestive heart
failure, a blood analyzer for hemostasis management and a laser ablation device
to treat atrial fibrillation. The Company intends to engage them to perform
late-stage manufacturing engineering and development in preparation for market
entry. In the event the Company cannot reach a new agreement with Minnetronix,
the Company will identify and contract for the services of a similarly qualified
medical products contract manufacturer.


Therapeutic Products

      In addition to the ProUroScan technology, ProUroCare has licensed rights
to technology that offers significant enhancements to existing microwave thermal
therapy for treatment of BPH and cancer. These technologies are covered by
patents held by the licensors--see "Intellectual Property" below. The Company is
not aware of any patents held by others that would present any uncertainties
regarding the protection of our intellectual-property rights.

      ProUroCare intends to partner with a major thermotherapy system company to
complete development of the technologies. To date, we have had discussions with
four thermotherapy system companies, although there can be no guarantee that an
agreement will be reached. We are currently involved in negotiations with only
one thermotherapy system company.

      Current microwave thermal therapy treatment utilizes a catheter that is
inserted into the patient's urethra. The catheter contains an antenna that
radiates microwave energy in an omni-directional, 360(degree) pattern. The
tissue of the prostate absorbs this energy and heat is inductively generated to
increase the temperature above 45(degree) C, which is necessary to cause
necrosis of the tissue. After this tissue dies and is eliminated by the body,
the enlargement of the prostate is reduced, restoring urine flow. However,
because the energy emitted in this procedure is radiated in a 360(degree)
pattern it tends to destroy both healthy and diseased tissue. Moreover, the
clinician is unable to monitor the migration of heat within the prostate, which
means that either too much energy may be applied, potentially causing collateral
damage to adjacent healthy organs, or too little energy may be applied, limiting
its therapeutic effectiveness.

      ProUroCare believes that its unique and proprietary Electrical Impedance
Tomography technology ("EIT") will be a significant advancement to thermal
therapy. EIT is an imaging technology in which an image of the conductivity or
resistivity of part of the body is inferred from surface electrical
measurements. The heating that occurs during a thermal therapy procedure
produces a change in the local conductivity or resistivity throughout the
treatment volume. These local changes in the electrical properties of the tissue
will be measured by a system of miniature electrodes placed on the patient's
body, and a rectal probe, all of which connect to an electronically controlled
low-frequency power supply. Each individual electrode will receive a specific
current and electronically measure all the possible induced voltages among the
electrode array. An inversion algorithm is then employed to create a real-time
image of the thermal pattern.


                                       9
<PAGE>

      We expect that the EIT system will be assembled into modules that will be
compatible and added on to existing thermal therapy systems. The modules will
include a low-frequency power supply, electrodes, a rectal probe, monitor and
software containing the proprietary algorithms. This system will enable
urologists to observe the real-time migration of heat through the prostate
during treatment and adjust the amount of energy applied in order to protect the
urethral tissue and adjacent organs. The upgraded systems will continue to
utilize transurethral microwave catheters to generate the heat necessary to
cause necrosis. This information and increased energy efficiency will also help
to minimize damage to healthy tissue.

      ProUroCare also intends to develop a focused-beam microwave array based on
its licensed technology. The focused-beam array will allow the treating
physician to direct treatment in a much narrower, 90(degree) to 120(degree)
pattern rather than the unfocused omni-directional, 360(degree) pattern of
current systems. This will enable the physician to selectively treat an area of
the prostate, and spare healthy tissue, helping to avoid damaging the rectal
wall and adjacent organs. Because the energy applied will be more focused, less
total energy can be used during treatment. Lower energy levels are believed to
reduce collateral damage to surrounding tissues when treating a patient and are
therefore believed to be a safer way to treat patients than microwave systems
currently being used.

      We believe that the combination of real-time visioning of the prostate and
the ability to direct treatment will enable a physician to treat specific areas
of the prostate that may have localized cancer or BPH, without damaging healthy
prostate tissue or medial nerves, thus avoiding potential impotence and
erectile-dysfunction complications. As a result, we believe that the
technologies will be positioned as significant enhancements to current microwave
therapy devices, minimizing the types of complications and side effects inherent
in most current treatments and, as such, can encourage more rapid acceptance and
adoption rates for the systems that incorporate this technology.


Competition

      Prostate Imaging. The Company is not aware of any competitive product
currently being sold based on the same technological features as the ProUroScan.
Nonetheless, we expect competition to intensify in the market for prostate
diagnosis and screening. Currently available diagnostic methods that are
expected to compete with the ProUroScan include the traditional DRE,
Prostate-Specific Antigen (PSA) tests, TRUS, magnetic resonance imaging (MRI),
computed tomography (CT) and nuclear medicine (NM). The Company believes that it
can be competitive in the prostate-imaging market due to its strong patent
position and anticipated ability to deliver a cost-effective and high-quality
imaging/screening device and results.

      o     Digital Rectal Examination (DRE): A DRE is a qualitative and
            subjective test in which a physician wearing a latex glove inserts a
            lubricated finger into the anus, primarily to feel or palpate the
            prostate gland for abnormalities. The clinician must rely on their
            experience and the sensitivity of their finger to estimate the size
            of the prostate and to detect hardness or nodules within the
            prostate that might indicate the presence of potentially
            life-threatening disease. The Company believes that some physicians
            may view the system as an unnecessary expense when compared to the
            negligible cost of a latex glove and lubricant, and may argue that
            they obtain accurate information when palpating with their finger.
            The Company believes the ProUroScan will ultimately gain acceptance
            because it offers distinct advantages in prostate screening compared
            to the standard DRE. For one, it will be more sensitive and able to
            detect smaller nodules or tissue abnormalities on the surface or
            within the prostate, and not be affected by anatomic anomalies or
            obesity that now prevent them from fully palpating the prostate in a
            significant percentage of their patients. Furthermore, the
            ProUroScan will enable physicians to electronically store the test
            results or to produce a color image of the prostate for patient
            files. Finally, the test will be standardized, and not be dependent
            upon the skill or experience level of the physician. The
            ProUroScan's capability is limited to the examination of the
            prostate, and will not detect other conditions unrelated to the
            prostate that a physician may detect in the course of a standard
            DRE, such as internal hemorrhoids, rectal cancer, stenosis
            (narrowing of the rectum), and atypical sphincter tone that may
            suggest neurological pathology.


                                       10
<PAGE>

      o     Prostate-Specific Antigen (PSA): The Prostate-Specific Antigen test
            ("PSA test") is a blood test used to detect and quantify PSA, a
            substance produced only by the prostate. This test only screens for
            cancer and does not provide any indication to the physician
            regarding the size of the prostate or the presence of any other
            tissue abnormalities. The PSA test is a screening tool usually used
            in conjunction with a traditional DRE. An elevated PSA result does
            not necessarily mean a patient has prostate cancer nor does a normal
            PSA mean a patient does not have prostate cancer. False negatives
            and false positive PSA tests are common. The Company believes
            diagnostics companies are working to develop PSA tests with improved
            sensitivity and specificity to reduce the number of false positives
            and false negatives. Improved PSA tests must be considered a
            competitor to the ProUroScan.

      o     Transrectal Ultrasound (TRUS): The Company believes that, compared
            to the ProUroScan, ultrasound cannot easily determine specific
            hardness in the prostate and thus lacks the specific ability to
            detect certain prostate disease detectable by the ProUroScan based
            on tissue density. Nevertheless, recently developed smaller
            ultrasound systems with more competitive price points have been
            introduced into the marketplace. The marketing of these devices is
            primarily focused on medical specialists other than urologists,
            including family practitioners. The Company believes that the
            ProUroScan will be easier to operate and the resulting images
            require will less training to interpret than TRUS, but the
            ProUroScan will only be able to detect abnormalities on the
            posterior section of the gland whereas TRUS can provide images of
            the entire prostate. TRUS also has the ability to differentiate
            between calcium deposits and nodules in the prostate, which the
            ProUroScan will not have.

      o     Magnetic Resonance Imaging (MRI): MRI is effective in providing high
            contrast, high-resolution images of anatomy deep inside the human
            body. Nevertheless, full-sized, high-field strength MRI systems may
            cost $1 million to $1.5 million, with smaller, lower-field strength
            magnets ranging from $700,000 to $1 million. Dedicated
            limited-purpose units for such applications as prostate evaluation,
            orthopedics or breast imaging have been developed but have not yet
            been shown to be commercially viable. Thus, MRI is currently too
            expensive to use for prostate-disease screening.

      o     Computed Tomography (CT): CT involves placing the patient inside of
            a rotating array of X-ray detectors subjected to multiple x-rays,
            which are analyzed and processed into a series of cross-sectional
            images of the body and then reconstructed to form a computerized
            three-dimensional image (like loaf of bread comprised of multiple
            "slices"). CT can be effective in prostate imaging, but transrectal
            ultrasound (TRUS) is generally preferable in terms of time and
            cost-effectiveness.

      o     Nuclear Medicine (NM): NM involves the injection into the body of
            radioactive isotopes which emit radiation that is detected and
            analyzed by a dedicated computer. NM is highly effective in staging
            of soft-tissue tumors. NM is not suited as a mass-screening device,
            although NM can be used for later-stage prostate cancer staging.

      Therapeutic Products. The Company's anticipated therapeutic products will
be intended to provide significant enhancements to existing thermal-therapy
devices. Once developed, the Company anticipates they will be sold to companies
that utilize catheter-based microwave energy to treat BPH and certain prostate
cancers. Competition in the BPH treatment market for therapeutic products in
which these companies compete is intense and expected to increase. ProUroCare
believes that the principal competition in this area will come from both
surgical and non-surgical therapies. Surgical therapies include transurethral
prostatectomy ("TURP"), transurethral incision of the prostate ("TUIP") or
alternative surgical procedures for vaporizing prostate tissue using laser or
radio frequency ("RF") energy. Non-surgical alternatives include drug therapy
and emerging less invasive and more specific technologies.

      o     Surgical Treatments for BPH: Surgical treatments for BPH typically
            use various means to completely remove the prostatic urethra along
            with a substantial portion of the diseased tissue within the
            prostate. Approximately 1.0 million prostatic surgeries were


                                       11
<PAGE>

            performed worldwide in 2002, of which 195,000 were performed in the
            United States according to the 2002 National Hospital Discharge
            Survey published by the Center for Disease Control. The most common
            surgical procedure for the treatment of BPH is TURP, whereby a rigid
            instrument is inserted into the patient's urethra and through which
            the surgeon passes an electrosurgical loop that is used to remove
            the urethra and the diseased tissue within the prostate. While TURP
            results in a dramatic improvement in urine flow and a reduction in
            the AUA Symptom Score (a standardized questionnaire developed by the
            American Urological Association to assess the severity of urological
            discomfort symptoms men are experiencing) a significant number of
            patients experience serious complications. Complications as
            described in the AUA Guideline on the Management of Benign Prostatic
            Hyperplasia (2003) include ejaculation problems (65% of patients),
            erectile dysfunction (10%), excessive hemorrhaging requiring
            transfusion (8%), urethral stricture (7%) infection (6%), hematuria
            or blood in the urine (6%), and long-term incontinence (3%). There
            has been a steady decline in the numbers of TURP procedures being
            performed in the U.S. Three other prevalent procedures are TUIP,
            transurethral vaporization of the prostate ("TVP"), and
            laser-assisted prostatectomy. In TUIP, a surgeon inserts an
            instrument into the urethra that is able to make incisions in the
            prostate where it meets the bladder. Because of the circular muscle
            fibers running around the prostate, the TUIP allows the bladder neck
            to spring open and urine to flow freely. During a TVP procedure, a
            surgeon inserts an electrode into the urethra which generates enough
            heat to vaporize the tissue constricting the urethra. During a
            laser-assisted prostatectomy, a surgeon uses a laser inserted into
            the urethra to destroy tissue constricting the urethra. While these
            alternative surgical treatments have been effective in reducing some
            side effects associated with TURP, such as reduced risk of blood
            loss, they still remove or damage the urethra, require general or
            regional anesthesia and are performed in an operating room.

      o     Drug Therapy: Drug therapy for BPH has been available in the United
            States since 1992, when the FDA approved the marketing of four
            orally administered pharmaceutical products. By 1996, drug therapy
            for the treatment of BPH symptoms was being administered to
            approximately 1.5 million men in the United States. By 2000,
            according to The National Institute of Diabetes & Digestive & Kidney
            Diseases, 2.2 million prescriptions written for drugs to treat BPH.
            In addition, combination therapy using alpha blockers and 5 -alpha
            reductase inhibitors has proven beneficial. We believe the dramatic
            growth of drug therapy in the short period since FDA approval can be
            attributed to extensive drug company marketing, resulting in
            increased patient awareness, and the desire of these patients for
            effective treatments which have less severe complications and side
            effects than currently available surgical procedures. Some of the
            adverse common side effects to drug therapy as described in the AUA
            Guideline on the Management of Benign Prostatic Hyperplasia (2003)
            are: dizziness (15%), headache (12%), stuffy nose (11%),
            stomach/intestinal (11%), erection problem (8%), and decreased
            sexual desire (5%).

      o     Less-Invasive BPH Treatments: In an effort to eliminate
            hospitalization and the complications arising from surgical
            treatments, other technologies have been developed, or are under
            development for the treatment of BPH. Two of these technologies are
            interstitial radio frequency therapy ("RF"), which is currently
            being marketed in the United States, and interstitial laser therapy,
            which has only been recently approved for commercialization in the
            United States. In an interstitial therapy procedure, a rigid scope
            is inserted into the patient's urethra and either needle electrodes
            or laser fibers pierce the urethra and are advanced into the lobes
            of the prostate. RF or laser energy is then delivered, causing
            necrosis of the surrounding tissues. Due to the limited amount of
            tissue necrosis caused by each electrode or laser fiber, multiple
            punctures of the urethra are required in order to coagulate a
            sufficient amount of tissue. While these procedures are designed to
            be performed in approximately 30-45 minutes with local anesthesia,
            the Company believes that intravenous sedation or regional
            anesthesia will be required in most patients due to the need to
            repeatedly puncture the urethra and manipulate the large, rigid
            instrument in the urethra. As a result, ProUroCare believes that it
            will be difficult to consistently perform interstitial therapies in
            an office setting, and that its therapeutic products will therefore
            be a cost-effective alternative.


                                       12
<PAGE>

      In addition to the competitive treatments discussed above, we are aware of
other companies that have developed or are developing technologies for BPH
treatment. These technologies include stents (a tube-shaped structure that holds
the urethra open enabling urine to pass more freely), dilation balloons (a small
balloon introduced into the urethra and then inflated to relieve the prostate's
pressure on the urethra), transurethral and transrectal hyperthermia (heating
the prostate, either through the urethra or the rectum, to a point that causes
necrosis of the tissue and relieves the pressure on the urethra), and
high-intensity focused ultrasound (a method involving the heating of the
prostate sufficiently to cause tissue necrosis using ultrasound waves). We
expect that competition in the BPH field will be based, among other things, on
the ability of the therapy to provide safe, effective and lasting treatment,
cost effectiveness, continued Medicare reimbursement, acceptance of the
procedure by physicians, healthcare payors and patients, marketing and sales
capabilities, and third-party reimbursement policies.


Intellectual Property

      Our goal is to obtain, maintain and enforce patent protection for our
products, formulations, processes, methods and other proprietary technologies,
preserve our trade secrets, and operate without infringing the proprietary
rights of other parties, both in the United States and in other countries. Our
policy is to actively seek to obtain, where appropriate, the broadest
intellectual-property protection possible for our products, proprietary
information and proprietary technology through a combination of contractual
arrangements and patents, both in the United States and throughout the rest of
the world. We have licensed the rights to 24 patents and three patent
applications, and have made one patent application for intellectual property
that we own.

      We also depend upon the skills, knowledge and experience of our scientific
and technical personnel, as well as that of our advisors, consultants and other
contractors, none of which is patentable. To help protect our proprietary
know-how which is not patentable, and for inventions for which patents may be
difficult to enforce, we rely on trade-secret protection and confidentiality
agreements. To this end, we require all employees, consultants, advisors and
other contractors to enter into confidentiality agreements which prohibit the
disclosure of confidential information and, where applicable, require disclosure
and assignment to us of the ideas, developments, discoveries and inventions
important to our business.

      ProUroCare licenses from third parties various intellectual properties
essential to its business. The significant intellectual-property rights licensed
by the Company include:

      o     Certain rights associated with prostate-imaging systems and related
            patented technology, from Profile. These rights include the rights
            to patents covering methods and devices for palpation and mechanical
            imaging of the prostate (patent expires in 2019), real-time
            mechanical imaging of the prostate (patent expires 2021), and a
            method for using a transrectal probe to mechanically image the
            prostate gland (patent expires 2017). Two patent applications
            covering these rights outside of the United States are being pursued
            by the Company. Together, the technology licensed from Profile is
            the basis for the imaging technology used in the proposed ProUroScan
            product. The license requires the Company to report its development
            activities to Profile each year and to pay for ongoing patent
            prosecution and maintenance costs. The license requires no specific
            expenditure level by the Company to remain in force; however, under
            the terms of a settlement agreement with Profile, the Company
            committed to spend at least $1.2 million of the proceeds of the
            Private Placement to develop this technology.

            Prior to the Merger, ProUroCare was involved in a dispute with
            Profile. Profile had alleged that ProUroCare was in default of the
            License Agreement; and ProUroCare had denied such default. The
            Company continues to deny that any such default ever existed.

            On March 23, 2004, ProUroCare and Profile entered into a Letter of
            Understanding pursuant to which Profile withdrew its default letters


                                       13
<PAGE>

            and waived all existing defaults under the License Agreement. Among
            other things, ProUroCare committed to spend at least $1.2 million of
            the proceeds from the Private Placement on the development and
            commercialization of the ProUroScan(TM) (with no specified time
            limit). As of March 15, 2005 ProUroCare had spent approximately
            $1,208,000 towards these activities, and have additionally issued
            warrants valued using the Black-Scholes pricing model at $281,086
            for development activities in lieu of cash. Accordingly, management
            believes that the Company has met this requirement.

            Certain rights associated with minimally invasive microwave therapy
            for the treatment prostate disease from CS Medical, including rights
            to two patents covering medical hyperthermia treatment and diagnosis
            using microwave devices (patents for both of which expire in 2019),
            microwave balloon angioplasty (patent expires 2009), microwave heat
            pipe array for hyperthermia (patent expires 2019), and a collineator
            array applicator (patent expires 2006). The Company also has rights
            to a patent application for treatment of prostatic tissue that is
            pending in Europe. Together, the technology licensed from CS Medical
            is the basis for the Company's proposed focused-beam microwave
            therapy product. This license requires the Company to report its
            development activities to CS Medical each year, but requires no
            specific level of development expenditures by the Company.

      o     Certain rights associated with electrical impendence tomography
            (EIT) imaging systems and related patented technology from RPI,
            including rights to processes for producing optimal current patterns
            for EIT (patent expires 2014) and a process and apparatus for
            distinguishing conductivities by electric computed tomography
            (patent expires 2010). Together, the methods licensed from RPI are
            the basis for the vision system portion of the Company's proposed
            focused-beam microwave therapy product. This license requires that
            the Company initiate an FDA approval process prior to July 13, 2006,
            but requires no specific level of development expenditures by the
            Company.

      In 2003, ProUroCare applied for its own patent for an intelligent
medical-device barrier and continues to pursue its issuance. This technology
provides a means of communicating certain information from a medical probe to
the computer system of a medical device using a special adapter integrated with
a disposable sterile sheath or barrier that will be used in a medical procedure.
This device will be used by the ProUroScan system to ensure the sterility and
functionality of the system's probe.


Manufacturing

      We do not intend to manufacture any of our initial proposed products.
Instead, we intend to retain contract manufacturers and clinical-trial
investigators. In addition, the identification of new product candidates for
development may require us to enter into licensing or other collaborative
agreements with others, including medical-device companies and pharmaceutical
companies, and research institutions. Finally, we may be required to enter into
sales, marketing, licensing and/or distribution arrangements with third parties
for our products.


Government Regulation

      The proposed products we intend to develop, assemble, and market are
subject to regulations by the FDA, and by comparable agencies in certain states
and various foreign countries. The process of complying with the requirements of
the FDA, related agencies, and other state and foreign agencies can be costly
and time consuming. The Company has developed and continues to refine regulatory
strategies for its proposed initial product offerings, as more fully described
above under the caption "Research and Development." Although we have secured the
assistance of regulatory consultants to help direct our regulatory compliance
and filings, no assurances can be given that such filings will be acceptable to
the FDA or other regulatory governing bodies. Moreover, even if our filings are
acceptable to the regulatory bodies with which we file applications, we may
encounter significant delays which will materially and adversely affect our
business.


                                       14
<PAGE>

      The FDA review process for medical devices differs for various devices.
Each device is classified into one of three classes, from which an approval path
is determined. The Company believes that its ProUroScan product is a Class II
device. A Class II device is one which requires performance standards, patient
registries, guidelines, and post-market surveillance to assure safety and
efficacy. In order to achieve this classification, the Company must demonstrate
that the ProUroScan is substantially equivalent to a previously approved product
(referred to as a "predicate device"). A device is substantially equivalent if
it has (a) the same intended use, and (b) either the same technological
characteristics of a predicate device, or different technological
characteristics but is shown to be as safe and effective as the predicate
device. If substantial equivalence is shown, a medical device is classified as a
Class II device. Such devices typically gain FDA approval through a pre-market
notification application, commonly referred to as the 510(k) application. This
pathway is generally shorter and less expensive than a full pre-market approval
application ("PMA"), which is required of Class III devices that are generally
used for life-sustaining or life-supporting purposes, implantable devices, or
devices that pose a high risk of illness or injury.

      A manufacturer must file a 510(k) application at least 90 days before it
intends to market the device. In general, the data required to prove substantial
equivalence in a 510(k) application is easier to collect than the safety and
efficacy data required for a PMA. In the case of the ProUroScan, much of the
supporting data will be gathered during the product-development phase. Once
filed, the FDA has 90 days in which to review the 510(k) application and
respond. Typically, the FDA's response after reviewing a 510(k) is a request for
additional data or clarification. Depending on the complexity of the application
and the amount of data required, the process may be lengthened by several weeks.
If additional data is needed to support our claims, the 510(k) application
process may be significantly lengthened. The FDA has reported that the overall
review time of 510(k) applications in the year 2002 was 100 days.

      ProUroCare met with the FDA on October 4, 2002. Our regulatory consultant,
William Jackson, participated in that meeting. Mr. Jackson and other Company
representatives in attendance concluded that it was appropriate to file a 510(k)
application for the ProUroScan after completing the required clinical studies.
We estimate that clinical studies will take only 45-60 days to complete. Mr.
Jackson has indicated that 90-180 days is a reasonable timeframe for this type
of filing to be approved.

