U.S. 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, 2003

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

                       For the transition period from ________ to _________

                         Commission file number: 0-11772

                             UNITED DIAGNOSTIC, INC.
                (Name of small business issuer as in its charter)

                   Delaware                                25-1411971
       (State or other jurisdiction of                  (I.R.S. Employer
        incorporation or organization)                 Identification No.)

               124 W. 60th Street, #33L, New York, New York 10023
                    (Address of principal executive offices)

                                 (212) 315-3585
                (Issuer's Telephone Number, Including Area Code)


         --------------------------------------------------------------
         (Former name or former address, if changed since last report.)


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

              Securities registered under Section 12(g) of the Act:

                     Common Stock, Par Value $.01 Per Share
                                (Title of Class)

      Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes / / No /X/

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and 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. / /

The issuer's revenues for the fiscal year ended December 31, 2003, were $0

      On January 15, 2005, the aggregate market value of the voting stock of
United Diagnostic, Inc. held by nonaffiliates of the registrant was
approximately $649. The Company's common stock is reported in the "pink sheets"
maintained by the National Quotation Bureau, LLC. The Company does not believe
that its common stock is the subject of an active market. January 27, 2003, was
the last date on which an actual transaction in the Company's common stock was
reported. On January 27, 2003, the high bid and low ask prices of such stock as
reported in the "pink sheets" were $.0010 and $.0010, respectively. For purposes
of calculating the market value of the Company's common stock, the Company has
utilized $.0010, the closing sale price for the common stock as reported by the
"pink sheets" on January 27, 2003.

      The registrant had 649,126 shares of common stock, $.01 par value per
share, outstanding at January 15, 2005.

                   Documents Incorporated by Reference: None.
<PAGE>

                             UNITED DIAGNOSTIC, INC.
                          ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                              <C>
PART I ...........................................................................................................1
         ITEM 1.           DESCRIPTION OF BUSINESS................................................................1
         ITEM 2.           DESCRIPTION OF PROPERTY................................................................3
         ITEM 3.           LEGAL PROCEEDINGS......................................................................3
         ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................4
PART II ..........................................................................................................5
         ITEM 5.           MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
                           PURCHASES OF EQUITY SECURITIES.........................................................5
         ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..............................6
         ITEM 7.           FINANCIAL STATEMENTS ..................................................................8
         ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...9
         ITEM 8A.          CONTROLS AND PROCEDURES................................................................9
         ITEM 8B.          OTHER INFORMATION......................................................................9
PART III ........................................................................................................11
         ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................................11
         ITEM 10.          EXECUTIVE COMPENSATION................................................................12
         ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                           STOCKHOLDER MATTERS...................................................................16
         ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................17
         ITEM 13.          EXHIBITS..............................................................................19
         ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES ...............................................19

SIGNATURES ......................................................................................................20
EXHIBIT INDEX ...................................................................................................21
</TABLE>
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Organization

      United Diagnostic, Inc. (hereinafter referred to as "United" or the
"Company"), was originally organized under the laws of the State of Delaware in
September 1981 under the name "Applied DNA Systems, Inc." On November 16, 1994,
the Company changed its name to "Nu-Tech Bio-Med, Inc." Effective December 23,
1998, the Company changed its name to its present name. One of the Company's
wholly-owned subsidiaries, Analytical Biosystems Corp. ("ABC") (inactive since
November 3, 1997), was organized under the laws of the State of Delaware in
August, 1985. On October 21, 1996, the Company acquired substantially all of the
medical billing service assets of Prompt Medical Billing, Inc. through the
Company's wholly-owned subsidiary, NTBM Billing Services Inc. (inactive since
April, 1998), organized under the laws of the State of Delaware on September 10,
1996. On October 15, 2001, the Company closed its office in Wakefield, Rhode
Island, and discontinued reporting activities until January 2003. In February
2003, the Company filed its Form 10-QSB for the quarter ended September 30,
2001, its Form 10-KSB for the year ended December 31, 2002, its Form 10-QSB for
the quarter ended March 31, 2002, its Form 10-QSB for the quarter ended June 30,
2002, its Form 10-QSB for the quarter ended September 30, 2002, and an
Information Statement on Schedule 14C. Since February 2003, the Company has
remained inactive. In February 2005, the Company filed its Form 10-KSB for the
year ended December 31, 2002, its Form 10-QSB for the quarter ended March 31,
2003, its Form 10-QSB for the quarter ended June 30, 2003, its Form 10-QSB for
the quarter ended September 30, 2003, its Form 10-KSB for the year ended
December 31, 2003, its Form 10-QSB for the quarter ended March 31, 2004, its
Form 10-QSB for the quarter ended June 30, 2004, and its Form 10-QSB for the
quarter ended September 30, 2004.