      In regard to the Company's proposed therapeutic products, the
thermal-therapy company with whom we eventually partner will likely determine
the strategy and seek approval from the FDA. Due to this and the
early-development stages of our proposed therapeutic products, the type of FDA
filing that will be required for our proposed thermal-therapy products has not
yet been determined.

      The Company's clinical investigations will follow the FDA's
Investigational Device Exemption (IDE) regulations, including the requirements
of informed consent and institutional review boards (IRBs). Prior to the
commencement of clinical investigations, the Company will have in place a
complete set of standard operating procedures (SOPs) as to clinical monitoring,
responsibilities, selecting investigators, selecting monitors, device control,
agreements, records, reports, labeling, etc. All of these SOPs will conform to
applicable FDA regulations. Finally, prior to commercialization and 510(k)
clearance, the Company will comply with FDA registration and listing regulations
by registering with the FDA Form 2891, and listing the device on FDA Form 2892.

      Once approved, the manufacturing, sale and performance of our products
will be subject to the ongoing FDA regulation and inspection processes. For
example, the FDA reviews design and manufacturing practices, labeling and record
keeping, and manufacturers' required reports of adverse experience and other
information to identify potential problems with marketed medical devices. We may
be subject to periodic inspection by the FDA for compliance with the FDA's good
manufacturing practice regulations. These regulations, also known as the Quality
System Regulations, govern the methods used in, and the facilities and controls
used for, the design, manufacture, packaging and servicing of all finished
medical devices intended for human use. If the FDA were to conclude that we are
not in compliance with applicable laws or regulations, or that any of our


                                       15
<PAGE>

medical devices are ineffective or pose an unreasonable health risk, the FDA
could ban such medical devices, detain or seize adulterated or misbranded
medical devices, order a recall, repair, replacement, or refund of such devices,
and require us to notify health professionals and others that the devices
present unreasonable risks of substantial harm to the public health. The FDA may
also impose operating restrictions, enjoin and restrain certain violations of
applicable law pertaining to medical devices, and assess civil or criminal
penalties against our officers, employees, or us. The FDA may also recommend
prosecution to the Department of Justice.


Employees

      We currently have no employees other than our executive management team,
consisting of four full-time personnel. We anticipate hiring a limited number of
additional employees in the next 12 months to manage the development of our
products, prepare FDA and regulatory filings, develop marketing plans, and
perform administrative duties. Some or all of these functions may be performed
by contracted individuals or consultants as management deems most effective. We
currently have engaged four consultants who perform these functions. To date,
the Company has conducted its research and development activities related to its
acquired technologies and proposed products on a contract basis with
Minnetronix, Inc., Resistance Technology, Inc., and Artann. The work conducted
by these contractors has been supervised by a combination of the Company's
executive management and consultants.

Risk Factors Associated with Our Business


As a development-stage company, we have no operating history and our business
plan has not been tested. We anticipate incurring future losses.

      The Company, conducting business through ProUroCare Inc. (sometimes
referred to hereinafter as "we"), is a development-stage company. We have yet to
commence active operations or manufacture or sell any products associated with
the proprietary urology-based imaging and therapeutic technologies that we
intend to market. We have no prior operating history from which to evaluate our
success, or our likelihood of success in operating our business, generating any
revenues or achieving profitability. To date, we have generated no revenue and
are proposing to enter the highly competitive urology-imaging and therapeutic
industries. There can be no assurance that our plans for developing and
marketing our urology-based products will be successful, or that we will ever
attain significant sales or profitability. We anticipate that we will incur
losses in the near future.


Our products have not been, and may never be, fully developed.

      We have developed and manufactured two working ProUroScan systems for
testing, clinical study, and demonstration purposes. Previously we had developed
and manufactured two working prototypes and key components of a third ProUroScan
system to prove the feasibility of the device and to provide a means to test and
develop future systems. Nevertheless, we have not generated any revenues from
the sale of the ProUroScan(TM) nor have we manufactured any ProUroScan(TM) in
commercial quantities. The completion of the development of proposed products
remains subject to all the risks associated with the development and manufacture
of new products based on innovative technologies, including unanticipated
technical or other problems, failures to meet FDA requirements or performance
objectives, and the possible insufficiency of the funds allocated for the
completion of such development, which could result in a change in the design,
delay in the development, or abandonment of such applications and products.
Consequently, there can be no assurance that our products will be successfully
developed or manufactured. Of course, our failure to complete the development of
products will have materially adverse effect on our business.


Even if finally developed, our products may not be commercially viable.

      Even if we are able to successfully develop our products, we may not be
able to manufacture such products in commercial quantities and at prices that
will be commercially viable. Further, there is risk that our products may not


                                       16
<PAGE>

prove to be as effective as currently available medical products. The inability
to successfully complete development of a product or application or a
determination by us, for financial, technical or other reasons not to complete
development of any product or application, particularly in instances in which we
have made sufficient capital expenditures could have a materially adverse affect
on our business.


Even if successfully developed, our products may not be accepted by the
marketplace.

      Our products, even if successfully developed, will be competing against
existing treatments and competing products in the healthcare marketplace. There
can be no assurance that the market will accept these products.


We will depend upon others for the manufacturing of our products, which will
subject our business to the risk that we will be unable to fully control the
supply of our products to the market.

      Our ability to develop, manufacture and successfully commercialize our
proposed products depends upon our ability to enter into and maintain
contractual and collaborative arrangements with others. We do not intend to
manufacture any of our proposed products. In this regard, we intend to retain
contract manufacturers. There can be no assurance that such manufacturers will
be able to supply our products in the required quantities, at appropriate
quality levels or at acceptable costs. We may be adversely affected by any
difficulties encountered by such third-party manufacturers that result in
product defects, production delays or the inability to fulfill orders on a
timely basis. If a manufacturer cannot meet our quality standards and delivery
requirements in a cost-efficient manner, we would likely suffer interruptions of
delivery while we arrange for alternative manufacturing sources. Any extended
disruption in the delivery of products could result in our inability to satisfy
customer demand for our products. Consequently, our inability to obtain
alternative sources on a timely basis may have a material adverse effect on our
business and results of operations.


Our reliance on third-party manufacturers and other third parties in other
aspects of our business will reduce any profits we may earn from our products,
and may negatively affect future product development.

      As noted above, we currently intend to market and commercialize products
manufactured by others, and in connection therewith we will likely be required
to enter into manufacturing, licensing and distribution arrangements with third
parties. These arrangements will likely reduce our product profit margins. In
addition, the identification of new product candidates for development may
require us to enter into licensing or other collaborative agreements with
others, including medical-device and pharmaceutical companies, and research
institutions. These collaborative agreements may require us to pay license fees,
make milestone payments, pay royalties and/or grant rights, including marketing
rights, to one or more parties. Any such arrangement will reduce our profits.
Moreover, these arrangements may contain covenants restricting our product
development or business efforts in the future.


We may not be able to enter into manufacturing agreements or other collaborative
agreements on terms acceptable to us, if at all, which failure would materially
and adversely affect our business.

      We cannot be sure that we will be able to enter into manufacturing or
other collaborative arrangements with third parties on terms acceptable to us,
if at all. If we fail to establish such arrangements when and as necessary, we
could be required to undertake these activities at our own expense, which would
significantly increase our capital requirements and may delay the development,
manufacture and commercialization of our products. If we could not find ways of
addressing these capital requirements, we would likely be forced to sell or
abandon our business.


                                       17
<PAGE>

We will need additional financing in the future and any such financing will
likely be dilutive to our existing shareholders.

      Our plan is to raise sufficient capital through debt or equity financing
to allow us to complete the development of our products, establish a sales and
marketing capability, manufacture our products and enter the market. We estimate
that in order to do so we will require between $5 million and $10 million.
Management has initiated discussions with various funding sources (investment
bankers, investment funds and commercial bankers) to secure the additional
capital. No committed sources of capital currently exist.

      As of the date of this annual report, the Company had depleted its cash.
On March 31, 2005 the Company borrowed $100,000 pursuant to the issuing of a
promissory note to a financial institution. The promissory note was secured by
the assets of the business and a guaranty by the Company's Chairman and Chief
Executive Officer, Maurice R. Taylor. The Company believes that the funds
borrowed under this promissory note will allow it to continue operations through
the month of April, 2005. Due to the amount of time it will take to complete the
debt or equity financing, it will be necessary for the Company to identify
guarantors in order to establish a secured line of credit with its commercial
bank to provide short-term capital for operations until it finalizes the
required financing. While we have made arrangements with our bank to provide
such capital if qualified guarantors are identified, and have initiated
discussions with various potential loan guarantors, no guarantors have yet
committed to providing their guarantees.

      We cannot be certain that any required additional financing will be
available on terms favorable to us. If additional funds are raised by the
issuance of our equity securities, such as through the issuance of stock,
convertible securities, or the issuance and exercise of warrants, then existing
stockholders will experience dilution of their ownership interest. If additional
funds are raised by the issuance of debt or other equity instruments, we may
become subject to certain operational limitations, and issuance of such
securities may have rights senior to those of the then existing holders of
common stock. If adequate funds are not available or not available on acceptable
terms, we may be unable to fund expansion, develop or enhance products. If we
are forced to slow our development programs, or put them on hold, it could delay
our market entry. Ultimately, if no additional financing is obtained, we may be
forced to cease operations.


The Company materially relies on consultants and contractors, some of whom have
been partially or wholly paid through issuances of common stock dilutive to our
shareholders.

      The Company (in combination with PUC) has incurred consulting fees equal
to an aggregate of $1.1 million between January 1 and December 31, 2004, which
represents a material expenditure in relation to our total operating costs. Of
this amount, approximately $255,000 was incurred for business brokerage services
rendered in connection with the Merger; $631,000 was incurred for research and
development activities; $74,000 was incurred for management and accounting
services; $49,000 was incurred for market research services; $59,000 was
incurred for manufacturing and engineering services; $15,000 for medical
advisory services; and $8,000 was incurred for services rendered in connection
with regulatory and reimbursement matters. Furthermore, approximately $383,000
of this amount was paid through the issuance of securities, including $281,000
by the issuance of warrants to purchase 200,000 shares of the Company's common
stock, and $102,000 by the issuance of 550,000 shares of common stock.

      The Company paid approximately $89,000 of accrued financing charges by
issuing 44,441 shares of common stock to a contractor, and issued warrants to
purchase an aggregate of 300,000 shares of common stock to a consultant for
business brokerage services rendered in connection with the Merger.

      The Company expects to continue to materially rely on consultants and
contractors to perform a significant amount of research and development,
pre-manufacturing, and marketing activities. Expenses for these activities are
anticipated to be approximately $1.0 to 1.2 million during the next twelve
months. The Company currently has no plans or commitments (other than the Artann
warrants discussed below) to issue securities in partial satisfaction of such
expenses, but may nonetheless choose to do so in the future. Any such issuance
could be dilutive to shareholders.


                                       18
<PAGE>

      Under the terms of a research and development agreement with Artann
Laboratories, Inc., the Company is committed to issue warrants for up to an
additional 200,000 shares of common stock over the next two years at $2.00 per
share or current market price, whichever is lower.

The resale of shares covered by our recent SB-2 registration statement has
adversely affected, and could continue to adversely affect, the market price of
our common stock in the public market, and thus could cause additional dilution
when the Company raises additional equity capital.

      The sale, or availability for sale, of common stock in the public market
pursuant to our SB-2 registration statement that became effective on January 24,
2005 has adversely affected the prevailing market price of our common stock.
Furthermore, we expect that, because there is such a large number of shares
registered thereunder, selling stockholders may continue to offer shares covered
by the registration statement for a significant period of time, the precise
duration of which we cannot predict. Accordingly, the adverse market and price
pressures resulting from the resale of their Company common stock may continue
for an extended period of time. If this adverse market pressure persists,
shareholders may experience dilution when the Company raises additional capital
by the sale of its equity securities.

      The registration statement made publicly available for resale 13,928,493
shares of our common stock, assuming the issuance of all shares of common stock
issuable upon exercise of warrants. This figure represents nearly 90% of all
shares of our common stock available in the public market after the
effectiveness of the registration statement. Prior to the effective date of the
SB-2 registration, we had outstanding approximately 13,988,057 shares of our
common stock outstanding, of which only approximately 1,600,000 shares were
available for sale. When the registration statement was declared effective, all
13,928,493 of the shares offered thereby (which figure includes 1,581,877 shares
of common stock issuable upon exercise of outstanding warrants) became available
for sale. We may also issue additional shares in connection with our business
and may grant additional stock options to our employees, officers, directors and
consultants or warrants to third parties. Sales of a substantial number of
shares of our common stock in the public market pursuant to the SB-2
registration, and afterwards, could adversely affect the market price for our
common stock and make it more difficult to sell our shares.

The commercialization of our products may be significantly delayed by
governmental regulation.

      The proposed products we intend to develop, assemble and market are
subject to regulations by the United States Food and Drug Association (the
"FDA"), and by comparable agencies in certain states and various foreign
countries. The process of complying with the requirements of the FDA, related
agencies, and other state and foreign agencies can be costly and time consuming.
Although we have secured the assistance of regulatory consultants to help direct
our regulatory compliance and filings, no assurances can be given that such
filings will be acceptable to the FDA or other regulatory bodies. Further, even
if acceptable, we may encounter significant delays which will materially and
adversely affect our business plan.


We are highly dependent on the services provided by certain key personnel.

      We are highly and materially dependent upon the services of our executive
officers and other key personnel, including Maurice R. Taylor II, Michael P.
Grossman, Richard Thon, and Richard Carlson. We have not obtained "key-man" life
insurance insuring the lives of any of these persons. If the services of any of
these persons become unavailable to us, for any reason, our business could be
adversely affected.


                                       19
<PAGE>

Our officers and directors possess substantial voting power with respect to our
common stock, which could adversely affect the market price of our common stock.

      Our officers and directors collectively possess beneficial ownership of
4,256,256 shares of our common stock, which represents approximately 29.3% of
the voting power of our common stock. This represents a significant portion of
the voting power of the Company's shareholders. As a result, our directors and
officers will have the ability to substantially (but not wholly) control our
management and affairs through the election and removal of our entire board of
directors, and all other matters requiring shareholder approval, including the
future merger, consolidation or sale of all or substantially all of our assets.
This concentrated control could discourage others from initiating any potential
merger, takeover or other change-of-control transaction that may otherwise be
beneficial to our shareholders. As a result, the return on an investment in our
common stock through the market price of our common stock or ultimate sale of
our business could be adversely affected.


We license from third parties, and do not own or control, certain intellectual
property critical to our products.

      We have exclusively licensed from third parties intellectual properties
covered by patents and patent applications. Although we have been advised by
patent counsel that such licensed technologies have received protection in
proposed major market areas, no assurance can be given that such protections
will be properly maintained by the parties controlling such intellectual
properties. The intellectual properties licensed from third parties include
technology that is critical to our proposed products. If the parties controlling
such intellectual property do not properly maintain or defend such intellectual
property, we may not be able to maintain the technological (and thereby
competitive) edge we believe we possess. Any such loss of intellectual-property
protections would likely have a materially adverse effect on the Company and its
business.


If we lose our right to license from third parties certain critical intellectual
properties, our entire business would be in jeopardy.

      The agreements pursuant to which we license critical intellectual
properties are not irrevocable. If we should lose our right to license and use
any technology covered by our licenses, such loss would have a materially
adverse effect on the Company and its business. In such a case, the viability of
the Company's business would be in question. Our only alternatives would be to
find existing and non-infringing technology to replace that lost (if any
exists), or develop new technology ourselves. The pursuit of any such
alternative would likely cause significant delay in the development and
introduction of our proposed products.


The protections for the intellectual property we own and license from other
parties may be successfully challenged by third parties.

      We own and, as noted above, license from third parties various
intellectual properties. No assurance can be given that any
intellectual-property claims will not be successfully challenged by third
parties. Any challenge to our intellectual property, regardless of merit, would
likely involve costly litigation which would materially and adversely affect the
Company. Moreover, if a challenge were successful, it is possible that the
viability of the Company's business would be in question. If a successful
challenge were made to intellectual property that is critical to our proposed
products, the pursuit of any such alternative would likely cause significant
delay in the development and introduction of such products.


                                       20
<PAGE>

Rapid technological change in our competitive marketplace may render our
proposed products obsolete or diminish our ability to compete.

      The urologic-products markets are extremely competitive and subject to
rapid technological advances. The discovery of new technologies and advances in
the application of such technologies to the medical marketplace in general, and
the market for urologic products in particular, may render our products obsolete
or non-competitive. Any such changes and advances could force us to abandon our
currently proposed products, which would have a material and adverse effect on
the Company and its business.


We may not be able to compete against companies with greater resources than us.

      The urology-imaging and therapeutic businesses and the healthcare business
in general, are extremely competitive. We have experienced, and expect to
continue experiencing significant competition in the marketplace. Although we
believe we may have a proprietary niche in the prostate-imaging and
prostate-therapeutic marketplaces, many factors beyond our control, including
government regulation, will likely encourage new competitors. In particular,
several large companies will compete with us in the prostate-imaging and
prostate-therapeutic business. Many of the companies that will be in direct
competition with us have significantly greater resources, more personnel and
longer operating histories than we do. Therefore, no assurance can be given that
we will be able to successfully compete with these, or any other companies in
the marketplace, if at all.


Our failure to receive third-party reimbursement will likely result in
diminished marketability of our products.

      The Company does not currently receive reimbursement from any party for
the use of Company products because there are no products fully developed and
used in the marketplace and we have taken no steps to obtain approval for
reimbursement for the use of any of our proposed products. Nevertheless, we are
working to formulate the appropriate approach to obtaining and optimizing
government and third-party reimbursement for the use of our products. ProUroCare
expects that the use of its ProUroScan(TM) product will be eligible for
reimbursement utilizing existing CPT codes. In addition, and as explained below,
we believe that our therapeutic products will be used in procedures eligible for
reimbursement as well, without negatively affecting reimbursement for such
procedures. The success of our future medical-device products will materially
depend on the ability of medical-service providers to obtain third-party
reimbursement from private insurance sources Medicare, Medicaid, and various
foreign governments when using our products. It may be difficult to predict the
timing and outcome of reimbursement decisions. Importantly, there are no
assurances that such reimbursement will ever be obtained.

      Each procedure performed by a physician is assigned a specific "Current
Procedural Terminology" (CPT) code. When a procedure is performed, the physician
must use the CPT code when billing third-party payers such as insurance
companies or the government. The amount of reimbursement the physician receives
depends on the relative value assigned to the procedure by the third-party payer
via the CPT coding. When a new product or procedure is introduced, it must be
submitted to the American Medical Association's (AMA) CPT Editorial Panel, who
determines if an existing code should be used, or if a new code should be
issued. However, before reaching the Editorial Panel, it must first be screened
by the CPT Advisory Committee and the appropriate national medical specialty
society seated in the AMA House of Delegates (for prostate-related procedures,
this is the American Urology Association, or AUA). The process of obtaining a
new CPT code can take from one to three years.

      In the case of the ProUroScan diagnostic product, we will approach the AUA
and request that our procedure initially be covered under the same reimbursement
code under which the digital rectal exam is covered, which is currently
reimbursed as part of what is referred to as Evaluation and Management (E&M).
The E&M procedure is reimbursed at various price ranges depending on the time
spent with the doctor ($35-$162 per visit). We may also determine that it would


                                       21
<PAGE>

be advantageous for us to seek our own CPT code for the procedure. There is no
assurance that we will be successful in obtaining a unique CPT code for use of
the ProUroScan.

      The Company's therapeutic products are anticipated to be "add-on"
enhancements to existing thermal therapy systems. These existing systems are
used in procedures that already have designated CPT codes. The use of our add-on
enhancements is not expected to alter the established CPT codes for such
procedures or otherwise affect reimbursement for such procedures. We anticipate
that these products will be sold to established thermal therapy companies and
not directly to the medical service provider. Because the thermal therapy
procedures utilizing the equipment provided by these established companies
already have designated CPT codes, neither the reimbursement for such procedures
nor the Company's future revenues are directly related to or dependent upon the
establishment of new CPT codes. Nevertheless, if reimbursement levels under the
existing CPT codes were reduced for applicable thermal therapy procedures, such
reduction may adversely affect our ability to sell therapeutic products at a
reasonable price.


Our common stock is illiquid and may be difficult to sell.

      Trading of our common stock is conducted on the Over-the-Counter Bulletin
Board, or "OTC Bulletin Board." This has an adverse effect on the liquidity of
our common stock, not only in terms of the number of securities that can be
bought and sold at a given price, but also through delays in the timing of
transactions and reduction in analyst and the media coverage of our Company.
This may result in lower prices for our common stock than might otherwise be
obtained, and could also result in a larger spread between the bid and asked
prices for our common stock.


There is currently little trading volume in our common stock, which may make it
difficult to sell shares of our common stock.

      Since the Merger, there has been very little trading activity in our
common stock. Over the past three months, the average daily trading volume (as
reported by BigCharts.com and Yahoo Finance) has been approximately 5,000
shares. The relatively small trading volume will likely make it difficult for
our shareholders to sell their shares as and when they choose. Furthermore,
small trading volumes generally depress market prices. As a result, you may not
always be able to resell shares of our common stock publicly at the time and
prices that you feel are fair or appropriate.


Because it is a "penny stock," you may have difficulty selling shares of our
common stock.

      Our common stock is a "penny stock" and is therefore subject to the
requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this
Rule, broker-dealers who sell penny stocks must provide purchasers of these
stocks with a standardized risk-disclosure document prepared by the SEC.

      The penny-stock rules severely limit the liquidity of securities in the
secondary market, and many brokers choose not to participate in penny-stock
transactions. As a result, there is generally less trading in penny stocks. If
you become a holder of our common stock, you may not always be able to resell
shares of our common stock publicly at the time and prices that you feel are
fair or appropriate. Under applicable regulations, our common stock will
generally remain a "penny stock" until and for such time as its per-share price
is $5.00 or more (as determined in accordance with SEC regulations), or until
meet certain net asset or revenue thresholds. These thresholds include the
possession of net tangible assets (i.e., total assets less intangible assets and
liabilities) in excess of $2,000,000 in the event we have been operating for at
least three years or $5,000,000 in the event we have been operating for fewer
than three years, and the recognition of average revenues equal to at least
$6,000,000 for each of the last three years. We do not anticipate meeting any of
the thresholds in the foreseeable future.


                                       22
<PAGE>

The Company's ability to use operating loss carryforwards from ProUroCare Inc.
may be limited by future changes in equity ownership.

      ProUroCare Inc. generated federal and state net operating losses of
approximately $1.2 million which, if not used, will begin to expire in 2021.
Federal tax laws impose significant restrictions on the utilization of net
operating loss carryforwards in the event of a change in ownership of the
Company that constitutes an "ownership change," as defined by the Internal
Revenue Code, Section 382. While the Company has not performed a formal Internal
Revenue Code Section 382 study, the Company believes that the Merger and Private
Placement transactions, together with possible future changes during the
subsequent 36-month period, may constitute a change in ownership that could
subject the Company's use of ProUroCare Inc.'s net operating loss carryforward
to the above limitations. As discussed elsewhere in this annual report, the
Company anticipates a need for additional financing in the near future. Any
significant equity-based financing could have the effect of limiting the
Company's use of these tax benefits.


Our business and products subject us to the risk of product-liability claims.

      The manufacture and sale of medical products and the conduct of clinical
trials using new technology involve the risk of product-liability claims. There
can be no assurance that our insurance coverage limits will be adequate to
protect us from any liabilities which we might incur in connection with the
clinical trials or the commercialization of any of our products.
Product-liability insurance is expensive and in the future may not be available
on acceptable terms, if at all. A successful product-liability claim or series
of claims brought against us in excess of our insurance coverage would have a
materially adverse effect on our business, financial condition and results of
operations. In addition, any claims, even if not ultimately successful, could
adversely affect the marketplace's acceptance of our products.


We have never paid dividends, and do not expect to pay dividends in the
foreseeable future.

      We have never paid dividends on our capital stock and do not anticipate
paying any dividends for the foreseeable future.


ITEM 2:  DESCRIPTION OF PROPERTY

      Our executive offices are located at One Carlson Parkway, Suite 124,
Plymouth, Minnesota 55447, the space for which we lease on a month-to-month
basis. The Company's rent expense for the same location the year ended December
31, 2004 was $45,538. We believe that our offices are adequate to meet our
current requirements. We do not own any real property. The Company has no
official policy on investments in real estate, interests in real estate,
real-estate mortgages, or securities of or persons primarily engaged in real
estate activities.


ITEM 3:  LEGAL PROCEEDINGS

      On April 2, 2004, Mr. Todd Leonard, the former President and Chief
Operating Officer of ProUroCare Inc., filed a lawsuit in Minnesota District
Court, Fourth Judicial District (Hennepin County) against ProUroCare Inc. and
the Company relating to Mr. Leonard's separation of employment with ProUroCare
Inc. prior to the Merger. Mr. Leonard was a party to an employment agreement
with ProUroCare Inc. dated January 1, 2002, and alleges that the Company failed
to make payments owed to him under the employment agreement in October 2003. Mr.
Leonard claims that this action resulted in a termination without cause and that
he is entitled to severance payments under the contract. The Company has
recorded a reserve provision of $75,000 as a contingent liability in connection
with this lawsuit.


                                       23
<PAGE>

      Mr. Leonard's complaint seeks approximately $228,000 in monetary damages,
injunctive relief to compel the Company to place such funds into an escrow
account, fines under Minnesota law (in an unspecified amount), plus payment of
litigation costs and attorneys' fees. The court did not grant the injunctive
relief. The Company disputes Mr. Leonard's claims.

      In late February, 2005 the Company asked the court for summary judgment
and dismissal of the case, and a decision is pending. The parties engaged in
court-ordered mediation in early March 2005, but were unable to resolve the
case. If summary judgment is not granted, the court has set a window for a trial
date in early June 2005.

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

         None.







                                     PART II


ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


General

      Our common stock has been quoted on the Over-the-Counter Bulletin Board,
or "OTC Bulletin Board," since December 2003. Our common stock currently trades
on the OTC Bulletin Board under the trading symbol "PRRC." Prior to May 5, 2004,
the Company's securities traded on the OTC Bulletin Board under the trading
symbol "GICI." This change was made following the Merger of Global Internet
Communications and ProUroCare, Inc. on April 5, 2004. The following table lists
the high and low bid information for the Company's common stock as quoted on the
OTC Bulletin Board since the stock began trading in December 2003:

                                                            Price Range
Quarter Ended                                         High              Low
---------------------------------------------    ----------------    ----------
December 31, 2003                                     $0.50            $0.48
March 31, 2004                                        $5.00            $0.48
June 30, 2004                                         $3.45            $1.90
September 30, 2004                                    $3.55            $2.05
December 31, 2004                                     $2.40            $1.48

      The above quotations from the OTC Bulletin Board reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions. The number of holders of record of our common stock as of
December 31, 2004 was 190. We have not paid or declared any dividends on our
common stock and we do not anticipate paying dividends on our common stock in
the foreseeable future.


                                       24
<PAGE>

Recent Sales of Unregistered Securities

Note: All shares and share prices in this section have been adjusted to reflect
the 3-for-1 exchange ratio of the Company's shares issued for each share of PUC
in the Merger.

Stock Transactions:

      On February 16, 2004, the Company's board of directors authorized the
      issuance of 500,000 shares of the Company's common stock to Mr. Raymond
      John Demman (then the Company's Chief Executive Officer) in exchange for
      $5,000 in a private placement exempt from the registration requirements of
      the Securities Act under Section 4(2) of the Securities Act.

      On March 26, 2004, the Company issued 650,000 shares of common stock to
      two consultants pursuant to consulting agreements. The securities were in
      a private placement exempt from the registration requirements of the
      Securities Act under Section 4(2) of the Securities Act.

      In connection with the Merger, the Company engaged in a private placement
      offering of common stock (referred to throughout this annual report as the
      "Private Placement"). In the Private Placement, the Company issued and
      sold a total of 2,205,000 shares of common stock, raising an aggregate of
      $4.41 million in gross proceeds, in several different closings. The
      initial closing of the Private Placement occurred on April 5, 2004 (the
      same day as the closing of the Merger), at which time the Company had
      received and accepted subscriptions for 1,980,000 shares at $2.00 per
      share, aggregating to gross proceeds of $3.96 million. Thereafter, the
      Company has received and accepted subscriptions for an additional 220,000
      shares of common stock at $2.00 per share. Sales and issuances of common
      stock in the Private Placement were made solely to accredited investors
      and in reliance on Rule 506 promulgated under the Securities Act and
      Section 4(2) of the Securities Act.

      On April 5, 2004, we closed the Merger pursuant to which Acquisition Co.,
      a wholly owned subsidiary of the Company, merged with and into PUC. Upon
      the Merger, all 3,501,001 shares of PUC common stock that were outstanding
      immediately prior to the Merger and held by PUC shareholders were
      cancelled, with one share of PUC common stock issued to the Company. This
      cancellation and issuance caused PUC to become a wholly owned subsidiary
      of the Company. In exchange for the cancellation of their PUC common
      shares, the former PUC shareholders received an aggregate of 9,603,003
      shares of common stock of the Company, representing approximately 82.1% of
      the Company's common stock outstanding immediately after the Merger. The
      exchange of securities pursuant to the Merger was a private placement
      under Section 4(2) of the Securities Act.

      On May 25, 2004, the Company issued 38,613 shares of common stock to a
      vendor in satisfaction of liabilities related to product development work
      valued at $77,225. The shares were issued under Section 4(2) of the
      Securities Act.

      On November 9, 2004, the Company issued 44,441 shares of common stock to a
      vendor in satisfaction of liabilities related to product development work
      valued at $88,882. The shares were issued under Section 4(2) of the
      Securities Act.

Warrant Issuances:

      On July 19, 2004, the Company issued warrants to a supplier to purchase an
      aggregate of 100,000 shares of its common stock at a per-share exercise
      price of $2.00. The warrants were issued in a private placement under
      Section 4(2) of the Securities Act.


                                       25
<PAGE>

      On December 2, 2004, the Company issued warrants to a supplier to purchase
      an aggregate of 200,000 shares of its common stock at a per-share exercise
      price of $2.00. The warrants were issued in a private placement under
      Section 4(2) of the Securities Act.

Option Issuances:

      On February 1, 2004, PUC issued 450,000 employee stock options to Michael
      P. Grossman, who was appointed as PUC's Chief Executive Officer as of such
      date. These options are exercisable at $2.00 per share through February
      2014. The options were issued in a private placement under Section 4(2) of
      the Securities Act, and exchanged (under Section 4(2) of the Securities
      Act) in the Merger for options to purchase an equal number of shares of
      Company common stock at the same exercise price.

      On February 1, 2004, PUC issued 30,000 nonqualified stock options to a
      consultant in consideration of services rendered. These options are
      exercisable at $2.00 per share through February 2014. The options were
      issued in a private placement under Section 4(2) of the Securities Act,
      and exchanged (under Section 4(2) of the Securities Act) in the Merger for
      options to purchase an equal number of shares of Company common stock at
      the same exercise price.

      On July 21, 2004, the Company issued 200,000 employee stock options to
      Richard B. Thon, the Company's Chief Financial Officer, in connection with
      his employment agreement. These options are exercisable at $2.50 per share
      through July of 2014. The options were issued in a private placement under
      Section 4(2) of the Securities Act.

      On January 3, 2005, the Company issued 150,000 stock options to Richard C.
      Carlson, the Company's Vice President of Marketing and Sales. These
      options are exercisable at $2.35 per share through January 3, 2015. The
      options were issued in a private placement under Section 4(2) of the
      Securities Act.


ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      The accompanying Plan of Operation should be read in conjunction with the
audited financial statements, and notes thereto, included in this annual report.


Plan of Operation

      Assets; Property Acquisitions and Dispositions. ProUroCare's primary
assets are cash and intellectual-property rights, which are the foundation for
the Company's proposed product offerings. At this time, the Company does not
anticipate purchasing or selling any significant equipment or other assets in
the near term. Neither does the Company anticipate any significant changes in
its number of employees (except as noted below). In connection with and as a
condition to the closing of the Merger, the Company engaged in the Private
Placement (as defined on page 2 above). In the Private Placement, the Company
issued and sold an aggregate of 2,205,000 shares of common stock at $2.00 per
share pursuant to Section 4(2) of the Securities Act and Rule 506 promulgated
under the Securities Act. The initial closing of the Private Placement occurred
on April 5, 2004 (the same day as the closing of the Merger). The Company raised
an aggregate of $4.2 million in the Private Placement, after payment of all
associated legal, accounting and other offering and Merger expenses.

      Initial Product Offerings. ProUroCare's first product will be the
ProUroScan(TM), which is designed as a unique diagnostic-imaging system that
will allow a physician to accurately display and chart a digital rectal
examination for disease screening, diagnosis and nodule detection. We have been
working closely with our development partners, Artann Laboratories and
Minnetronix, who are both experienced and knowledgeable in the development of
medical devices. In late November 2004, we took delivery of two working,
pre-clinical ProUroScan systems from Artann Laboratories. Based on our


                                       26
<PAGE>

development partners' judgment of the current status of the development projects
and the estimated amount of work remaining to be done, we anticipate that these
prototypes can be refined and made ready for clinical trials during 2005. We met
with the FDA in late 2002, and provided them with an overview of the ProUroScan
and our initial thoughts on the clinical protocol to be employed. Based on their
informal guidance provided during the meeting, we have developed a preliminary
plan for our clinical trials. After completing the required clinical trials and
upon advice from our regulatory consultant, we intend to file a 510(k)
application with the FDA for approval of the ProUroScan. We estimate that
clinical studies should take approximately 45-60 days to complete. Assuming that
the results of clinical trials pose no unanticipated problems, we expect, based
on advice from our regulatory consultant, to have our 510(k) application
approved within 90-180 days after its filing.

      ProUroCare has also licensed rights to technology that offers significant
enhancements to existing microwave thermal therapy for treatment of benign
prostate hyperplasia ("BPH"). The Company intends to use this technology to
develop a means for urologists to observe and direct the application of heat to
diseased portions of the prostate during thermal therapy procedures.

      Current Operations and Expenses. The Company currently employs only its
three executive officers and a Vice President of Marketing and Sales, and
conducts its research and development, market research, regulatory function, and
all other business operations through the use of a variety of consultants and
medical-device development contractors. Management believes that using
consultants and contractors to perform these functions is more cost effective
than hiring full-time employees, and affords the Company flexibility in
directing its resources toward specific and changing goals during its
development stage. As the Company prepares for the market launch of its
ProUroScan(TM) product, we do expect to add two to three employees within the
next 12 months.

      The Company incurs ongoing expenses that are directly related to being a
public company, including professional audit and legal fees, financial printing,
press releases, and transfer agent fees. The Company's facilities consist of a
month-to-month rental of approximately 2,200 square feet in an office that it
shares with another company. Other expenses incurred include travel, insurance,
telephone, supplies, and other miscellaneous expenses.

      Year Ended December 31, 2004 vs. 2003. For the year ended December 31,
2004, the Company recorded general and administrative (G&A) costs of $1,141,467
compared with G&A costs of $1,016,785 for the year ended December 31, 2003.
Significant components of G&A are as follows:

      o     Employee compensation costs (salary, payroll taxes, and benefits)
            for the year ended December 31, 2004 were approximately $354,000,
            compared to $513,000 in the prior year period. The decreased
            compensation expense resulted from no bonus accruals being recorded
            in 2004, and from the departure of a part-time employee in the
            fourth quarter of 2003.

      o     The Company recorded stock-based compensation expenses of
            approximately $220,000 for the year ended December 31, 2004,
            compared to approximately $147,000 for the comparable 2003 periods.
            The increases are attributable to new option issuances to the
            Company's President and Chief Operating Officer and Chief Financial
            Officer upon their hiring in February and July, respectively.

      o     The Company has a limited number of employees, and utilizes
            consultants in various fields to achieve its goals during its
            development phase. Throughout 2003 and until July 21, 2004, the
            Company's Chief Financial Officer provided his services on a
            part-time consulting basis. Consulting fees related to these
            services were $61,015 for the year ended December 31, 2004, compared
            to $61,521 for the prior year. In 2003, a consultant was engaged to
            provide the Company with financial advisory services. The related
            consulting expense of $39,000 was recorded in the year ended
            December 31, 2003. Other consulting expenses recorded as general and
            administrative costs totaled $78,788 in the year ended December 31,
            2004. These expenses were primarily for various consultants


                                       27
<PAGE>

            specializing in market analysis, reimbursement and medical advising.
            For the year ended December 31, 2003, consulting expenses for
            similar activities totaled $49,101. The year-to-year increases can
            be attributed to increased development activity following the Merger
            and Private Placement at the beginning of the fiscal 2004 second
            quarter.

      o     These decreases were offset by increased professional fees related
            to SEC reporting, the settlement with Profile, L.L.C, and legal
            proceedings concerning the separation of employment of a former
            officer of PUC. Fees for these professional services were
            approximately $150,000 for the year ended December 31, 2004 compared
            to $86,000 for the year earlier period.

      o     A $75,000 contingent expense related to the separation-of-employment
            legal proceeding was recorded during the year ended December 31,
            2004.

      o     New expenses in connection with being a public company of
            approximately $71,000 were recorded during fiscal 2004 upon
            completion of the Merger.

      For the year ended December 31, 2004, the Company recorded research and
development (R&D) expense of $708,164 compared to $357,197 in the year ended
December 31, 2003. Significant components of R&D are as follows:

      o     Contracted development costs increased from approximately $278,000
            in the year ended December 31, 2003 to approximately $631,000 during
            the year ended December 31, 2004. The primary increase was due to
            increased development activity as a result of funding following the
            Merger and Private Placement. The development costs include the
            value of warrants issued to our development partners of $187,060 and
            $281,086 for the years ended December 31, 2003 and 2004,
            respectively.

      o     In 2004, Company engaged consultants in product development and
            engineering. Expenses related to these consulting activities were
            approximately $65,000 for the year ended December 31, 2004.

      Interest expense increased from approximately $258,000 during year ended
December 31, 2003 to approximately $485,000 during year ended December 31, 2004.
The increase is attributable to the costs of loan guarantees, which increased
from approximately $144,000 to $394,000 from 2003 to 2004 as a result of the
issuance of additional warrants valued at $309,794 to loan guarantors under the
terms of price and dilution protection provisions of their original warrants.
The increase in loan guarantee costs was offset by reduced loan interest and
finance charges, which decreased from approximately $115,000 to $92,000
following the repayment of debts subsequent to the Merger and Private Placement
in April, 2004.

      Interest income increased from $0 in the year ended December 31, 2003 to
$16,034 in the year ended December 31, 2004 as a result of bank interest on the
proceeds of the Private Placement.

      During the next 12 months, the Company expects to complete the development
of clinical ProUroScan systems, conduct clinical trials, and file a 510(k)
submission with the FDA; fund development work on its therapeutic products; and
prepare for initial market launch. During this time the Company anticipates that
it will spend approximately $1.9 million in marketing and administrative
expenses. Of these, the Company expects that approximately $1.3 million will be
for compensation, benefits, and payroll taxes.

      Research and Development. As part of the Company's settlement agreement
with Profile (discussed in greater detail below), the Company agreed to spend
$1.2 million of the new capital raised under the Private Placement on research
and development and the commercialization of the ProUroScan(TM). This
expenditure commitment, together with the other provisions of the settlement
agreement, satisfied Profile's contention that we were not in compliance with
the terms of the license agreement between Profile and the Company. There is no


                                       28
<PAGE>

specific timeframe attached to this expenditure commitment. As of March 15, 2005
ProUroCare had spent approximately $1,208,000 towards these activities, and have
additionally issued warrants valued using the Black-Scholes pricing model at
$281,086 for development activities in lieu of cash. Accordingly, management
believes that the Company has met this requirement. The Company anticipates that
it will spend a total of approximately $1.4 and $1.8 million on research and
product development of the ProUroScan(TM) system over the next 12 months. Of
this amount, approximately $700,000-$750,000 will be spent on manufacturing,
engineering, validation and documentation efforts with a contracted
medical-products development company. Clinical trials and the 510(k) filing with
the FDA are expected to cost in the range of $300,000-350,000. Other costs,
estimated to be in the range of $200,000-$500,000, are expected to include
market research, regulatory costs and project management.

      For the Company's thermal therapy products, we expect that research and
development efforts will be funded primarily through a joint development and
marketing arrangement with a thermal therapy company. Management expects that
the Company will spend between $200,000 and $250,000 over the next twelve months
in this joint development effort. To date, we have had discussions with several
such thermotherapy system companies, but no agreement has yet been reached.


Liquidity and Capital Resources

      The Company had working capital (deficit) of $22,947 and $(2,077,612) at
December 31, 2004 and December 31, 2003, respectively. Cash used in operations
was $2,105,970 and $788,609 for the years ended December 31, 2004 and 2003,
respectively, and $3,869,722 for the period from August 17, 1999 (date of
inception) to December 31, 2004. The primary use of cash in the period from
August 17, 1999 (inception) through December 31, 2003 was to fund the Company's
net loss. During the year ended December 31, 2004, in addition to funding the
Company's net loss, the Company repaid a $1,000,000 bank line of credit, and
$650,000 plus accrued interest was paid to Profile in relation to a note payable
arising from their exercise of dissenter's rights at the time of the Merger. The
Company also repaid loans from Clinical Network, Inc. and CS Medical
Technologies, LLC totaling $24,301 and $26,000, respectively.

      Common stock and warrants have also been used to fund a portion of the
Company's operating loss in those periods. Common stock was issued to pay for
approximately $77,000 and $193,000 of consulting services for the year ended
December 31, 2004 and the period from August 17, 1999 (date of inception) to
December 31, 2004, respectively. Warrants were used to pay for approximately
$281,000, $187,000, and $468,000 of contracted development costs for the years
ended December 31, 2004 and 2003, and the period from August 17, 1999 (date of
inception) to December 31, 2004, respectively.

      Pursuant to terms of the Research and Development Agreement with Artann
Laboratories, Inc. and Armen Sarvazyan executed in July, 2004, the Company is
required to pay $250,000 for development services to be rendered over the next
three years, based on achievement of certain performance milestones. An
additional 10% bonus will also be required for completion of certain technology
ahead of pre-established milestone dates. As of December 31, 2004 the Company
had paid $150,000 to Artann Laboratories under the Research and Development
Agreement.

      On October 12, 2004, the Company reached an agreement with one of its
ProUroScan research and development contractors, Minnetronix Inc., regarding
payment of amounts due to Minnetronix for past and future work. Under this
agreement, the Company paid $80,538 of its outstanding balance due to
Minnetronix, and issued an unsecured promissory note for the remaining balance
of $241,613. The promissory note is payable in 12 monthly installments beginning
November 1, 2004 or within 30 days of closing on a financing of at least $2
million, whichever is earlier, and bears interest at a 6% annual rate. At the
same time, the Company settled $133,323 of accrued finance charges with a
$44,441 cash payment and by issuing 44,441 shares of ProUroCare common stock.
These liabilities had been recorded on the Company's books as of December 31,
2004. In addition, the Company paid $200,000 to Minnetronix as a deposit on
future development work, to be applied to the last mutually agreed upon project
expenses.


                                       29
<PAGE>

      Our plan is to raise sufficient capital through debt or equity financing
to allow us to complete the development of our products, establish a sales and
marketing capability, manufacture our products and enter the market. We estimate
that in order to do so we will require between $5 million and $10 million.
Management has initiated discussions with various funding sources (investment
bankers, investment funds and commercial bankers) to secure the additional
capital. No committed sources of capital currently exist.

      As of the date of this annual report, the Company had depleted its cash.
On March 31, 2005 the Company borrowed $100,000 pursuant to the issuing of a
promissory note to a financial institution. The promissory note was secured by
the assets of the business and a guaranty by the Company's Chairman and Chief
Executive Officer, Maurice R. Taylor. The Company believes that the funds
borrowed under this promissory note will allow it to continue operations through
the month of April, 2005. Due to the amount of time it will take to complete the
debt or equity financing, it will be necessary for the Company to identify
guarantors in order to establish a secured line of credit with its commercial
bank to provide short-term capital for operations until it finalizes the
required financing. While we have made arrangements with our bank to provide
such capital if qualified guarantors are identified, and have initiated
discussions with various potential loan guarantors, no guarantors have yet
committed to providing their guarantees.

      We cannot be certain that any required additional financing will be
available on terms favorable to us. If additional funds are raised by the
issuance of our equity securities, such as through the issuance of stock,
convertible securities, or the issuance and exercise of warrants, then existing
stockholders will experience dilution of their ownership interest. If additional
funds are raised by the issuance of debt or other equity instruments, we may
become subject to certain operational limitations, and issuance of such
securities may have rights senior to those of the then existing holders of
common stock. If adequate funds are not available or not available on acceptable
terms, we may be unable to fund expansion, develop or enhance products. If we
are forced to slow our development programs, or put them on hold, it could delay
our market entry. Ultimately, if no additional financing is obtained, we may be
forced to cease operations.


Dispute and Settlement with Profile L.L.C.

      On July 31, 2003, PUC received a notice from Profile, the licensor under a
license agreement (the "Profile License Agreement") pursuant to which Profile
licenses to PUC certain essential intellectual property needed to develop,
manufacture and sell the ProUroScan product, that it believed PUC had breached
material provisions of the license agreement. The Company believed that it was
in compliance with the Profile License Agreement. The closing of the Private
Placement was contingent upon PUC's resolving such dispute with Profile, and the
closing of the Private Placement was a condition to the closing of the Merger.

      On March 23, 2004, PUC and Profile entered into a Letter of Understanding
pursuant to which, effective upon April 5, 2004:

      o     Profile withdrew its default letters and waived any existing
            defaults under the Profile License Agreement.

      o     ProUroCare committed to spend at least $1.2 million of the proceeds
            from the Private Placement on the development and commercialization
            of the ProUroScan (with no specified time limit). As of March 15,
            2005 ProUroCare had spent approximately $1,208,000 towards these
            activities, and have additionally issued warrants valued using the
            Black-Scholes pricing model at $281,086 for development activities
            in lieu of cash. Accordingly, management believes that the Company
            has met this requirement.

      o     PUC agreed to purchase 300,000 of the 308,465 shares with respect to
            which dissenters' rights were exercised, for an aggregate purchase
            of $750,000 of which $100,000 was paid upon the initial closing of
            the Private Placement and the balance of $650,000 was paid pursuant
            to the delivery of a promissory note, payable in two equal quarterly
            installments of $325,000 commencing on July 6, 2004. This promissory
            note is secured by all of the assets of PUC. The remaining 8,465
            shares with respect to which dissenters' rights were originally
            exercised withdrew their dissents and participated in the Merger.


                                       30
<PAGE>

      o     Maurice Taylor, Chairman of PUC (and now Chairman and Chief
            Executive Officer of the Company), agreed to certain restrictions on
            the sale of the shares of PUC (and shares of Company common stock
            received upon the Merger) owned by him until the promissory note to
            Profile was paid in full. On October 4, 2004, the promissory note
            was paid in full and the restrictions on the sale of Mr. Taylor's
            securities expired.

      o     PUC committed to provide Profile (the owner of 3,084,999 shares of
            the Company's common stock following the Merger) limited piggyback
            registration rights in connection with any underwritten public
            offering. The shares were registered under the Company's SB-2
            registration statement that was declared effective on January 24,
            2005.

      o     The Company's officers and directors agreed to not dispose of their
            shares of Company common stock for a period of 90 days following the
            effective date of the Company's SB-2 registration statement.

Critical Accounting Policies

      The Company's critical accounting policies are those (i) having the most
impact on the reporting of its financial condition and results, and (ii)
requiring significant judgments and estimates. Due to the development-stage
nature of the Company's current operations, the Company does not believe it has
any critical policies or procedures.

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future
operations. Management's statements contained in this report that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results may differ materially from
those included in the forward-looking statements. The Company intends such
forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of complying with
those safe-harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," "prospects," or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on the operations and future prospects of the Company on
a consolidated basis include, but are not limited to: changes in economic
conditions generally and the retail pharmaceutical market specifically,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. Further information
concerning the Company and its business, including additional factors that could
materially affect the Company's financial results, is included herein and in the
Company's other filings with the Securities and Exchange Commission.


                                       31
<PAGE>

                          ITEM 7: FINANCIAL STATEMENTS

ITEM 7 Financial Statements

      The following financial statements, financial statement schedules and
supplementary data are included:

      Report of Independent Registered Public Accounting Firm................33

     Audited Financial Statements:

      Consolidated Balance Sheets............................................34

      Consolidated Statements of Operations..................................35

      Consolidated Statement of Shareholders' Equity (Deficit) ..............36

      Consolidated Statements of Cash Flows..................................38

      Notes to Consolidated Financial Statements.............................39


                                       32
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders, Audit Committee and Board of Directors
ProUroCare Medical Inc.
Plymouth, MN


We have audited the accompanying consolidated balance sheets of ProUroCare
Medical Inc. (formerly known as ProUroCare, Inc.)(a development stage company)
as of December 31, 2004 and 2003, and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for the years then
ended and the period from August 17, 1999 (inception) to December 31, 2004.
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 audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 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 ProUroCare Medical
Inc. as of December 31, 2004 and 2003 and the results of their operations and
their cash flows for the years then ended and the period from August 17, 1999
(inception) to December 31, 2004, in conformity with U.S. generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has recurring operating losses,
negative cash flows from operations, a working capital deficit, and a
shareholders' equity (deficit) that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regards to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


                                              /s/ Virchow, Krause & Company, LLP

Minneapolis, Minnesota
January 20, 2005 (except as to Note 14, as to which the date is March 31, 2005)


                                       33
<PAGE>

                            ProUroCare Medical Inc.
                          (A Development Stage Company)
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                         December 31,    December 31,
                           Assets                                            2004            2003
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
Current assets:
     Cash                                                                $    301,522    $      8,968
     Deposit                                                                  200,000          30,000
     Prepaid expenses                                                          19,336           6,879
                                                                         ------------    ------------
                 Total current assets                                         520,858          45,847
Equipment and furniture, net                                                   12,587           6,195
Debt issuance costs, net                                                           --          72,594
Other assets                                                                       --           7,590
                                                                         ------------    ------------
                                                                         $    533,445    $    132,226
                                                                         ============    ============
       Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
     Line of credit, bank                                                $         --    $    860,000
     Note payable                                                             202,341              --
     Accounts payable                                                         112,602         774,436
     Accrued expenses                                                         174,025         404,779
     License obligation                                                            --          25,000
     Due to CS Medical Technologies, LLC                                           --          26,000
     Due to Clinical Network, Inc.                                              8,943          33,244
                                                                         ------------    ------------
                 Total current liabilities                                    497,911       2,123,459
                                                                         ------------    ------------

Commitments and contingencies (note 6) Shareholders' equity (deficit):
     Common stock, $0.00001 par. Authorized
        100,000,000 shares; issued and outstanding
        13,988,057 and 10,503,003                                                 140             105
     Additional paid-in capital                                             8,212,283       3,866,655
     Deficit accumulated during the development
        stage                                                              (8,176,889)     (5,857,993)
                                                                         ------------    ------------
                 Total shareholders' equity (deficit)                          35,534      (1,991,233)
                                                                         ------------    ------------
                                                                         $    533,445    $    132,226
                                                                         ============    ============
</TABLE>

See accompanying notes to consolidated financial statements


                                       34
<PAGE>

                            ProUroCare Medical Inc.
                          (A Development Stage Company)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                                      Period from
                                                                                       August 17,
                                                                                          1999
                                                   Year ended       Year ended       (inception) to
                                                  December 31,      December 31,      December 31,
                                                      2004              2003              2004
                                                 --------------    --------------    --------------
<S>                                              <C>               <C>               <C>
Operating expenses:
     Research and development                    $      708,164    $      357,197    $    4,206,076
     General and administrative                       1,141,467         1,016,785         3,232,279
                                                 --------------    --------------    --------------
        Total operating expenses                      1,849,631         1,373,982         7,438,355
                                                 --------------    --------------    --------------
        Operating loss                               (1,849,631)       (1,373,982)       (7,438,355)
Interest income                                          16,034                --            16,034
Interest expense                                       (485,299)         (258,475)         (754,568)
                                                 --------------    --------------    --------------
        Net loss                                 $   (2,318,896)   $   (1,632,457)   $   (8,176,889)
                                                 ==============    ==============    ==============

Net loss per common share:
     Basic and diluted                           $        (0.18)   $        (0.16)   $        (1.21)

Weighted average number of shares outstanding:
     Basic and diluted                               13,002,276        10,502,168         6,760,766
</TABLE>

See accompanying notes to consolidated financial statements.


                                       35
<PAGE>

                             ProUroCare Medical Inc.
                          (A Development Stage Company)
            Consolidated Statements of Shareholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                                                          Deficit,
                                                                                                        accumulated
                                                                      Common stock         Additional    during the     Total
                                                                -------------------------   paid-in     development   shareholders'
                                                                  Shares        Amount      capital        stage    equity (deficit)
                                                                -----------  ------------ ------------  ------------  ------------
<S>                                                             <C>          <C>          <C>           <C>           <C>
Balance at inception, August 17, 1999
Net loss for the period from inception to
    December 31, 1999                                                    --  $         -- $         --  $         --  $         --
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 1999                                               --            --           --            --            --
Net loss for the year ended December 31, 2000                            --            --           --            --            --
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 2000                                               --            --           --            --            --
Issuance of common stock to founders at $3.33
    per share on March 1, 2001                                            6            --           20            --            20
Cancellation of founders' shares, March 6, 2001                          (6)           --          (20)           --           (20)
Recapitalization and transfer of common stock to
    Clinical Network, Inc. July 6, 2001                           3,000,000            30          (30)           --            --
Issuance of common stock to CS Medical Technologies, LLC
    as consideration for technology license agreement
     on July 6, 2001, valued at $0.158 per share                  3,000,000            30      474,970            --       475,000
Net loss for the year ended December 31, 2001                            --            --           --      (612,533)     (612,533)
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 2001                                        6,000,000            60      474,940      (612,533)     (137,533)
Issuance of common stock valued at $0.429 per
    share to Profile LLC for technology license,
    January 14, 2002                                              3,999,999            40    1,713,560            --     1,713,600
Issuance of common stock at $2.33 per share for services
    rendered, November 14, 2002                                      44,214             0      103,166            --       103,166
Issuance of common stock for cash at $2.33 per share                     --
    on November 22, 2002, net of costs of $193,386                  453,345             5      864,414            --       864,419
Options to purchase 900,000 shares issued to officers
    and directors, valued at $0.46 per share, granted
    March 19, 2002; portion vested in 2002                               --            --      124,583            --       124,583
Options to purchase 60,000 shares issued to
    consultants for services rendered, valued at $0.46 per
     share, granted March 19, 2002; portion vested in 2002               --            --       18,400            --        18,400
Warrant for 30,000 shares valued at $0.46 per share,
    issued to a director on April 19, 2002; portion
    vested in 2002                                                       --            --        4,025            --         4,025
Warrant for 1,500 shares valued at $0.33 per share issued
    for services rendered, November 11, 2002                             --            --          490            --           490
Net loss for the year ended December 31, 2002                            --            --           --    (3,613,003)   (3,613,003)
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 2002                                       10,497,558           105    3,303,578    (4,225,536)     (921,853)
Stock issued in lieu of cash for accounts payable, valued at
    $2.33 per share, February 25, 2003                                5,445            --       12,705            --        12,705
Warrants for 192,861 shares valued at $0.30 per share,
    issued to bank line of credit guarantors, March 1, 2003              --            --       57,858            --        57,858
Warrant for 21,429 shares valued at $0.30 per share,
     issued to director as a bank line of credit
    guarantor, March 1, 2003                                             --            --        6,429            --         6,429
Warrant for 92,148 shares issued for services rendered,
    valued at $2.03 per share, June 30, 2003                             --            --      187,060            --       187,060
Warrants for 225,006 shares valued at $0.36 per share,
    issued to bank line of credit guarantors, August 5, 2003             --            --       81,003            --        81,003
Warrant for 21,429 shares valued at $0.36 per share,
     issued to director as a bank line of credit
    guarantor, August 5, 2003                                            --            --        7,714            --         7,714
Warrants for 64,287 shares valued at $0.34 per share,
    issued to bank line of credit guarantors, September 11, 2003         --            --       21,858            --        21,858
Warrant for 117,858 shares valued at $0.35 per share,
    issued to bank line of credit guarantor, December 22, 2003           --            --       41,250            --        41,250
Options to purchase 900,000 shares issued to officers
    and directors, valued at $0.46 per share, granted
    March 19, 2002; portion vested in 2003                               --            --      133,400            --       133,400
Options to purchase 60,000 shares issued to
    consultants for services rendered, valued at $0.46 per
     share, granted March 19, 2002; portion vested in 2003               --            --        6,900            --         6,900
Warrant for 30,000 shares valued at $0.46 per share,
    issued to a director on April 19, 2002; portion
    vested in 2003                                                       --            --        6,900            --         6,900
Net loss for the year ended December 31, 2003                            --            --           --    (1,632,457)   (1,632,457)
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 2003                                       10,503,003           105    3,866,655    (5,857,993)   (1,991,233)
Options to purchase 30,000 shares issued to a consultant
    valued at $0.67 per share, granted February 1, 2004,
    portion vested in 2004                                               --            --       10,100            --        10,100
Options to purchase 450,000 shares issued to officer
    valued at $0.67 per share, granted February 1, 2004;
    portion vested in 2004                                               --            --       84,173            --        84,173
Repurchase of 900,000 shares pursuant to the exercise of
    dissenters' rights at time of merger, April 5, 2004
    in connection with $750,000 note payable                       (900,000)           (9)    (749,991)           --      (750,000)
Issuance of shares to shareholders of Global Internet
    Communications, Inc. pursuant to merger April 5, 2004         2,097,000            21          (21)           --            --
Issuance of common stock for cash at $2.00 per share
    on April 5, 2004, net of costs of $125,259                    1,980,000            20    3,834,721            --     3,834,741
Cost associated with Global Internet Communications, Inc.
    reverse merger effective April 5, 2004                               --            --     (162,556)           --      (162,556)
Effect of anti-dilution and price-protection provisions of
    warrants issued to loan guarantors in 2003, triggered by
    April 5, 2004 closing of private placement; shares subject
    to warrants increased by 375,012; exercise price reduced
    from $2.00 to $1.67 per share (see note 9)                           --            --      320,974            --       320,974
Issuance of common stock for cash at $2.00 per share
    on April 27, 2004, net of costs of $1,582                        25,000            --       48,418            --        48,418
Issuance of common stock valued at $2.00 per share for accrued
    expenses in lieu of cash, May 21, 2004                           38,613            --       77,225            --        77,225
Issuance of common stock for cash at $2.00 per share
    on June 1, 2004, net of costs of $3,796                          60,000             1      116,203            --       116,204
Issuance of common stock for cash at $2.00 per share
    on July 13, 2004, net of costs of $6,326                        100,000             1      193,673            --       193,674
Warrants for 100,000 shares issued for services rendered
    valued at $1.15 per share on July 19, 2004                           --            --      114,914            --       114,914
Options to purchase 200,000 shares issued to officer
    valued at $1.50 per share, granted July 21, 2004;
    portion vested in 2004                                               --            --       41,670            --        41,670
Issuance of common stock for cash at $2.00 per share
    on July 30, 2004, net of costs of $2,530                         40,000            --       77,470            --        77,470
Issuance of common stock valued at $2.00 per share for
    accrued interest in lieu of cash, October 12, 2004               44,441             1       88,881            --        88,882
Warrants for 200,000 shares issued for services rendered
    valued at $0.83 per share on December 2, 2004                        --            --      166,172            --       166,172
Options to purchase 900,000 shares issued to officers
    and directors, valued at $0.46 per share, granted
    March 19, 2002; portion vested in 2004                               --            --       82,452            --        82,452
Warrant for 30,000 shares valued at $0.46 per share,
    issued to a director on April 19, 2002; portion
    vested in 2004                                                       --            --        1,150            --         1,150
Net loss for the year ended December 31, 2004                            --            --           --    (2,318,896)   (2,318,896)
                                                                -----------  ------------ ------------  ------------  ------------
Balance, December 31, 2004                                       13,988,057  $        140 $  8,212,283  $ (8,176,889) $     35,534
                                                                ===========  ============ ============  ============  ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       36
<PAGE>

                            ProUroCare Medical Inc.
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                        Cumulative
                                                                                                        period from
                                                                                                         August 17,
                                                                         Year ended      Year ended    1999 (inception)
                                                                        December 31,    December 31,   to December 31,
                                                                            2004            2003            2004
                                                                        ------------    ------------    ------------
<S>                                                                     <C>             <C>             <C>
Cash flows from operating activities:
     Net loss                                                           $ (2,318,896)   $ (1,632,457)   $ (8,176,889)
     Adjustments to reconcile net loss to net cash
         used in operating activities:
            Depreciation and amortization                                      3,462           2,832           8,210
            Stock-based compensation                                         219,545         147,200         513,753
            Issuance of common stock for services rendered                        --              --         103,166
            Warrants issued for services                                     281,086         187,060         468,636
            Warrant issued for debt guarantees                               320,974              --         320,974
            Amortization of debt issuance costs                               72,594         143,518         216,112
            License rights expensed as research and development,
                paid by issuance of common stock to CS Medical
                Technologies, LLC                                                 --              --         475,000
            License rights expensed as research and development,
                paid by issuance of common stock to Profile, LLC                  --              --       1,713,600
            Changes in operating assets and liabilities:
                Deposits                                                    (170,000)         37,375        (200,000)
                Other current assets                                         (12,457)         (3,726)        (19,336)
                Other assets                                                   7,590              --              --
                Accounts payable                                            (331,339)         43,392         455,802
                Accrued expenses                                            (153,529)        286,197         251,250
                License obligation                                           (25,000)             --              --
                                                                        ------------    ------------    ------------
                    Net cash used in operating activities                 (2,105,970)       (788,609)     (3,869,722)
                                                                        ------------    ------------    ------------
Cash flows from investing activities:
     Purchases of equipment and furniture                                     (9,854)             --         (20,797)
                                                                        ------------    ------------    ------------
                                Net cash used in investing activities         (9,854)             --         (20,797)
                                                                        ------------    ------------    ------------
Cash flows from financing activities:
     Net advances from (payments to) line of credit, bank                   (860,000)        860,000              --
     Payment for recession of common stock                                  (100,000)             --        (100,000)
     Payment of notes payable                                               (689,272)             --        (689,272)
     Net advances from (payments to) Clinical Network, Inc.                  (24,301)        (77,419)          8,943
     Net advances from (payments to) CS Medical Technologies, LLC            (26,000)             --              --
     Cost of reverse merger                                                 (162,556)             --        (162,556)
     Net proceeds from issuance of common stock                            4,270,507              --       5,134,926
                                                                        ------------    ------------    ------------
                    Net cash provided by financing activities              2,408,378         782,581       4,192,041
                                                                        ------------    ------------    ------------
                    Net increase (decrease) in cash                          292,554          (6,028)        301,522
Cash, beginning of the period                                                  8,968          14,996              --
                                                                        ------------    ------------    ------------
Cash, end of the period                                                 $    301,522    $      8,968    $    301,522
                                                                        ============    ============    ============
Supplemental cash flow information:
     Cash paid for interest                                             $     87,691    $     39,585    $    127,276
     Non-cash investing and financing activities:
         Assumption of liabilities in the Profile, LLC transaction      $         --    $         --    $     25,000
         Warrants issued for debt issuance costs                                  --         216,112         216,112
         Issuance of note payable for redemption of common stock             650,000              --         650,000
         Common stock issued in lieu of cash for
            accounts payable and accrued interest                            166,107          12,705         178,812
         Conversion of accounts payable to note payable                      241,613              --         241,613
</TABLE>

See accompanying notes to consolidated financial statements.


                                       37
<PAGE>

                             ProUroCare Medical Inc.
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements

                 December 31, 2004 and 2003 and the period from
                August 17, 1999 (inception) to December 31, 2004

(1)   Description of Business and Summary of Significant Accounting Policies

      (a)   Description of Business, Development Stage Activities, and Basis of
            Presentation

            ProUroCare Medical Inc. ("ProUroCare" or the "Company", which term
            includes reference to ProUroCare, Inc., the Company's wholly owned
            subsidiary) is a development stage company that is developing
            diagnostic equipment and treatments for enlarged prostates and other
            male urological conditions. The Company's developmental activities
            have included the acquisition of several technology licenses, the
            development of a strategic business plan and a senior management
            team, product development, and fund raising activities.

            From its incorporation in August 1999, the Company had no
            activities. In July 2001, the Company issued 3,000,000 shares of
            common stock to Clinical Network, Inc. (CNI) and Clinical Network
            LLC (CN LLC), a related party to CNI. Also in July 2001 the Company
            issued 3,000,000 shares of common stock to CS Medical Technologies,
            LLC (CSM) in exchange for a license to certain microwave technology.
            In January 2002, the Company issued 3,999,999 shares to Profile LLC
            (Profile) in exchange for a license to certain imaging technology.

            Pursuant to an Agreement and Plan of Merger and Reorganization dated
            as of April 2, 2004 by and among the Company, Global Internet
            Communications, Inc.("Global"), and GIC Acquisition Corp., a
            Minnesota corporation and wholly owned subsidiary of Global
            ("Acquisition Co."), Acquisition Co. merged with and into the
            Company, with ProUroCare remaining as the surviving company and a
            wholly owned operating subsidiary of Global (the "Merger"). The
            Merger was effective as of April 5, 2004. On April 26, 2004, the
            Company changed its name to ProUroCare Medical Inc., pursuant to a
            short-form merger with a wholly owned subsidiary formed for the sole
            purpose of effecting the name change, as allowed under Nevada
            corporate law.

            In connection with the Merger, Global completed a private placement
            offering of 2,205,000 shares of common stock pursuant to Rule 506
            promulgated under the Securities Act of 1933, as amended.

            The accompanying consolidated financial statements include the
            accounts of the Company and its wholly owned subsidiary. Significant
            intercompany accounts and transactions have been eliminated in
            consolidation.

      (b)   Restatement of Share Data

            At the effective time of the Merger, the legal existence of
            Acquisition Co. ceased, and all 3,501,001 shares of common stock of
            ProUroCare that were outstanding immediately prior to the Merger and
            held by ProUroCare shareholders were cancelled, with one share of
            ProUroCare common stock issued to Global. Simultaneously, the
            non-dissenting former shareholders of 3,201,001 shares of ProUroCare
            common stock received an aggregate of 9,603,003 shares of common
            stock of Global.

            All share data has been restated to give effect to the retroactive
            application merger under which each ProUroCare share was converted
            into three shares of Global.


                                       38
<PAGE>

      (c)   Cash

            The Company maintains its cash in high quality financial
            institutions. The balances, at times, may exceed federally insured
            limits.

      (d)   Equipment and Furniture

            Equipment and furniture are stated at cost and depreciated using the
            straight-line method over the estimated useful lives ranging from
            three to seven years. Maintenance, repairs, and minor renewals are
            expensed as incurred.

      (e)   License Agreements

            The costs associated with acquisition of licenses for technology are
            recognized at the fair value of stock and cash used as
            consideration. Fair value of stock for such transactions is
            determined by an independent valuation firm using forecasts of
            discounted cash flows provided by the Company. The annual discount
            rates used in these calculations reflect the high commercial risk of
            a development stage business and are typically within the range of
            40-60%.

            Costs of acquiring technology which has no alternative future uses
            are expensed immediately as research and development expense.

      (f)   Impairment of Long-lived Assets and Long-lived Assets to be Disposed
            Of

            The Company reviews long-lived assets and certain identifiable
            intangibles for impairment whenever events or changes in
            circumstances indicate that the carrying amount of an asset may not
            be recoverable. Recoverability of assets to be held and used is
            measured by a comparison of the carrying amount of an asset to
            future undiscounted net cash flows expected to be generated by the
            asset. If such assets are considered to be impaired, the impairment
            to be recognized is measured by the amount by which the carrying
            amount of the assets exceeds the fair value of the assets. Assets to
            be disposed of are reported at the lower of the carrying amount or
            fair value less costs to sell.

            During the years ended December 31, 2004 and 2003, and the period
            from August 17, 1999 (inception) to December 31, 2004, the Company
            did not record any impairment charge.

      (g)   Stock-Based Compensation

            Effective August 17, 1999, the Company adopted the fair value
            recognition provisions of FASB Statement of Financial Accounting
            Standards (SFAS) No. 123 (SFAS 123), "Accounting for Stock-Based
            Compensation," to record option and warrant issuances, including
            stock-based employee compensation. The Company's policy is to grant
            stock options at fair value at the date of grant, and to record the
            expense at fair value as required by SFAS No. 123, using the
            Black-Scholes pricing model.

            At December 31, 2004, the Company had two stock-based employee
            compensation plans, which are described more fully in Note 9.
            Pursuant to SFAS 123, which was amended by SFAS 148, the stock-based
            employee and non-employee compensation cost related to stock options
            was $218,395, $140,300, and $486,728 for the years ended December
            31, 2004 and 2003 and the period from August 17, 1999 (inception) to
            December 31, 2004, respectively. Stock-based compensation cost
            related to warrants issued to a director (in lieu of stock options)
            was $1,150, $6,900, and $12,075 for the years ended December 31,
            2004 and 2003 and the period from August 17, 1999 (inception) to
            December 31, 2004, respectively.

            The estimated fair value of each option grant is estimated on the
            date of grant using the Black Scholes pricing model with the
            following weighted-average assumptions used for options granted
            during the year ended December 31, 2004: dividend yield 0.0%,
            expected volatility of 42.06%; risk-free interest rates of 4.19%,
            and expected lives of ten years. No options were granted in 2003.


                                       39
<PAGE>

      (h)   Financial Instruments

            The carrying amounts for all financial instruments approximates fair
            value. The carrying amounts for cash, accounts payable and accrued
            liabilities approximate fair value because of the short maturity of
            these instruments. The fair value of line of credit approximated the
            carrying amount based upon the Company's expected borrowing rate for
            debt with similar remaining maturities and comparable risk.

      (i)   Research and Development

            Expenditures for research and product development costs are expensed
            as incurred.

      (j)   Debt Issuance Costs

            Debt issuance costs are amortized over the life of the loan using
            the straight-line method, which approximates the interest method.

      (k)   Income Taxes

            The Company utilizes the liability method of accounting for income
            taxes. Under this method, deferred tax assets and liabilities are
            recognized for the expected future tax consequences attributable to
            temporary differences between the financial statement and income tax
            reporting bases of assets and liabilities. Deferred tax assets are
            reduced by a valuation allowance to the extent that realization is
            not assured.

      (l)   Accounting Estimates

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make 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 and the reported amounts of expenses during the reporting
            periods. The Company's significant estimates include the
            determination of the fair value of its common stock, contingent
            liability expense, and the valuation of license rights. Actual
            results could differ from those estimates.

      (m)   Comparative Figures

            Certain comparative figures have been reclassified to conform to the
            financial statement presentation adopted in the current year.

      (n)   Net Loss Per Common Share

            Basic and diluted loss per common share is computed by dividing net
            loss by the weighted-average number of common shares outstanding for
            the reporting period. Dilutive common-equivalent shares have not
            been included in the computation of diluted net loss per share
            because their inclusion would be antidilutive. Antidilutive common
            equivalent shares issuable based on future exercise of stock options
            or warrants could potentially dilute basic loss per common share in
            subsequent years. All options and warrants outstanding were
            antidilutive for the years ended December 31, 2004 and 2003 and the
            period from August 17, 1999 (inception) to December 31, 2004.

      (o)   Recently Issued Accounting Pronouncements

            In November 2004, FASB issued SFAS No. 151 "Inventory Costs" amends
            the guidance in ARB No. 43, Chapter 4 "Inventory Pricing," to
            clarify the accounting for abnormal amounts of idle facility
            expense, freight, handling costs, and wasted material (spoilage).
            Paragraph 5 pf ARB 43, Chapter 4, previously stated that under some
            circumstances, items such as idle facility expense, excessive
            spoilage, double freight, and rehandling costs may be so abnormal as


                                       40
<PAGE>

            to require treatment as current period charges." SFAS No. 151
            requires that those items be recognized as current-period charges
            regardless of whether they meet the criterion of "so abnormal." In
            addition, SFAS No, 151 requires that allocation of fixed production
            overheads to the costs of conversion be based on the normal capacity
            of the production facilities. SFAS No. 151 shall be effective for
            inventory costs incurred during fiscal years beginning after June
            15, 2005. Earlier application is permitted for inventory costs
            incurred during fiscal years beginning after the date SFAS No. 151
            was issued. SFAS No. 151 shall be applied prospectively. The Company
            does not expect the adoption of SFAS No. 151 to have a material
            effect on its consolidated financial statements.

            In December 2004, FASB issued SFAS No. 153 "Exchanges of Nonmonetary
            Assets" amends APB Opinion No. 29, "Accounting for Nonmonetary
            Transactions." APB No. 29 is based on the principle that exchanges
            of nonmonetary assets should be measured based on the fair value of
            the assets exchanged. The guidance in that Opinion, however,
            included certain exceptions to that principle. SFAS No. 153 amends
            APB No. 29 to eliminate the exception for nonmonetary exchanges of
            similar productive assets and replaces it with a general exception
            for exchanges of nonmonetary assets that do not have commercial
            substance. A nonmonetary exchange has commercial substance if the
            future cash flows of the entity are expected to change significantly
            as a result of the exchange. SFAS No. 153 shall be effective for
            nonmonetary asset exchanges occurring in fiscal periods beginning
            after June 15, 2005. Earlier application is permitted for
            nonmonetary asset exchanges occurring in fiscal periods beginning
            after the date SFAS No. 153 was issued. SFAS No. 153 shall be
            applied prospectively. The Company does not expect the adoption of
            SFAS No. 153 to have a material effect on its consolidated financial
            statements.

            In December 2004, FASB issued SFAS No. 123 (revised 2004),
            "Share-Based Payment", that focuses primarily on accounting for
            transactions in which an entity obtains employee services in
            share-based payment transactions. This statement replaces SFAS No.
            123, "Accounting for Stock-Based Compensation", and supersedes APB
            Opinion No. 25, "Accounting for Stock Issued to Employees." The
            revised SFAS No. 123 requires publicly held companies to expense the
            fair value of employee stock options and similar awards, which has
            been the Company's policy to date. The Company does not expect the
            adoption of SFAS No. 123, as revised, to have a material effect on
            its consolidated financial statements, since the Company has
            previously adopted SFAS No. 123.

      (2)   Going Concern

            The Company incurred a net loss of $2,318,896, $1,632,457, and
            $8,176,889 and negative cash flow from operating activities of
            $2,105,970, $788,609, and $3,869,722 for the years ended December
            31, 2004 and 2003 and for the cumulative period from August 17, 1999
            (inception) to December 31, 2004, respectively. From July 2001
            through January 2002, the Company entered into several license
            arrangements to develop the licensed technologies into diagnostic
            equipment and treatments for enlarged prostates and other male
            urological conditions. The Company anticipates significantly
            increasing its expenditures for technology development activities
            and building the Company's infrastructure over the near term.
            Implementation of the Company's business plan is dependent upon the
            successful transition of its product development program into a
            viable product with market penetration and profitability and
            obtaining sufficient capital to fund these developmental activities.

            The Company sold 2,205,000 shares of its Common Stock at $2.00 per
            share in a private placement to accredited investors between April
            and July, 2004 for gross proceeds of $4,410,000.

            In October 2004, the Company reached an agreement with one of its
            research and development contractors, Minnetronix Inc., regarding
            payment of amounts due to Minnetronix for past and future work. As
            part of this agreement, the Company issued an unsecured promissory
            note for the remaining balance of $241,613. The promissory note is
            payable in 12 monthly installments beginning November 1, 2004, and
            bears interest at a 6% annual rate. In addition, the Company paid
            $200,000 to Minnetronix as a deposit on future development work, to
            be applied to the last mutually agreed upon project expenses.


                                       41
<PAGE>

            As of the date of this report, the Company cash has been depleted.
            The Company plans to raise sufficient capital through bank or equity
            financing to allow it to complete the development of its products,
            establish a sales and marketing capability, manufacture its products
            and enter the market. Management estimates that to do so will
            require between $5 million and $10 million. Management has initiated
            discussions with various funding sources (investment bankers,
            investment funds and commercial bankers) to secure the additional
            capital. No committed sources of capital, such as bank lines of
            credit, currently exist.

            Due to the amount of time it will take to raise this capital, it
            will be necessary for the Company to identify guarantors in order to
            establish a secured line of credit of up to $2.5 million with its
            commercial bank to provide short-term capital for operations until
            it finalizes the required financing. While arrangements have made
            with the Company's bank to provide such capital if qualified
            guarantors are identified, and discussions have been initiated with
            various potential loan guarantors, no guarantors have yet committed
            to providing their guarantees.

            The Company cannot be certain that any required additional financing
            will be available on terms favorable to it. If additional funds are
            raised by the issuance of our equity securities, such as through the
            issuance of stock or the issuance and exercise of warrants, then
            existing stockholders will experience dilution of their ownership
            interest. If additional funds are raised by the issuance of debt or
            other equity instruments, the Company may become subject to certain
            operational limitations, and issuance of such securities may have
            rights senior to those of the then existing holders of common stock.
            If adequate funds are not available or not available on acceptable
            terms, the Company may be unable to fund expansion, develop or
            enhance products. If the Company is forced to slow its development
            programs, or put them on hold, it could delay market entry.

      (3)   Equipment and Furniture

            Equipment and furniture consisted of the following at December 31:

                                          2004            2003
                                      ------------    ------------
      Computer equipment              $     16,518    $      6,664
      Furniture                              4,279           4,279
                                      ------------    ------------
                                            20,797          10,943
      Less accumulated depreciation         (8,210)         (4,748)
                                      ------------    ------------
                                      $     12,587    $      6,195
                                      ============    ============


       Depreciation expense was $3,462, $2,832, and $8,210 for the years ended
       December 31, 2004 and 2003 and the period from August 17, 1999
       (inception) to December 31, 2004, respectively.

(4)    Accrued Expenses

       Accrued expenses consisted of the following at December 31:

                                      2004           2003
                                  ------------   ------------
      Contingent liability        $     75,000   $         --
      Directors' fees                   65,834         50,000
      Legal fees                         7,736          4,615
      Payroll and related taxes          2,936        166,436
      Accrued interest                   1,324         86,166
      Development costs                  2,195         77,225
      Other                             19,000         20,337
                                  ------------   ------------
                                  $    174,025   $    404,779
                                  ============   ============


                                       42
<PAGE>

(5)   License Agreements

      CS Medical

      In July 2001, the Company licensed certain microwave technology from CS
      Medical Technologies, LLC (CSM). The worldwide, exclusive license is
      limited to the field of use of the treatment of enlarged prostates,
      prostate cancer, and other urological disorders, and terminates with the
      expiration of the last to expire patents that are the subject of the
      license and requires defined royalty payments.

      As consideration for the license, the Company exchanged 3,000,000 shares
      of its common stock valued at $475,000 by Gerald Gray & Associates, an
      independent appraiser. This consideration was expensed as research and
      development.

      Under the terms of the license agreement, royalty payments are to be made
      quarterly in an amount equal to one-half percent (0.5%) of the amount that
      net sales of the Company's products that incorporate the licensed
      technology exceed $500,000 in that quarter. In the absence of revenues, we
      are not obligated to make any royalty payments to CSM.

      Profile LLC

      In January 2002, Profile LLC (Profile) granted the Company an exclusive
      license for prostate imaging systems in exchange for 3,230,769 shares of
      the Company's common stock and the assumption of $25,000 of Profile net
      liabilities. The license requires royalties ranging from 1.05% to 3.05% of
      defined revenues. The Profile license required the Company to meet certain
      financial covenants. If these covenants were not met by December 31, 2002,
      either party had the right to terminate the license. In the event of
      termination by Profile, all the Company shares issued would be returned to
      the Company. If the Company terminated the license, then only 50% of the
      shares issued would have to be returned. On March 22, 2002, in exchange
      for eliminating these covenants the Company issued Profile an additional
      769,230 shares of its common stock. The field of use for the exclusive
      license is limited to the diagnosis and treatment of enlarged prostate,
      prostate cancer, or other conditions of or disorders of the prostate which
      may be diagnosed, imaged, or treated using any diagnostic or imaging
      process. The license will terminate upon the later of the date of
      expiration of the last to expire patent included in the licensed
      technology or the date that the Company permanently ceases the sale of
      devises using the technology.

      The 3,999,999 shares of common stock were valued at $1,713,600 by Gerald
      Gray & Associates, an independent appraiser. The aggregated stock and cash
      consideration for the Profile license was $1,738,600, which was expensed
      as research and development.

      RPI Agreement

      In July 2001, the Company entered into a license agreement with Rensselaer
      Polytechnic Institute (RPI) to allow the Company to use Electrical
      Impedance Tomography technology developed and patented by RPI, on a
      worldwide, exclusive basis for the diagnosis and/or treatment of
      urological conditions. The license period continues until expiring of RPI
      patents, or on the fifth anniversary of the agreement if the Company has
      failed to develop a marketable product or process by that point.

      Consideration for the license was $50,000, payable in two $25,000
      installments. The first installment was paid in August 2002 and the second
      installment was due December 31, 2003. Royalties are payable to RPI on the
      basis of 3% of the net sales of the therapeutic product if the primary
      function of the device is tomography or 1% of net sales if the primary
      function of the final system is not tomography. Beginning in 2006, RPI is
      entitled to receive a minimum annual royalty payment of $20,000 to
      maintain the license.

      The total consideration has been recognized as of the date of the
      agreement, with outstanding payments at the balance sheet dates included
      under the caption of license obligation. The license was expensed as
      research and development in fiscal 2001.


                                       43
<PAGE>

(6)   Commitments and Contingencies

      (a)   Lease

            On July 1, 2002, the Company entered into a sub-lease agreement for
            office space, which terminated on October 31, 2003. During this
            rental period, the Company sublet a portion of this office space on
            a month-to-month basis to an unaffiliated company owned by the
            Company's CEO. Beginning November 1, 2003 this unaffiliated company
            entered into a lease for the same office space, and rents a portion
            of the space to the Company on a month-to-month basis.

            Rent expense for the years ended December 31, 2004, and 2003 and the
            period from August 17, 1999 (inception) to December 31, 2004 was
            $43,538, $38,053, and $110,985, respectively.

      (b)   Employment Agreements

            ProUroCare Inc. ("PUC"), the Company's wholly owned subsidiary, is a
            party to employment agreements with its Chairman and Chief Executive
            Officer, its President and Chief Operating Officer, and its Chief
            Financial Officer. The agreements have terms that continue until
            December 2006, January 2007, and July 2007, respectively, thereafter
            renewing for successive two-year terms. Each of these agreements
            provides for a minimum annual salary, cash incentive payments,
            options to purchase shares of common stock that vest over time, and
            a non-compete clause applicable for the period ending one year from
            termination.

            These agreements also provide that, upon termination without cause
            (or a change of employment that the employee elects to treat as a
            termination of employment), the employee will receive as severance
            six months of base salary plus four months of base salary for each
            year of service (up to a maximum of 24 months of base salary), plus
            the prorated average of any bonus or incentive compensation paid
            over the previous two years. Additionally, all unvested stock
            options then held by the employee will immediately vest with a
            one-year period for exercise.

            Under each of the agreements, in the event of a change in control
            resulting in a termination of employment, change of location, or
            decrease in the level of responsibility of the executive (any of
            which occur within two years of a change in control), the Company
            shall compensate the executive as if he were terminated without
            cause, as described above. See Note 14, "Subsequent Events".

      (c)   Legal proceedings

            The Company is involved in legal proceedings in the ordinary course
            of business.

            On April 2, 2004, the former President and Chief Operating Officer
            of ProUroCare Inc., filed a lawsuit against ProUroCare Inc. and the
            Company relating to his separation of employment with ProUroCare
            Inc. prior to the Merger. The former President and Chief Operating
            Officer was a party to an employment agreement with ProUroCare Inc.
            dated January 1, 2002, and alleges that the Company failed to make
            payments owed to him under the employment agreement in October 2003.
            He claims that this action resulted in a termination without cause
            and that he is entitled to severance payments under the contract.
            The Company has recorded a reserve provision of $75,000 as a
            contingent liability in connection with this lawsuit.

            The complainant seeks approximately $229,000 in monetary damages,
            injunctive relief to compel the Company to place such funds into an


                                       44
<PAGE>

            escrow account, fines under Minnesota law (in an unspecified
            amount), plus payment of litigation costs and attorneys' fees. The
            court did not grant the injunctive relief. The Company disputes
            these claims and believes they are without merit.

            The Company has asked the court for summary judgment and dismissal
            of the case, and expects a court ruling in this regard in February
            2005. The parties are tentatively scheduled to engage in
            court-ordered mediation in March, 2005 in an attempt to resolve the
            case. If summary judgment is not granted or the parties are still
            unable to resolve the dispute through mediation, the court has set a
            window for a trial date from mid-May to mid-June, 2005.

(7)   Income Taxes

      The Company has generated net operating loss carryforwards of
      approximately $1,690,000 which, if not used, will begin to expire in 2021.
      Federal tax laws impose significant restrictions on the utilization of net
      operating loss carryforwards in the event of a change in ownership of the
      Company that constitutes an "ownership change," as defined by the Internal
      Revenue Code, Section 382. While the Company has not performed a formal
      Internal Revenue Code Section 382 study, the Company believes that the
      Merger and Private Placement transactions in April, 2004, together with
      possible future changes during the subsequent 36-month period, may
      constitute a change in ownership that could subject the Company's use of
      its net operating loss carryforward to the above limitations. Based on the
      Company's estimates, this limitation would apply to approximately $1.2
      million of the $1,690,000 net operating loss carryforward.

      The Company has recorded a full valuation allowance against its deferred
      tax asset due to the uncertainty of realizing the related benefits as
      follows:

                                             2004            2003
                                         ------------    ------------
      Net operating loss carryforwards   $    650,000    $    461,000
      Capitalized start up costs            1,186,000         687,000
      Other                                   434,000         231,000
      Less: valuation allowance            (2,270,000)     (1,379,000)
                                         ------------    ------------
      Net deferred tax assets            $          0    $          0
                                         ============    ============


      The change in the valuation allowance was $891,000, $626,000, and
      $2,270,000 for the years ended December 31, 2004 and 2003 and the period
      from August 17, 1999 (inception) to December 31, 2004, respectively.

      Reconciliation between the federal statutory rate and the effective tax
      rated for the years ended December 31, 2004 and 2003 and the period from
      August 17, 1999 (inception) to December 31, 2004 is as follows:

<TABLE>
<CAPTION>
                                                                              Period from
                                                                            August 17, 1999
                                                                             (inception) to
                                                                              December 31,
                                                 2004             2003             2004
                                            ------------     ------------     ------------
      <S>                                          <C>              <C>              <C>
      Federal statutory tax rate                   (34.0)%          (34.0)%          (34.0)%
      State taxes, net of federal benefit           (4.5)            (4.5)            (4.5)
      Change in valuation allowance                 38.5             38.5             38.5
                                            ------------     ------------     ------------
      Effective tax rate                             0.0%             0.0%             0.0%
                                            ============     ============     ============
</TABLE>

(8)   Line of Credit

      On January 24, 2003 the Company obtained a $500,000 line of credit from a
      financial institution. The line of credit was collateralized by the
      Company's business assets and severally guaranteed by five individuals,
      including a director of the Company. In exchange for the personal
      guarantees, the Company issued to each guarantor a warrant to purchase one
      share of the Company's Common Stock at $2.33 dollars per share for every
      $2.33 guaranteed. A total of 214,290 shares are subject to these warrants,
      including 21,429 shares subject to the warrant issued to the Company
      director. The value of the warrants based on the Black-Scholes pricing
      model of $64,287 was expensed in 2003.


                                       45
<PAGE>

      In August 2003 the Company replaced the $500,000 credit line with a
      $1,000,000 line of credit from the same financial institution. The line of
      credit is collateralized by the Company's business assets and severally
      guaranteed by nine individuals, including the original five individuals
      noted above. In exchange for the personal guarantees, the Company issued
      to each guarantor a warrant to purchase one share of the Company's Common
      Stock at $2.33 dollars per share for every $2.33 guaranteed. A total of
      428,580 shares are subject to these warrants, including 21,429 shares
      subject to the warrant issued to the Company director. The value of the
      warrants based on the Black-Scholes pricing model of $151,825 was
      amortized over the life of the bank line of credit; $72,594 and $79,231
      was recorded as interest expense in 2004 and 2003, respectively.

      The $1,000,000 line of credit was repaid in full on April 5, 2004 and
      simultaneously terminated.

      There can be no assurances that the Company will be able to close
      additional rounds of financing or obtain additional line of credit
      financing to fund developmental activities.

(9)   Note Payable

      In October 2004, the Company reached an agreement with one of its research
      and development contractors, Minnetronix Inc., regarding payment of
      amounts due to Minnetronix for past and future work. As part of this
      agreement, the Company issued an unsecured promissory note for the
      remaining balance of $241,613. The promissory note is payable in 12
      monthly installments beginning November 1, 2004, and bears interest at a
      6% annual rate. The balance at December 31, 2004 was $202,311. Interest
      expense during the year ended December 31, 2004 was $3,330. In addition,
      the Company paid $200,000 to Minnetronix as a deposit on future
      development work, to be applied to the last mutually agreed upon project
      expenses.

(10)  Shareholders' Equity

      (a)   Common Stock and Warrants issued related to 2002 Private Placement

            The Company issued 3,000,000 shares to CNI and CNI LLC in July 2001.
            In connection with the Company's license agreements with CSM and
            Profile, the Company issued 3,000,000 and 3,999,999 shares of common
            stock in 2001 and 2002, respectively.

            In connection with a private placement to accredited investors, the
            Company issued 453,345 shares of common stock in 2002. In addition,
            the Company issued warrants to purchase 45,348 shares of common
            stock to three individuals related to services rendered in
            connection with the private placement. These warrants are
            exercisable through November 2006 at $2.33 per share.

      (b)   Common Stock and Warrants issued related to Merger and 2004 Private
            Placement

            Merger Agreement

            Pursuant to an Agreement and Plan of Merger and Reorganization dated
            as of April 2, 2004 (the "Merger Agreement"), by and among the
            ProUroCare, Inc., Global Internet Communications ("Global"), and GIC
            Acquisition Corp., a Minnesota corporation and wholly owned
            subsidiary of Global ("Acquisition Co."), Acquisition Co. merged
            with and into the ProUroCare, Inc., with ProUroCare remaining as the
            surviving company and a wholly owned operating subsidiary of Global
            (such transaction is hereinafter referred to as the "Merger"). The
            Merger was effective as of April 5, 2004, when articles of merger
            were filed with the Minnesota Secretary of State. On April 5, 2004,
            Global announced the effectiveness of the Merger through a press
            release and subsequent Current Report on Form 8-K, filed on April
            20, 2004.

            Prior to the Merger, one ProUroCare shareholder, Profile, L.L.C.
            ("Profile") had dissented from the Merger proposal as the registered
            holder of securities beneficially owned by certain shareholders
            holding, in the aggregate, 308,465 (pre-merger) shares of
            ProUroCare's common stock. As described below, Profile and
            ProUroCare entered into an agreement relative to these dissenting
            shareholders.


                                       46
<PAGE>

            Concurrent with the consummation of the Merger, ProUroCare delivered
            definitive documents related, among other things, to the purchase of
            300,000 (pre-conversion) shares of ProUroCare common stock from the
            dissenting shareholders for $750,000; and shareholders beneficially
            holding the remaining 8,465 (pre-conversion) shares of ProUroCare
            common stock withdrew their dissents from the Merger. These
            redemption transactions had the result of decreasing the aggregate
            number of shares of ProUroCare common stock outstanding immediately
            prior to the Merger, and thereby reduced the anticipated total
            number of shares of common stock of Global issued and outstanding
            immediately after the Merger.

            At the effective time of the Merger, the legal existence of
            Acquisition Co. ceased, and all 3,501,001 (pre-conversion) shares of
            common stock of ProUroCare that were outstanding immediately prior
            to the Merger and held by ProUroCare shareholders were cancelled,
            with one share of ProUroCare common stock issued to Global.
            Simultaneously, the former shareholders of ProUroCare common stock
            received an aggregate of 9,603,003 shares of common stock of Global,
            representing approximately 82.1% of Global's common stock
            outstanding immediately after the Merger. At the same time, Global
            purchased 300,000 of the 308,465 (pre-conversion) shares with
            respect to which dissenters' rights were exercised, for an aggregate
            purchase price of $750,000.

            Global was a non-operating public shell company at the time of the
            Merger. Accordingly, the Merger transaction was recorded as a
            recapitalization rather than a business combination. The assets and
            liabilities resulting from the reverse acquisition were the former
            ProUroCare assets and liabilities (at historical cost) plus a
            $13,500 accrued Global liability (assumed at historical cost). There
            were no other assets or liabilities on Global's books at the time of
            the Merger.

            The Company recorded costs associated with the Merger totaling
            $162,556 during 2004.

            Settlement of Dispute with Profile L.L.C.

            On July 31, 2003, the Company received a notice from Profile, the
            licensor under a license agreement (the "Profile License Agreement")
            pursuant to which Profile licenses to the Company certain essential
            intellectual property needed to develop, manufacture and sell its
            ProUroScan product, that it believed the Company had breached
            material provisions of the license agreement. The Company believed
            that it was in compliance with the Profile License Agreement. The
            closing of the Private Placement was contingent upon the Company's
            resolving such dispute with Profile, and the closing of the Private
            Placement was a condition to the closing of the Merger.

            On March 23, 2004, the Company and Profile entered into a Letter of
            Understanding pursuant to which, effective upon April 5, 2004:

            i.    Profile withdrew its default letters and waived any existing
                  defaults under the Profile License Agreement.

            ii.   ProUroCare committed to spend at least $1.2 million of the
                  proceeds from the Private Placement on the development and
                  commercialization of the ProUroScan. The terms of the
                  settlement with Profile included no specific time limit within
                  which such requirement must be met.

            iii.  The Company agreed to purchase 300,000 of the 308,465
                  (pre-conversion) shares with respect to which dissenters'
                  rights were exercised, for an aggregate purchase of $750,000
                  of which $100,000 was paid upon the initial closing of the
                  Private Placement and the balance of $650,000 was paid
                  pursuant to the delivery of a promissory note, payable in two
                  equal quarterly installments of $325,000 commencing on July 6,
                  2004. This promissory note was collateralized by all of the
                  assets of the Company. The remaining 8,465 (pre-conversion)


                                       47
<PAGE>

                  shares with respect to which dissenters' rights were
                  originally exercised withdrew their dissents and participated
                  in the Merger. The note was paid in full in October 2004.

            iv.   Maurice Taylor, Chairman and Chief Executive Officer of the
                  Company, agreed to certain restrictions on the sale of the
                  shares of the Company owned by him until the promissory note
                  to Profile was paid in full. On October 4, 2004, the
                  promissory note was paid in full and the restrictions on the
                  sale of Mr. Taylor's securities expired.

            v.    The Company committed to provide Profile (the owner of
                  3,084,999 shares of the Company's common stock following the
                  Merger) limited piggyback registration rights in connection
                  with any underwritten public offering.

            vi.   The Company's officers and directors (except for the Company's
                  Chief Financial Officer) agreed to not dispose of their shares
                  of Company common stock for a period of 90 days following the
                  effective date of the Company's SB-2 registration statement.

            Private Placement of the Global's Common Stock.

            In connection with the Merger Agreement, Global completed a private
            placement offering of 2,205,000 shares of common stock pursuant to
            Rule 506 promulgated under the Securities Act of 1933, as amended.
            The initial closing occurred on April 5, 2004, at which time Global
            issued 1,980,000 shares at $2.00 per share, aggregating to gross
            proceeds of $3.96 million. Subsequent to April 5, Global issued an
            additional 225,000 shares at $2.00 per share, aggregating to gross
            proceeds of $450,000. Costs associated with the private placement
            (including the subsequent registration costs) were $139,493.

            As part of the Private Placement, the Company agreed to prepare and
            file a registration statement covering the resale of all of the
            shares of common stock purchased and sold in the Private Placement
            with the United States Securities and Exchange Commission (the
            "SEC") within 120 days of the initial closing of the Private
            Placement and the closing of the Merger. The registration statement
            was first filed on August 3, 2004 and was declared effective on
            January 24, 2005.

            Also as part of the Private Placement, a consultant was engaged by
            Global to provide financial-advisory services. Under terms of the
            arrangement, the consultant was paid $52,000, and issued a warrant
            for 300,000 shares of common stock upon the first closing of the
            private placement. The warrant has a three-year term and is
            exercisable at $2.00 per share.

      (c)   Common Stock Issued for Services and Liabilities

            The Company issued 5,445 common shares to a consultant in lieu of
            $12,705 cash for accounts payable in 2003. A vendor was issued
            38,613 shares of the Company's common stock in May, 2004 as payment
            for product development work valued at $77,225. In October, 2004
            another vendor was issued 44,441 shares of ProUroCare common stock
            in lieu of $88,882 cash for accounts payable.

      (d)   Stock Options

            In April 2002, the Company adopted a stock option plan covering the
            granting of options to employees and independent contractors (the
            "2002 Plan").

            Under the 2002 Plan, 1,500,000 shares of the Company's common stock
            are available for issuance. It permits the Company to grant
            incentive and nonqualified options, stock appreciation rights, stock
            awards, restricted stock awards, performance shares, and cash
            awards.


                                       48
<PAGE>

            The exercise price for all options shall be determined by the board
            of directors. The term of each stock option and period of
            exercisability will also be set by the board of directors, but will
            not exceed a period of ten years and one day from grant date or on
            conclusion of an initial public offering or merger with a public
            entity, if earlier. The agreement also includes provisions for
            anti-dilution of options.

            In March 2002, the Company granted an aggregate of 900,000 employee
            stock options to officers and directors that are exercisable at
            $1.13 per share. The officer's options vest ratably over a 36-month
            period through December 2004, while the director's options vested
            ratably over a 24-month period through April 2004. In October 2003,
            an officer resigned from the Company and 150,000 of his unvested
            options were forfeited. His remaining 210,000 options expired in
            October 2004. In February 2004 a director resigned from the Board of
            Directors, and 3,750 of his unvested options were forfeited. In
            accordance with SFAS No. 123, "Accounting for Stock-Based
            Compensation," the Company has elected to utilize the fair-value
            method of accounting for these options. An aggregate of $82,452,
            $133,400, and $340,435 of stock-based compensation related to these
            options was recognized in the years ended December 31, 2004, 2003
            and the period from August 17, 1999 to December 31, 2004,
            respectively.

            In April 2002, the Company issued a nonqualified stock option to a
            consultant to acquire 30,000 shares of common stock at $1.13 per
            share. This option vested over a 6-month period ended October 2002.
            At the same time, the Company also issued a nonqualified stock
            option to a consultant to acquire 30,000 shares of common stock at
            $1.13 per share. This option vested ratably over a two-year period
            through April 2004. An aggregate of $0, $6,900, and $25,300 of
            stock-based compensation related to these options was recognized in
            the years ended December 31, 2004 and 2003, and the period from
            August 17, 1999 (inception) to December 31, 2004, respectively.

            In February 2004, the Company issued 450,000 employee stock options
            to an officer. These options vest ratably over a three year period
            and are exercisable at $2.00 per share through February 2014. The
            options were valued at $0.67 per share using the Black-Scholes
            pricing model. The Company expensed $84,173 during the year ended
            December 31, 2004 related to these options.

            In February 2004, the Company issued 30,000 nonqualified stock
            options to a consultant in consideration of services rendered. The
            option vested as to 15,000 shares upon issuance and as to the
            remaining 15,000 shares on January 1, 2005. These options are
            exercisable at $2.00 per share through February 2014. The options
            were valued at $0.67 per share using the Black-Scholes pricing
            model. The Company expensed $10,100 during the year ended December
            31, 2004 related to these options.

            In July, 2004 the Company's board of directors passed a resolution
            adopting the ProUroCare Medical Inc. 2004 Stock Option Plan (the
            "2004 Plan"). The Company has reserved 1,500,000 shares of common
            stock for issuance under the 2004 Plan. The 2004 permits the Company
            to grant incentive and nonqualified options, stock appreciation
            rights, stock awards, restricted stock awards, performance shares,
            and cash awards. Under current IRS regulations, the Company's
            shareholders must approve the 2004 Plan on or prior to July 14, 2005
            in order for the Company to grant incentive stock options under the
            2004 Plan.

            In July 2004 the Company issued 200,000 employee stock options to an
            officer in connection with his employment agreement. These options
            vest ratably over a three year period and are exercisable at $2.50
            per share through July 2014. The options valued at $1.50 per share
            using the Black-Scholes pricing model. The Company expensed $41,670
            during the year ended December 31, 2004 related to these options.

            The exercise price for all options shall be determined by the board
            of directors. The term of each stock option and period of


                                       49
<PAGE>

            exercisability will also be set by the board of directors, but will
            not exceed a period of ten years and one day from grant date. The
            agreement also includes provisions for anti-dilution of options.

            Stock option activity is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                           Options             Weighted-Average Exercise Price
                                 ----------------------------    ---------------------------
                                     2004            2003            2004           2003
                                 ------------    ------------    ------------   ------------
      <S>                        <C>             <C>             <C>            <C>
      Outstanding, January 1          810,000         960,000    $       1.13   $       1.13
          Granted                     680,000              --            2.15             --
         Exercised                         --              --              --             --
         Forfeited                     (3,750)       (150,000)           1.13           1.13
         Expired                     (210,000)             --            1.13             --
                                 ------------    ------------    ------------   ------------
      Outstanding, December 31      1,276,250         810,000    $       1.67   $       1.13
                                 ------------    ------------    ------------   ------------

      Exercisable, December 31        751,575         615,834    $       1.34   $       1.13
                                 ============    ============    ============   ============
</TABLE>

            There were 1,276,250 options outstanding at December 31, 2004 with
            exercise prices ranging from $1.13 to $2.50 per share, and with a
            remaining weighted-average contractual life of 8.2 years.

            The Black-Scholes option-pricing model was developed for use in
            estimating the fair value of traded options, which have no vesting
            restrictions and are fully transferable. In addition, option pricing
            models require the input of highly subjective assumptions. Because
            the Company's employee and consultant stock options have
            characteristics significantly different from those of traded
            options, and because changes in the subjective input assumptions can
            materially affect the fair value estimate, the existing models may
            not necessarily provide a reliable single measure of the fair value
            of the Company's employee stock options. Using the foregoing
            assumptions, the average fair value of each option granted during
            the year ended December 31, 2004 was $0.91.

      (e)   Warrants

            In accordance with SFAS No. 123, "Accounting for Stock-Based
            Compensation," the Company has elected to utilize the fair-value
            method of accounting for warrants issued as compensation.

            Loan guarantor warrants:

            In March 2003, the Company issued warrants to purchase 192,861
            shares of common stock to four individuals in exchange for their
            guaranteeing a bank line of credit. At the same time, the Company
            issued a warrant to purchase 21,429 shares of common stock to a
            director in exchange for guaranteeing the bank line of credit. These
            warrants were exercisable through February 2008 at $2.33 per share.
            An aggregate of $64,287 of debt issuance cost related to these
            warrants was recorded in the year ended December 31, 2003.

            In August 2003, the Company issued warrants to purchase 225,006
            shares of common stock to five individuals in exchange for their
            guaranteeing a new bank line of credit. At the same time, the
            Company issued a warrant to purchase 21,429 shares of common stock
            to a director in exchange for guaranteeing the bank line of credit.
            These warrants were exercisable through August 2008 at $2.33 per
            share. An aggregate of $88,717 of debt issuance cost related to
            these warrants was recorded in the year ended December 31, 2003.

            In September and December 2003, the Company issued additional
            warrants to purchase 64,287 and 117,858 shares of common stock,
            respectively, to three individuals in exchange for their


                                       50
<PAGE>

            guaranteeing additional amounts under the existing bank line of
            credit. These warrants were exercisable through September and
            December 2008, respectively, at $2.33 per share. An aggregate of
            $63,108 of debt issuance cost related to these warrants was recorded
            in the year ended December 31, 2003.

            In total, warrants to purchase 642,870 shares of common stock were
            issued in relation to the bank line of credit guarantees, and an
            aggregate of $216,112 of debt issuance cost related to these
            warrants was recorded in the year ended December 31, 2003, which was
            amortized over the life of the bank line of credit ($72,594 and
            $143,518 during the years end December 31, 2004 and 2003,
            respectively).

            Upon the closing of the Company's Private Placement and Merger on
            April 5, 2004, certain exercise-price protections and anti-dilution
            provisions of warrants issued to guarantors of the Company's bank
            line of credit became effective. Under the terms of these
            provisions, holders of warrants to purchase 642,870 shares of the
            Company's common stock at $2.33 per share became eligible to
            purchase a total of 1,017,882 shares at $1.67 per share. These
            warrants, valued at $320,974 using the Black Scholes pricing model,
            were recorded as interest expense at the time of issuance.

            Other warrants:

            In March 2002, the Company granted a warrant to purchase 30,000
            shares of common stock to a director that is exercisable at $1.13
            per share. This warrant vested ratably over a 24-month period ending
            April 2004 until the resignation of the director on February 9,
            2004, and is exercisable through February 9, 2005. An aggregate of
            $1,150, $6,900, and $12,075 of stock-based compensation related to
            this warrant was recognized in the years ended December 31, 2004 and
            2003, and the period from August 17, 1999 (inception) to December
            31, 2004, respectively.

            In November 2002, the Company granted a warrant to purchase 1,500
            shares of common stock to a consultant for services rendered. This
            warrant is exercisable through November 2007 at $2.33 per share. An
            aggregate of $490 of stock-based compensation related to this
            warrant was recognized in the year ended December 31, 2002.

            In June 2003, under the terms of an agreement with a supplier, the
            Company issued a warrant to purchase 92,148 shares of common stock.
            This warrant is exercisable through June 2007 at $0.33 per share.
            The value of $187,060 related to this warrant was recognized in the
            year ended December 31, 2003.

            Also on April 5, 2004, in connection with the Company's Private
            Placement, the Company issued a warrant to purchase 300,000 shares
            of its common stock at $2.00 per share to an agent who assisted with
            raising the financing. The warrant has a three-year term.

            Under the terms of a Research and development Agreement with Artann
            Laboratories, Inc. ("Artann") (see Note 12), Artann will receive
            additional compensation in the form of five-year warrants to
            purchase up to 500,000 shares of Company common stock, issuable upon
            certain milestone events. Warrants for the purchase of 100,000
            shares at a per-share price of $2.00 were issued upon the execution
            of the agreement. The value of these warrants computed using the
            Black-Scholes pricing model was $114,914, and was recorded as
            research expense. Warrants for the purchase of 200,000 shares at a
            per share price of $2.00 per share were issued in December 2004
            following the shipment of the ProUroScan systems under the
            Development Agreement. The value of these warrants computed using
            the Black-Scholes pricing model was $166,172, and was also recorded
            as research expense. The final 200,000 warrants will be issued in
            two equal 100,000-share installments on the one-year and two-year
            anniversaries of the Research and Development Agreement.


                                       51
<PAGE>

            Warrant activity is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                           Warrants           Weighted-Average Exercise Price
                                 ----------------------------   ---------------------------
                                     2004            2003           2004           2003
                                 ------------    ------------   ------------   ------------
      <S>                        <C>             <C>            <C>            <C>
      Outstanding, January 1          811,866          76,848   $       2.06   $       1.86
          Granted                     975,012         735,018           1.87           2.08
         Exercised                         --              --             --             --
         Forfeited                     (5,001)             --           1.13             --
                                 ------------    ------------   ------------   ------------
      Outstanding, December 31      1,781,877         811,866   $       1.72   $       2.06
                                 ============    ============   ============   ============
</TABLE>

            The weighted-average fair value of the warrants granted during the
            years ended December 31, 2004 and 2003 was $0.54 and $0.55,
            respectively.

            The fair value of stock warrants is the estimated present value at
            grant date using the Black-Scholes pricing model with the following
            weighted average assumptions:

                                                2004           2003
                                             -----------    ----------
              Risk-free interest rate             2.99%         3.03%
              Expected life                   3-5 years     4-5 years
              Expected volatility                 41.7%          0.0%
              Expected dividend rate               0.0%          0.0%


(11)  Related Parties

      A director of the Company is also a director of CSM. In April and May
      2002, CSM loaned a total of $51,000 to the Company. In June 2002 and June
      2004, the Company repaid the loan by making payments to CSM of $25,000 and
      $28,963, respectively, including interest accrued at a rate of 5%.
      Interest expense on the loan was $605, $1,300, and $2,962 for the years
      ended December 31, 2004 and 2003, and the period from August 17, 1999
      (inception) to December 31, 2004, respectively.

      The Company's former President (until October, 2003) was also President of
      ArMed, LLC, a company related to Profile prior to the January 2002 license
      transaction. In February 2003, the Company advanced $10,000 to the former
      President, of which $9,985 was outstanding at December 31, 2004 and 2003.
      The Company has recorded a reserve against the entire balance, pending
      resolution of a lawsuit filed by the former President against the Company
      (see Note 6). Two of the Company's former directors are managing members
      of Profile.

      The Company's Chairman and a Company director are also directors of CNI
      and CN LLC. From October 2001 through May 2002, CNI loaned a total of
      $123,616 to the Company. The Company accrues interest on this debt at an
      annual rate of 5%. Interest expense on the loan was $818, $2,214, and
      $8,360 for the years ended December 31, 2004 and 2003, and the period from
      August 17, 1999 (inception) to December 31, 2004, respectively. In 2002
      the Company repaid $12,950 to CNI. The Company repaid principal and
      interest totaling $27,021 and $82,747 to CNI in 2004 and 2003,
      respectively.

      In July, 2003 the Company borrowed $60,000 from the Company's Chairman and
      a director under the terms of an unsecured promissory note. The note bore
      simple interest at 6.5% per annum. In August and September 2003, the
      Company repaid the note and the accrued interest thereon.


                                       52
<PAGE>

(12)   Development Agreements

       Development Agreement.

       In July of 2004, the Company entered into a Development Agreement with
       Artann and Armen Sarvazyan under which Artann and Sarvazyan developed two
       working, pre-clinical ProUroScan systems. These systems were delivered to
       ProUroCare in late November 2004. ProUroCare paid Artann $180,000 for
       this development work, which was expensed as research and development
       cost during the year ended December 31, 2004. The Development Agreement
       also provides that Artann will provide, at no charge, consulting and
       advisory services to our to-be-contracted medical-device manufacturer in
       the development of systems for use in clinical trials. The Company
       intends to use data obtained from these clinical trials to support its
       510(k) application with the FDA.

       Research and Development Agreement.

       In July of 2004, the Company entered into a "Research and Development
       Agreement" with Artann for the development of the ProUroScan and other
       to-be-determined technologies in the urologic field. Under this
       agreement, any intellectual property and know-how resulting from the
       advancement of the ProUroScan will be assigned to ProUroCare. For its
       role, Artann will receive a total of $250,000 (plus incentives as
       explained below) to fully develop the ProUroScan system, payable upon
       certain milestone events. A payment of $50,000 was made to Artann upon
       the execution of the agreement. In December, 2004 the Company paid Artann
       $110,000 following the shipment of the ProUroScan prototypes in
       accordance with the Development Agreement (including a $10,000 bonus for
       delivery of the systems ahead of schedule). All of these payments to
       Artann were expensed as research and development cost during the year
       ended December 31, 2004. The Company will pay Artann an additional
       $50,000 upon the filing of a patent or patents relating to a new
       probe-positioning technology, and the final $50,000 will be paid upon
       issuance of the patent(s) to ProUroCare. Artann will also receive
       additional compensation in the form of five-year warrants to purchase up
       to 500,000 shares of Company common stock, similarly issuable upon
       certain milestone events. Fully vested warrants for the purchase of
       100,000 shares at a per-share price of $2.00 were issued upon the
       execution of the agreement. The value of these warrants computed using
       the Black-Scholes pricing model was $114,914, and was recorded as
       research and development cost. Fully vested warrants for the purchase of
       200,000 shares at a per share price of $2.00 were issued in December 2004
       following the shipment of the ProUroScan systems under the Development
       Agreement. The value of these warrants computed using the Black-Scholes
       pricing model was $166,172, and was also recorded as research expense.
       The final 200,000 warrants will be issued, contingent on the delivery of
       the clinical systems, in two equal 100,000-share installments on the
       one-year and two-year anniversaries of the Research and Development
       Agreement.

(13)   Pro Forma Information (Unaudited)

       The following unaudited pro forma condensed results of operations for the
       years ended December 31, 2004 and 2003, gives effect to the reverse
       merger with Global Internet Communications, Inc. and the private
       placement of the Company's common stock as if such transactions had
       occurred on January 1, 2003 (see Note 10).

       The unaudited pro forma information does not purport to represent what
       the Company's results of operations would actually have been if such
       transactions in fact had occurred at such date or to project the
       Company's results of future operations:


                                       53
<PAGE>

       Year Ended December 31, 2003

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                                 Global Internet     Proforma       Proforma
                                   ProUroCare    Communications      Adjustments     Results
-----------------------------------------------------------------------------------------------
<S>                              <C>             <C>                <C>            <C>
-----------------------------------------------------------------------------------------------
Sales, net                       $         --    $         --       $         --   $         --
-----------------------------------------------------------------------------------------------
Loss from operations             $ (1,373,982)   $    (28,328)      $         --   $ (1,402,310)
-----------------------------------------------------------------------------------------------
Net loss                         $ (1,632,457)   $    (26,255)      $         --   $ (1,658,712)
-----------------------------------------------------------------------------------------------
Net loss per share-basic and     $       (.16)                                     $       (.12)
diluted
-----------------------------------------------------------------------------------------------
Shares outstanding - basic and     10,502,168                          3,402,000(1)  13,904,168
diluted
-----------------------------------------------------------------------------------------------
</TABLE>


       Year Ended December 31, 2004

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                   Global Internet         Proforma            Proforma
                                    ProUroCare     Communications         Adjustments          Results
----------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>                  <C>                 <C>
----------------------------------------------------------------------------------------------------------
Sales, net                       $           --    $           --       $           --      $           --
----------------------------------------------------------------------------------------------------------
Loss from operations             $   (1,849,631)   $     (199,113)      $      205,028(2)   $   (1,843,716)
----------------------------------------------------------------------------------------------------------
Net loss                         $   (2,318,896)   $     (199,183)      $      205,028(2)   $   (2,313,051)
----------------------------------------------------------------------------------------------------------
Net loss per share-basic and     $         (.18)                                            $         (.17)
diluted
----------------------------------------------------------------------------------------------------------
Shares outstanding - basic and       13,002,276                                936,164(1)        13,938,440
diluted
----------------------------------------------------------------------------------------------------------
</TABLE>

NOTES TO PRO FORMA ADJUSTMENTS

(1)   This adjustment restates the number of weighted average shares outstanding
      as if the Merger and Private Placement had occurred at the beginning of
      the period. The adjustment is computed as the difference between the
      weighted average effect of additional shares issued pursuant to the Merger
      and Private Placement (2,097,000 shares of Global Internet Communications,
      Inc. common stock outstanding at the time of the Merger, 2,205,000 shares
      issued pursuant to the Private Placement, less 900,000 shares redeemed
      under dissenters' rights) and the total of the same transactions as if
      they had occurred at the beginning of the period.

(2)   This adjustment is for non-recurring consulting expenses related to the
      Merger, paid by Global Internet Communications, Inc..


(14)  Subsequent Events

      On March 3, 2005 the ProUroCare Medical Inc.'s Board of Directors
realigned the duties of our Chairman, Maurice R. Taylor, and our President and
Chief Executive Officer, Michael P. Grossman. As a result, the Board named Mr.
Taylor as its new Chief Executive Officer, and named Mr. Grossman as Chief
Operating Officer. Mr. Taylor retains the title of Chairman and Mr. Grossman
retains the title of President. In recognition of these changes, the Company
entered into new employment agreements with Mr. Taylor and Mr. Grossman.

      Each of these agreements provides for a minimum annual salary, potential
cash incentive payments, and options to purchase shares of common stock that


                                       54
<PAGE>

vest over time. These agreements also provide that, upon termination without
cause (or a change of employment that the employee elects to treat as a
termination of employment), the employee will receive as severance six months of
base salary plus four months of base salary for each year of service (up to a
maximum of 24 months of base salary), plus the prorated average of any bonus or
incentive compensation paid over the previous two years. Additionally, all
unvested stock options then held by the employee will immediately vest with a
one-year period for exercise. Mr. Taylor's and Mr. Grossman's agreements have
terms that continue until December 31, 2006 and January 31, 2007, respectively.

      Under each of the above-referenced employment agreements, in the event of
a change in control resulting in a termination of employment, change of
location, or decrease in the level of responsibility of the executive (any of
which occur within two years of a change in control), the Company shall
compensate the executive as if he were terminated without cause, as described
above.

      On March 31, 2005 the Company borrowed $100,000 pursuant to the issuing of
a promissory note to a financial institution. The promissory note was secured by
the assets of the business and a guaranty by the Company's Chairman and Chief
Executive Officer, Maurice R. Taylor. The promissory note bears interest at an
annual rate of 7.0%, and matures on July 2, 2005.


                                       55
<PAGE>

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

      On April 20, 2004, the Company (formerly Global Internet Communications,
Inc.) dismissed Manning Elliot as its independent auditors. The Company
thereafter engaged Virchow, Krause & Company, LLP ("Virchow"), as its new
independent auditors.

      The decision to dismiss Manning Elliot was made by the Company's
reconstituted board of directors after the effectiveness of the Merger, and was
made primarily because of the desire to retain the accounting firm which was
familiar with the Company's operating business conducted through ProUroCare Inc.
There were not, within the past two years, any disagreements with Manning Elliot
that are known to the Company's management and relate to accounting principles
or practice, financial disclosures or auditing scope or procedures.

      The Company requested that Manning Elliot furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not it
agrees with the above statements. A copy of such letter was filed as Exhibit
16.1 to a Current Report on Form 8-K/A filed on April 20, 2004.

      On April 20, 2004, the Company engaged Virchow as its independent public
accountants for the fiscal year ending December 31, 2004. During the subsequent
interim period preceding the engagement of Virchow, the Company did not consult
Virchow on any matter requiring disclosure under Item 304(a)(2) of Regulation
S-B promulgated by the SEC. The selection of Virchow as the Company's
independent auditor was approved by the Company's board of directors.

      In the Company's two most recent fiscal years prior to the change in
accountants and any subsequent interim period to the date of such change, the
Company had not consulted with Virchow regarding either: (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the registrant's
financial statements, and neither a written report was provided to the
registrant nor oral advice was provided that Virchow concluded was an important
factor considered by the registrant in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was either the
subject of a "disagreement," as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a
"reportable event," as that term is defined in Item 304(a)(1)(v) of Regulation
S-K

      We did not have any change of disagreements with our auditor on any matter
of accounting principles or practices, disclosure, or auditing scope or
procedure.

ITEM 8A: CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934. Based upon that evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and
procedures are effective to cause the material information required to be
disclosed by us in the reports that we file or submit under the Exchange Act to
be recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in our internal controls or in other factors which could significantly affect
internal controls subsequent to the date we carried out our evaluation.

ITEM 8B: OTHER INFORMATION

      None.


                                       56
<PAGE>

                                    PART III

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

      The following information sets forth the names of our officers and
directors, their ages and their present positions with the Company as of March
4, 2005. The directors serve for a term of one year or until the next annual
meeting of the shareholders. Each officer serves at the discretion of the Board
of Directors.

   Name                    Age  Position
   ----                    ---  --------
   Maurice R. Taylor, II   59   Chairman of the Board, Chief Executive Officer
   Michael P. Grossman     51   President, Chief Operating Officer and Director
   Richard Thon            49   Chief Financial Officer
   David Koenig            64   Secretary and Director
   Alex Nazarenko          60   Director

      Maurice R. Taylor, II, is a Minneapolis entrepreneur, and has served as
the Chairman of the Board of PUC since its inception in 1999, and as its Chief
Executive Officer until February 2004. Upon the Merger, Mr. Taylor was appointed
to serve as the Company's Chairman of the Board. In March 2005 he was
reappointed as the Company's Chief Executive Officer.

      Mr. Taylor was the founder of Chronimed Inc. ("Chronimed"), and has been
involved in several healthcare and medical-technology companies. He served as
Chairman and Chief Executive Officer of Chronimed from April 1985 until March
1999, at which point he joined its diagnostic division in a spin-off venture
which became known as MEDgenesis. Mr. Taylor held such positions with Chronimed
and MEDgenesis until the sale of MEDgenesis to the British company Medisys PLC.
Mr. Taylor is also Chairman of Clinical Network and CHdiagnostics, LLC, a
diabetes market product-development company. He serves as a director and is the
former Chairman of the Scripps Whittier Institute for Diabetes which, through
collaborations, is believed to be the largest diabetes research group in the
world. Mr. Taylor was the recipient of the Inc. Magazine "Entrepreneur of the
Year Award for Healthcare" in 1994.

      Michael P. Grossman has served as President and Chief Executive Officer of
ProUroCare, Inc., the Company's wholly owned subsidiary since February, 2004 and
became President, Chief Executive Officer and a director of our Company upon the
Merger. In March 2005, when Mr. Taylor was appointed to the position of Chief
Executive Officer, Mr. Grossman was appointed to the position of Chief Operating
Officer. He retains the titles of President and Director.

      Mr. Grossman has extensive experience in the financial services and
advisory industry, including more than 14 years in the area of new business
start-ups and economic development. From 1995 to 2003 he served as Vice
President of the Minnesota Cooperation Office ("MCO"), a privately funded
business-development company created to identify and assist in the formation of
high-growth, innovative companies and provide support for their future growth.
Mr. Grossman, in his capacity as an officer of the MCO, provided four primary
services to client companies and entrepreneurs: evaluation of proposed products
and their market potential; development of a comprehensive five-year business
plan; assistance in assembling a management team and/or board of directors; and
assistance with locating appropriate financing. In this role, Mr. Grossman
identified and helped ten client companies with these issues and thereby played
a key role in helping to start/launch these companies. In some instances, Mr.
Grossman served on the board of directors of the client companies and in most
all cases provided ongoing assistance to the companies for a period of three to
five years. Prior to 1995 he held senior positions at Tricon Capital
Corporation, Ehlers and Associates, Inc., and corporate and public finance
positions at Piper Jaffray & Hopwood, and Dain Bosworth. Mr. Grossman has a B.A.
in Economics from Carleton College and an M.B.A. from the University of
Minnesota.


                                       57
<PAGE>

      Richard Thon was hired as our Chief Financial Officer in July 2004 after
serving in this role in an interim capacity on a consulting basis since 2001.
From 2002 to 2004, Mr. Thon was the Chief Financial Officer of CHdiagnostics,
LLC. He served as the Chief Financial Officer and Vice President of Finance for
MEDgenesis from 2000 to 2001, as Corporate Controller of Instant Web Companies
from 1998 to 2000, and as Controller and director of Business Systems of Sanofi
Diagnostics Pasteur from 1990 to 1998. Mr. Thon began his career as an auditor
with KPMG LLP, and since that time has held financial management positions with
both public and privately held firms. Mr. Thon has a B.B.A. in Accounting from
the University of Michigan and an M.B.A. in Finance from the University of
Wisconsin.

      David F. Koenig has served as a director of PUC since 1999, and became a
director of the Company upon the Merger. From 1996 to 2005, Mr. Koenig was the
Executive Vice President and Chief Operating Officer of Solar Plastics, Inc., a
manufacturer of custom rotationally molded plastic parts ("Solar Plastics").
Solar Plastics has four manufacturing facilities and services customers in both
domestic and international markets. Mr. Koenig served as Chief Financial Officer
and director of Quadion Corporation from 1977 to 1987, a manufacturer of
precision-made rubber and plastic components and assemblies for industrial uses.
In this role, he had full responsibility for strategic planning, acquisitions,
information services, real estate and legal services, and helped create the
plans and implement the programs that took this company from sales of $22
million from three domestic plants to sales exceeding $100 million from six
domestic and three foreign plants. Prior to this time, Mr. Koenig spent 11 years
growing and developing his own consulting business focusing on providing
services to small to medium-sized companies in the areas of strategic planning
and implementation, acquisitions, financing and organizational restructuring.
Earlier, Mr. Koenig was employed by Dain Rauscher as an investment banker, and
by General Mills, Inc. and the Kroger Co. (both Fortune 100 companies) with
responsibilities in strategic planning, acquisitions and finance. Mr. Koenig
received his undergraduate degree in business administration from Indiana
University and his M.B.A. from Harvard Graduate School of Business.

      Alex Nazarenko has served as a director of PUC since 2001, and became a
director of the Company upon the Merger. Since 1992, Mr. Nazarenko has been a
co-owner, officer and director of American Phoenix, Inc. of Eau Claire,
Wisconsin, a company with approximately $10 million in revenues and 100
employees engaged in the business of rubber processing for the major tire
companies. Since 1996, he has also been co-owner, officer and director of 2N
Company, L.L.C., of Minneapolis, Minnesota, a private investment and management
company with investments in a broad range of industries. Form 1973 until 1991,
Mr. Nazarenko served as Vice President for Equity Securities Trading Company of
Minneapolis. Mr. Nazarenko began his career in the securities industry in 1966.

      There are no family relationships among our executive officers or
directors.


Audit Committee

      The Company has established a two-member audit committee within the board
of directors that currently consists of Messrs. Koenig and Nazarenko. The board
of directors has adopted a written charter for the audit committee. The audit
committee was formed after the effectiveness of the Merger; and prior to the
Merger the Company had no such audit committee.

      The board of directors has determined that at least one member of the
audit committee, David Koenig, is an "audit committee financial expert" as that
term is defined in Item 401(e)(2) of Regulation S-B promulgated under the
Securities Exchange Act of 1934, as amended. Mr. Koenig's relevant experience
includes his service as the Chief Financial Officer and director of Quadion
Corporation, and his past consulting experience which involved his oversight and
supervision of the performance of business enterprises respecting the


                                       58
<PAGE>

preparation, audit and evaluation of financial statements. Both members of the
audit committee (i.e., Messrs. Koenig and Nazarenko) currently qualify as
"independent directors," as such term is defined in Section 4200(a)(15) of
National Association of Securities Dealers' listing standards. Moreover, the
board of directors has determined that each of the audit committee members is
able to read and understand fundamental financial statements and that at least
one member of the audit committee has past employment experience in finance or
accounting.

Code of Ethics Disclosure Compliance

      On February 15, 2005 we adopted a Code of Ethics for Financial Executives,
which include our Company's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions, as required by Sections 406 and 407 of the Sarbanes-Oxley Act
of 2002. Our Code of Ethics is filed as an exhibit to this annual report.


ITEM 10:  EXECUTIVE COMPENSATION

      The following table sets forth, for the last three fiscal years, the
compensation earned for services rendered in all capacities by our Chief
Executive Officer and the other highest-paid executive officers serving as such
at the end of fiscal year 2004 whose compensation for that fiscal year was in
excess of $100,000. The individuals named in the table will be hereinafter
referred to as the "Named Officers." No other executive officer of the Company
or the Company's wholly owned subsidiary, ProUroCare Inc., received compensation
in excess of $100,000 during fiscal year 2004.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                              Long-Term
                                                                                             Compensation
                                                                    Annual Compensation         Awards
                                                                ------------------------------------------
                                                                                              Securities
                                                                                              Underlying
Name and Position                                    Year          Salary         Bonus         Options
----------------------------------------------------------------------------------------------------------
<S>                                                  <C>        <C>            <C>            <C>
Maurice Taylor, II (1)                                   2004   $    190,000   $    104,738             --
Chief Executive Officer                                  2003   $    190,000   $         --             --
and Chairman of the Board                                2002   $    190,000   $     42,750        450,000

Michael P. Grossman (1) (2)                              2004   $    164,417   $         --        450,000
President, Chief Operating                               2003   $      4,000   $         --             --
Officer and Director                                     2002             --   $         --             --
----------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Mr. Taylor served as Chairman and Chief Executive Officer of ProUroCare
      Inc. until January 31, 2004. On February 1, 2004, Michael P. Grossman
      became the Chief Executive Officer of ProUroCare Inc., and subsequently
      became the Chief Executive Officer of the Company upon the Merger. On
      March 3, 2005 Mr. Taylor was again named Chief Executive Officer of the
      Company, and continues to serve as the Chairman of the Company.

(2)   Mr. Grossman's 2003 and 2004 compensation includes consulting compensation
      earned between December 1, 2003 and January 31, 2004, prior to his
      appointment to the position of Chief Executive Officer on February 1,
      2004. On March 3, 2005 Mr. Grossman was appointed to the position of Chief
      Operating Officer. He continues to serve as President and Director.


                                       59
<PAGE>

Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values

      No stock options or stock-appreciation rights were exercised during fiscal
year 2004, and no stock-appreciation rights were outstanding at the end of such
fiscal year. The table below sets forth outstanding but unexercised options of
the named officers as of the end of fiscal year 2004.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                    Securities Underlying Unexercised      Value of Unexercised
                                       Options at Fiscal Year End         In-the-Money Options (1)
                                  --------------------------------------------------------------------
              Name                    Exercisable     Unexercisable      Exercisable    Unexercisable
------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>              <C>              <C>
Maurice R. Taylor, II                       173,535           12,465   $      133,622   $        9,598
------------------------------------------------------------------------------------------------------
Michael P. Grossman                         100,010          324,990   $           --   $           --
------------------------------------------------------------------------------------------------------
</TABLE>

Director Compensation

      The Company's policy is that each of our non-employee directors receives
an annual cash payment of $5,000, and the chairpersons of our compensation and
audit committees receive an additional annual payment of $2,500. It is also our
policy to grant all non-employee directors a one-time option upon initial
election or appointment to the board of directors to purchase 30,000 shares of
our common stock at the then-current market price, which option shall vest
ratably over two years of service and have a ten-year term. All directors shall
be reimbursed for travel and other out-of-pocket expenses incurred in connection
with attendance at meetings of the board of directors and its committees.


Employment Agreements

      The Company is a party to employment agreements with Maurice R. Taylor, II
and Michael P. Grossman. Each of these agreements provides for a minimum annual
salary, potential cash incentive payments, and options to purchase shares of
common stock that vest over time. The agreement with Mr. Taylor provides for an
annual salary of $190,000, and Mr. Grossman's agreement provides for an annual
salary of $175,000. These agreements also provide that, upon termination without
cause (or a change of employment that the employee elects to treat as a
termination of employment), the employee will receive as severance six months of
base salary plus four months of base salary for each year of service (up to a
maximum of 24 months of base salary), plus the prorated average of any bonus or
incentive compensation paid over the previous two years. Additionally, all
unvested stock options then held by the employee will immediately vest with a
one-year period for exercise. Mr. Taylor's and Mr. Grossman's agreements have
terms that continue until December, 2006, and January, 2007, respectively.

      Under each of the above-referenced employment agreements, in the event of
a change in control resulting in a termination of employment, change of
location, or decrease in the level of responsibility of the executive (any of
which occur within two years of a change in control), we shall compensate the
executive as if he were terminated without cause, as described above.

      ProUroCare Inc., the Company's wholly owned operating subsidiary, is a
party to an employment agreement with Richard B. Thon which expires in July
2007. Mr. Thon's employment agreement provides for a minimum annual salary of
$140,000, cash incentive payments, and options to purchase shares of common
stock that vest over time. In addition, Mr. Thon's employment agreement also
provides that, upon termination without cause (or a change of employment that


                                       60
<PAGE>

the employee elects to treat as a termination of employment), Mr. Thon will
receive as severance six months of base salary plus four months of base salary
for each year of service (up to a maximum of 24 months of base salary), plus the
prorated average of any bonus or incentive compensation paid over the previous
two years. Additionally, all unvested stock options then held by Mr. Thon
employee will immediately vest upon a termination without cause with a one-year
period for exercise. Finally, in the event of a change in control resulting in a
termination of employment, change of location, or decrease in the level of
responsibility (any of which occur within two years of a change in control), Mr.
Thon shall entitled to compensation as if he were terminated without cause, as
described above.


ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information regarding beneficial
ownership of the our common stock as of March 21, 2005, by (i) each person known
by us to be the beneficial owner of more than five percent of the outstanding
common stock, (ii) each director, (iii) each executive officer, and (iv) all
executive officers and directors as a group. The number of shares beneficially
owned is determined under rules promulgated by the SEC, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
those rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares which
the individual has the right to acquire within 60 days of the date hereof,
through the exercise or conversion of any stock option, convertible security,
warrant or other right. Including those shares in the tables does not, however,
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of those shares. Unless otherwise indicated, each person or
entity named in the table has sole voting power and investment power (or shares
that power with that person's spouse) with respect to all shares of capital
stock listed as owned by that person or entity. Unless otherwise indicated, the
address of each of the following persons is One Carlson Parkway, Suite 124,
Plymouth, Minnesota 55447.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                                     Shares
Name                                           Beneficially Owned   Percent of Class
------------------------------------------------------------------------------------------
<S>                                             <C>                  <C>
Maurice R. Taylor II (1)                               1,704,838               12.0
------------------------------------------------------------------------------------------
Michael P. Grossman (2)                                  162,515                1.1
------------------------------------------------------------------------------------------
Richard Thon (3)                                          80,004                  *
------------------------------------------------------------------------------------------
Alex Nazarenko (4)                                     2,044,998               14.6
------------------------------------------------------------------------------------------
David Koenig (5)                                         555,115                3.9
------------------------------------------------------------------------------------------
All directors and officers as a group (6)              4,256,256               29.3
------------------------------------------------------------------------------------------
Profile, L.L.C. (7)
2700 Corporate Drive, Suite 120
Birmingham, Alabama 35242                              3,074,285               22.0
------------------------------------------------------------------------------------------
CS Medical Technologies, LLC (8)                       1,947,498               13.9
2277 West Highway 36, Suite 254
Roseville, Minnesota  55113
------------------------------------------------------------------------------------------
</TABLE>

*     Less than one percent (1%).

(1)   Includes 36,214 shares of common stock held by Clinical Network, LLC, and
      255,000 shares held by Clinical Network, Inc., with respect to each of
      which Mr. Taylor is a managing officer and majority owner. Also includes
      1,227,624 shares of common stock held directly and options to purchase
      186,000 shares of common stock which are currently exercisable or
      exercisable within 60 days at $1.13 per share.

(2)   Includes options to purchase up to 162,515 shares of common stock which
      are currently exercisable or exercisable within 60 days, at $2.00 per
      share.


                                       61
<PAGE>

(3)   Includes options to purchase up to 80,004 shares of common stock which are
      currently exercisable or exercisable within 60 days. Of Mr. Thon's
      options, 30,000 are exercisable at $1.13 per share, and 50,004 are
      exercisable at $2.50 per share.

(4)   Includes 1,947,498 shares held by CS Medical Technologies, LLC, of which
      Mr. Nazarenko is a managing officer and member. Also includes 67,500
      shares of common stock held directly, and options to purchase up to 30,000
      shares of common stock which are currently exercisable or exercisable
      within 60 days at $1.13 per share.

(5)   Includes 36,214 shares held by Clinical Network, LLC, and 255,000 shares
      held by Clinical Network, Inc., with respect to each of which Mr. Koenig
      is an officer and minority owner. Also includes 166,041 shares of common
      stock held directly, options to purchase up to 30,000 shares of common
      stock which are currently exercisable or exercisable within 60 days,
      exercisable at $1.13 per share, and immediately exercisable warrants to
      purchase 67,860 shares at $1.67 per share.

(6)   Includes Messrs. Taylor, Nazarenko, Koenig, Grossman and Thon.

(7)   The managers of Profile, LLC are T. Forcht Dagi and Stanley L. Graves, who
      share voting and investment power over the securities held by Profile,
      LLC. Cordova Technology Partners, L.P., a private investment fund, by
      virtue of its 39.75% ownership interest in Profile, LLC, indirectly has a
      pecuniary interest in 1,226,287 shares of the Company's common stock. The
      sole general partner of Cordova Technology Partners, L.P. is Cordova
      Technologies, LLC. T. Forcht Dagi and Jerry Schmidt, the senior executives
      of Cordova Technologies, LLC, share voting and investment power over the
      securities held by Cordova Technology Partners, L.P.

(8)   The beneficial owners of CS Medical Technologies, LLC are Clement Nelson
      and Alex Nazarenko (a director of the Company).


Securities Authorized for Issuance Under Equity Compensation Plans
As of Last Fiscal Year (December 31, 2004)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

                                                                                             Number of Securities
                                Number of Securities to be                                  Remaining Available for
                                  Issued Upon Exercise of     Weighted-Average Exercise      Issuance Under Equity
                                   Outstanding Options,         Price of Outstanding          Compensation Plans
                                    Warrants and Rights         Options, Warrants and        (excluding securities
                                                                       Rights              reflected in column (a))
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                           <C>                          <C>
                                            (a)                          (b)                             (c)
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by stockholders (1)             1,076,250                      $1.52                         60,000
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by stockholders (2)             1,981,877                      $1.82                      1,300,000
----------------------------------------------------------------------------------------------------------------------
            Total                        3,058,127                      $1.71                      1,360,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

(1)   Includes shares of our common stock issuable under options issued under
      our 2002 Plan (as defined below).

(2)   Includes 200,000 shares of our common stock issuable under options issued
      under our 2004 Plan (as defined below) and warrants to purchase 1,781,877
      shares issued to vendors, consultants, and loan guarantors.


                                       62
<PAGE>

2002 Plan

      In April 2002, PUC adopted the ProUroCare Inc. 2002 Stock Plan (the "2002
Plan"), pursuant to which PUC granted options to officers, directors, employees
and independent contractors. Under the 2002 Plan, PUC was able to grant
incentive and nonqualified options, stock appreciation rights, stock awards,
restricted stock awards, performance shares, and cash awards. The Company
adopted the 2002 Plan as part of the Merger. There are currently options to
purchase up to 1,076,250 shares of the Company's common stock outstanding under
the 2002 Plan that are exercisable at prices ranging from $1.13 to $2.00,
adjusted for the post-Merger distribution. All of these options are held by
Company officers, consultants and directors. Because the Company has adopted the
2004 Plan as described below, the Company will not issue any further options to
purchase shares of Company common stock under the 2002 Plan.

      The officers' options vest ratably over a 36-month period from the date of
issuance, while the directors' and consultants' options are completely vested.
In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company has elected to utilize the fair-value method of accounting for these
options. An aggregate of $218,395, $140,300, and $501,678 of stock-based
compensation related to these options was recognized in the years ended December
31, 2004, 2003 and the period from August 17, 1999 to December 31, 2004,
respectively.

      On February 15, 2005 the Company's board of directors approved an
amendment to the 2002 Stock Plan that provides for the cashless exercise of
options granted under the plan, at the discretion of a committee of independent
directors.


2004 Plan

      On July 14, 2004 the Company's board of directors passed a resolution
adopting the ProUroCare Medical Inc. 2004 Stock Option Plan (the "2004 Plan").
The Company has reserved 1,500,000 shares of common stock for issuance under the
2004 Plan. Under current IRS regulations, the Company's shareholders must
approve the 2004 Plan on or prior to July 14, 2005 in order for the Company to
grant incentive stock options under the 2004 Plan. As of December 31, 2004,
200,000 options have been granted to an officer under the 2004 Plan that are
exercisable at $2.50 per share.

      The 2004 Plan provides for the grant of both incentive and non-statutory
stock options. Incentive stock options granted under the 2004 Plan are intended
to qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Non-statutory stock
options granted under the 2004 Plan will not qualify as incentive stock options
under the Code. The board of directors adopted the 2004 Plan to provide a means
by which Company employees, directors, officers and consultants may be given an
opportunity to purchase stock in the Company, to assist in retaining the
services of such persons, to secure and retain the services of persons capable
of filling such positions and to provide incentives for such persons to exert
maximum efforts for the success of the Company.




             ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Company History

      ProUroCare Inc., the Company's wholly owned subsidiary ("PUC"), was
initially founded by shareholders of Clinical Network Inc. ("Clinical Network")
in August 1999. Clinical Network was originally established in 1990 for the
purpose of pursuing treatments for stress urinary incontinence in women. In July


                                       63
<PAGE>

2001, Clinical Network began collaborating with CS Medical Technologies, L.L.C.
("CS Medical"), a developer of microwave treatment technology for prostate and
cardiology treatments, for the development of products for the male urology
market. At that time, PUC acquired from Clinical Network and CS Medical all
assets and rights associated with the minimally invasive microwave therapy in
exchange for an aggregate of 3,000,000 shares of PUC common stock. Alex
Nazarenko, a Company director (and former director of PUC), is a principal
shareholder and controlling person of CS Medical. Currently, CS Medical owns
1,947,498 shares of our common stock. In addition, Maurice R. Taylor, the our
Chairman and Chief Executive Officer (and Chairman of PUC), and David Koenig,
another of our directors (and a former director of PUC), are principal
shareholders and controlling persons of Clinical Network and Clinical Network,
L.L.C. (a limited liability company affiliated with Clinical Network) which
together beneficially own 291,214 shares of our common stock. Prior to the
transactions with Clinical Network and CS Medical, neither of such companies
(nor the individual directors named above) were related parties or otherwise
affiliated with PUC. Accordingly, these transactions were negotiated at
arms-length. We believe that the terms of the above-described transactions were
fair to the Company.


Licenses and Royalties

      In January 2002, PUC purchased certain assets from Profile L.L.C.
("Profile") and obtained a license from Profile providing for worldwide
exclusive rights to its prostate-imaging system and related patented technology
in exchange for the issuance of 3,230,769 shares of PUC common stock, and future
royalties ranging from 1.05% to 3.05% of net sales of the ProUroScan(TM) system
under the terms of its licensing agreement. Subsequent to that transaction, PUC
issued Profile an additional 769,230 shares of PUC common stock pursuant to the
agreement governing the transfer of assets. After the Merger, Profile owned
3,084,999 shares of our common stock. Prior to the transaction with Profile,
Profile was not a related party or otherwise affiliated with the Company. We
believe that the terms of the above-described transaction with Profile were fair
to the Company.

      In July 2001, PUC obtained an exclusive worldwide license relating to an
imaging system developed by Rensselaer Polytechnic Institute ("RPI") allowing
the monitoring of microwave therapy changes to tissue in real time. We intend to
implement this licensed technology in our therapeutic product. The license
agreement with RPI required a $50,000 payment as a licensing fee, which was paid
in 2004, and royalty payments of 3.0% of net sales if the primary function of
the device is tomography or 1.0% of net sales if the primary function of the
final system is not tomography. Beginning in 2006, RPI is entitled to receive a
minimum annual royalty payment of $20,000 to maintain the license.


Line of Credit

      On January 24, 2003, PUC obtained a $500,000 line of credit from a
financial institution. The line of credit was collateralized by PUC's business
assets and severally guaranteed by five individuals, including David Koenig, a
former director of PUC who is now a Company director. In exchange for the
personal guarantees, PUC issued to the guarantors warrants to purchase 214,290
shares of our common stock at $2.33 per share (after the Merger), including
21,429 shares of common stock issuable upon exercise of the warrant issued to
the Company director. As described below, the shares of common stock issuable
upon exercise of these warrants were adjusted by operation of certain price and
anti-dilution protections.

      On August 5, 2003 PUC replaced the $500,000 credit line with a $1,000,000
line of credit from the same financial institution. The line of credit was
secured by PUC's business assets and severally guaranteed by nine individuals,
including the same five individuals who guaranteed the first line of credit. In
exchange for the personal guarantees, PUC issued to the guarantors a warrant to
purchase a total of 428,580 shares of our common stock (after the Merger) at
$2.33 per share, including 21,429 shares of Common Stock issuable upon exercise
of the warrant issued to a Company director. As described below, the number
shares of common stock issuable upon exercise of these warrants was adjusted by
operation of certain price and anti-dilution protections. Shortly after the
merger, the line of credit was paid off.


                                       64
<PAGE>

      In total, warrants to purchase up to 642,870 shares of our common stock
after the Merger were issued by PUC in connection with the foregoing
line-of-credit guarantees. Each such warrant granted the holder certain price
and anti-dilution protections. As a result of these protections and the price
per share offered in the Private Placement (and the consideration exchanged in
the Merger), the foregoing warrants, after adjustment for such protections,
entitle such holders to obtain 1,017,882 shares of our common stock at an
exercise price of $1.67 per share. Of these adjusted warrants, Mr. David Koenig
has the right to acquire 67,860 shares of our common stock at $1.67 per share.
All of the common stock issuable upon exercise of the foregoing warrants is
registered for resale pursuant to the Company's SB-2 registration statement.


Loan Transactions

      From October 2001 through May 2002, Clinical Network loaned a total of
$123,616 to the Company. The Company accrued interest on this debt at an annual
rate of 5%. In 2002, 2003, and 2004 the Company repaid $12,950, $77,419, and
$24,301 to Clinical Network, respectively. As of December 31, 2004, the Company
owed $9,030 to Clinical Network in connection with these loans. At the time of
the loans, Maurice R. Taylor, II, then the Company's Chief Executive Officer and
Chairman, was also a director of Clinical Network.

      In April and May 2002, CS Medical loaned a total of $51,000 to the
Company. In June 2002 and June 2004, the Company repaid $25,000 and $26,000 to
CS Medical, respectively. In addition, the Company paid interest on this debt in
an amount equal to an annual rate of 5%. At the time of the loan, Alexander
Nazarenko, a Company director, was also a director of CS Medical.

      In July, 2003, the Company borrowed $60,000 from Maurice R. Taylor II and
Alexander Nazarenko. At the time of the loan, Mr. Taylor was the Company's Chief
Executive Officer and Chairman, and Mr. Nazarenko was a director of the Company.
The loan was made pursuant to an unsecured promissory note. The promissory note
bore simple interest at 6.5% per annum. In August and September, 2003 the
Company repaid the note and the accrued interest thereon in full.

      On March 31, 2005 the Company borrowed $100,000 pursuant to the issuing of
a promissory note to a financial institution. The promissory note was secured by
the assets of the business and a guaranty by the Company's Chairman and Chief
Executive Officer, Maurice R. Taylor. The promissory note bears interest at an
annual rate of 7.0%, and matures on July 2, 2005.


                                       65
<PAGE>

ITEM 13:  EXHIBITS

Exhibit
No.         Description
------      -----------

2.1         Agreement of Merger and Reorganization by and among Global Internet
            Communications, Inc., GIC Acquisition Co., and ProUroCare Inc. dated
            April 5, 2004 (incorporated by reference to Exhibit 2.1 to Current
            Report on Form 8-K filed April 20, 2004).

2.2         Articles of Merger relating to the merger of GIC Acquisition Co.,
            then a wholly owned subsidiary of the registrant with and into
            ProUroCare Inc., as filed with the Minnesota Secretary of State on
            April 5, 2004 (incorporated by reference to Exhibit 2.2 to Current
            Report on Form 8-K filed April 20, 2004).

3.1         Articles of Incorporation of ProUroCare Medical Inc. (incorporated
            by reference to Exhibit 3.1 to registration statement on Form SB-2
            filed August 3, 2004).

3.2         Amended and Restated Bylaws of ProUroCare Medical Inc. (filed
            herewith).

4.1         Warrant to purchase common stock of ProUroCare Inc., and assumed by
            ProUroCare Medical Inc. pursuant to the Agreement of Merger and
            Reorganization referenced in Exhibit 2.1, issued in favor of Cordova
            Ventures, Inc. on April 19, 2002 (incorporated by reference to
            Exhibit 4.1 to registration statement on Form SB-2 filed August 3,
            2004).

4.2         Warrant to purchase 300,000 shares of common stock of ProUroCare
            Medical Inc., issued in favor of BINA Enterprises on April 5, 2004
            (incorporated by reference to Exhibit 4.2 to registration statement
            on Form SB-2 filed August 3, 2004).

4.3         Warrant to purchase 90,000 shares of common stock of ProUroCare
            Medical Inc., issued in favor of Artann Laboratories, Inc. on July
            19, 2004 (incorporated by reference to Exhibit 4.3 to registration
            statement on Form SB-2 filed August 3, 2004).

4.4         Warrant to purchase 10,000 shares of common stock of ProUroCare
            Medical Inc., issued in favor of Vladimir Drits on July 19, 2004
            (incorporated by reference to Exhibit 4.4 to registration statement
            on Form SB-2 filed August 3, 2004).

4.5         Form of warrants issued to ProUroCare Inc. guarantors of lines of
            credit, issued between March 1 and December 22, 2003 (incorporated
            by reference to Exhibit 4.5 to registration statement on Form SB-2
            filed August 3, 2004).

4.6         Warrant to purchase 90,000 shares of common stock of ProUroCare
            Medical Inc., issued in favor of Artann Laboratories, Inc. effective
            as of July 19, 2004, in exchange for the warrant referenced as
            Exhibit Item 4.3 (incorporated by reference to Exhibit 4.6 to
            registration statement on Form SB-2/A filed October 1, 2004).

4.7         Warrant to purchase 10,000 shares of common stock of ProUroCare
            Medical Inc., issued in favor of Vladimir Drits effective as of July
            19, 2004, in exchange for the warrant referenced as Exhibit Item 4.4
            (incorporated by reference to Exhibit 4.7 to registration statement
            on Form SB-2/A filed October 1, 2004).

4.8         Warrant to purchase 180,000 shares of common stock of ProUroCare
            Medical Inc., in favor of Artann Laboratories, Inc. effective as of
            December 2, 2004 (incorporated by reference to Exhibit 4.8 to
            registration statement on Form SB-3/A filed December 17, 2004).


                                       66
<PAGE>

4.9         Warrant to purchase 20,000 shares of common stock of ProUroCare
            Medical Inc., in favor of Vladimir Drits effective as of December 2,
            2004 (incorporated by reference to Exhibit 4.9 to registration
            statement on Form SB-3/A filed December 17, 2004).

10.1        License Agreement with Profile, L.L.C, dated January 14, 2002, as
            amended on March 22, 2002 (incorporated by reference to Exhibit 10.1
            to Current Report on Form 8-K filed April 20, 2004).

10.2        Research and Development Agreement by and among ProUroCare Medical
            Inc., Artann Laboratories, Inc. and Armen Sarvazyan, dated July 15,
            2004 (incorporated by reference to Exhibit 10.1 to Quarterly Report
            on Form 10-QSB filed August 3, 2004).

10.3        Development Agreement by and among ProUroCare Medical Inc., Artann
            Laboratories, Inc. and Armen Sarvazyan, dated July 15, 2004
            (incorporated by reference to Exhibit 10.2 to Quarterly Report on
            Form 10-QSB filed August 3, 2004).

10.4        Letter of Understanding by and between Profile LLC and ProUroCare
            Inc., dated March 23, 2004 (incorporated by reference to Exhibit
            10.4 to registration statement on Form SB-2 filed August 3, 2004).

10.5        Employment Agreement by and between ProUroCare Medical Inc. and
            Maurice R. Taylor, II, dated effective January 1, 2005 (incorporated
            by reference to Exhibit 10.1 to current report on Form 8-K filed
            March 9, 2005).

10.6        Employment Agreement by and between ProUroCare Medical Inc. and
            Michael P. Grossman dated effective March 4, 2005 (incorporated by
            reference to Exhibit 10.2 to current report on Form 8-K filed March
            9, 2005).

10.7        ProUroCare Medical Inc. 2002 Stock Option Plan (incorporated by
            reference to Exhibit 10.7 to registration statement on Form SB-2
            filed August 3, 2004).

10.8        Amendment to ProUroCare Medical Inc. 2002 Stock Option Plan (filed
            herewith).

10.9        ProUroCare Medical Inc. 2004 Stock Option Plan, as amended (filed
            herewith).

10.10       Employment Agreement by and between ProUroCare Inc. and Richard B.
            Thon, dated July 21, 2004 (incorporated by reference to Exhibit 10.9
            to registration statement on Form SB-2 filed August 3, 2004).

10.11       License Agreement by and between CS Medical Technologies, LLC and
            ProUroCare Inc., dated July 6, 2001 (incorporated by reference to
            Exhibit 10.10 to registration statement on Form SB-2/A filed October
            1, 2004).

10.12       License Agreement by and between Rensselaer Polytechnic Institute
            and ProUroCare Inc., dated July 13, 2001 (incorporated by reference
            to Exhibit 10.11 to registration statement on Form SB-2/A filed
            October 1, 2004).

10.13       License Agreement by and between Profile, LLC and ProUroCare Inc.,
            dated January 14, 2002 (incorporated by reference to Exhibit 10.12
            to registration statement on Form SB-2/A filed October 1, 2004).


                                       67
<PAGE>

10.14       First Amendment to License Agreement by and between Profile, LLC and
            ProUroCare Inc., dated March 22, 2002 (incorporated by reference to
            Exhibit 10.13 to registration statement on Form SB-2/A filed October
            1, 2004).

10.15       Consulting Agreement by and between Dr. Neal Shore and ProUroCare
            Inc., dated January 1, 2003 (with compensation amendment effective
            January 1, 2004) (incorporated by reference to Exhibit 10.14 to
            registration statement on Form SB-2/A filed October 1, 2004).

10.16       Letter of Understanding by and between Profile, LLC and ProUroCare
            Inc., dated March 23, 2004 (incorporated by reference to Exhibit
            10.15 to registration statement on Form SB-2/A filed October 1,
            2004).

10.17       Minnetronix Agreement and Promissory Note dated October 12, 2004
            (incorporated by reference to Exhibit 10.1 to Quarterly Report on
            Form 10-QSB filed November 16, 2004).

14.1        Code of Ethics (filed herewith).

16.1        Letter of Manning Elliott regarding change in certifying accountant
            (incorporated by reference to Exhibit 16.1 to Current Report on Form
            8-K/A filed on April 26, 2004).

21.1        List of Subsidiaries of ProUroCare Medical Inc. (incorporated by
            reference to Exhibit 21.1 to registration statement on Form SB-2
            filed August 3, 2004).

23.1        Consent of Virchow, Krause & Company, LLP (filed herewith).

24.1        Power of Attorney (included on signature page hereof).

31.1        Certification of Principal Executive Officer pursuant to Rule
            13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002 (filed
            herewith).

31.2        Certification of Chief Financial Officer pursuant to Rule
            13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002 (filed
            herewith).

32.1        Certification of Chief Executive Officer and Chief Financial Officer
            pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant
            to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).


                                       68
<PAGE>

ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

      The aggregate fees billed by our auditors for professional services
rendered in connection with the audit of our annual consolidated financial
statements for the fiscal year ended December 31, 2004 were $32,805.

Audit-Related Fees

      The aggregate fees billed by our auditors for professional services
rendered in connection with the Form SB-2 filing and SEC comment letters was
$11,600 for the fiscal year ended December 31, 2004.

Tax Fees

      Our auditors did not bill any fees for professional services for tax
compliance, tax advice, and tax planning for the fiscal year ended December 31,
2004.

All Other Fees

      The aggregate fees billed by our auditors for all other non-audit
services, related to the private placement memorandum and the merger with Global
Internet Communications, Inc. for the fiscal year ended December 31, 2004 were
$3,575. The fees for 2003 are not included as the Company was a private company
until April 5, 2004.

Preapproval Policies

      The policy of the Company's audit committee is to review and preapprove
both audit and non-audit services to be provided by the independent auditors
(other than with de minimis exceptions permitted by the Sarbanes-Oxley Act of
2002). This duty may be delegated to one or more designated members of the audit
committee with any such approval reported to the committee at its next regularly
scheduled meeting. Approval of non-audit services shall be disclosed to
investors in periodic reports required by Section 13(a) of the Securities
Exchange Act of 1934. Approximately 100% of the fees paid to Virchow Krause were
pre-approved as aforesaid.

      No Services in connection with appraisal or valuation services, fairness
opinions or contribution-in-kind reports were rendered by Virchow Krause.
Furthermore, no work of Virchow Krause with respect to its services rendered to
the Company was performed by anyone other than Virchow Krause.


                                       69
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


ProUroCare Medical, Inc.


By:         ______________________________________
            Maurice R. Taylor II
            Chairman and Chief Executive Officer
            Date: March 31, 2005



                                POWER OF ATTORNEY

      Each person whose signature to this annual report appears below hereby
constitutes and appoints Maurice R. Taylor and Richard Thon as his or her true
and lawful attorney-in-fact and agent, with full power of substitution, to sign
on his or her behalf individually and in the capacity stated below and to
perform any acts necessary to be done in order to file all amendments to this
registration statement and any and all instruments or documents filed as part of
or in connection with this registration statement or the amendments thereto and
each of the undersigned does hereby ratify and confirm all that said
attorney-in-fact and agent, or his substitutes, shall do or cause to be done by
virtue hereof.

      Pursuant to the requirements of the Securities Act of 1934, this annual
report has been signed as of the 30th day of March, 2005, by the following
persons in the capacities indicated.

Name                                        Title
----                                        -----

         /s/ Maurice R. Taylor, II          Chief Executive Officer (Principal
------------------------------------        Executive Officer) and Director
         Maurice R. Taylor, II

         /s/ Richard Thon                   Chief Financial Officer (Principal
------------------------------------        Financial and Accounting Officer)
         Richard Thon

         /s/ Michael P. Grossman            President, Chief Operating Officer
------------------------------------        and Director
         Michael P. Grossman

         /s/ David Koenig                   Director and Secretary
------------------------------------
         David Koenig

         /s/ Alex Nazarenko                 Director
------------------------------------
         Alex Nazarenko



                                       70