      During February 2003, the Company effectuated a 1 for 20 reverse stock
split of its common stock. Accordingly, this filing has been retroactively
adjusted for such reverse split.

      On May 18, 2004, the Company entered into a Term Sheet regarding a
proposed transaction whereby the Company would acquire all of the outstanding
capital stock of a privately held company (the "target company") in exchange for
issuing a 90% interest to the stockholders of the target company. The
transaction is expected to be treated as a recapitalization of the target
company with the target company as the accounting acquirer (reverse
acquisition). The proposed transaction is subject to the negotiation, execution
and delivery of definitive agreements as well as the satisfaction of certain
significant additional conditions. The target company also agreed in the Term
Sheet to pay up to $115,000 to the Company to be used to pay certain debts of
the Company and the Company's legal and accounting fees in connection with
negotiating the Term Sheet, the definitive documents for the proposed
transaction and the preparation and filing of the Company's past due SEC
reports. The parties are in the process of finalizing definitive agreements
relating to the proposed transaction.

Certain Business, Operational and Background Information

Issuance of Common Shares to Directors

      On October 25, 2002, the Board of Directors of the Company approved the
conversion of certain debts amounting to $80,185 owed by the Company to Mr. J.
Marvin Feigenbaum and David Sterling 400,925 into shares of the Company's common
stock. Mr. Feigenbaum and Mr. Sterling constitute the Board of Directors of the
Company, and Mr. Feigenbaum also is the Company's Chairman, President, Chief
Executive Officer and Chief Financial Officer.


                                       1
<PAGE>

      Accordingly, during October 2002, the Company converted an aggregate of
$63,185 of loan repayments and other obligations owed by the Company, to Mr. J.
Marvin Feigenbaum into 315,925 shares of the Company's common stock at an
estimated fair value of $0.01 per share, which is also par value for the Common
Stock. Such shares of common stock were issued in full payment and satisfaction
of the $63,185 owed by the Company to Mr. Feigenbaum, which consisted of: (i) a
$15,000 demand loan made by Mr. Feigenbaum to the Company during October 2002,
to assist the Company in paying certain of its expenses; (ii) $28,185,
representing a portion of accrued but unpaid reimbursement of medical, life and
other insurance premiums and other expenses which the Company was obligated to
pay on Mr. Feigenbaum's behalf under the terms of his employment agreement with
the Company, which expired in April 2002; and (iii) $20,000 of an aggregate of
approximately $280,000, representing accrued but unpaid salary owed to Mr.
Feigenbaum under the terms of his employment agreement with the Company. The
remaining amount approximating $260,000 of accrued salary owed to Mr. Feigenbaum
remained as an unpaid obligation of the Company and is classified as Due to
Related Parties as of December 31, 2003.

      In addition, the Company converted during October 2002, an aggregate of
$17,000 of loan repayments and other obligations owed by the Company to David
Sterling into 85,000 shares of the Company's common stock at an estimated fair
value of $0.01 per share, which is also par value for the Common Stock. Such
shares of common stock were issued in full payment and satisfaction of the
$17,000 owed by the Company to Mr. Sterling, which consisted of: (i) a $5,000
demand loan made by Mr. Sterling to the Company during August 2002, to assist
the Company in paying certain of its expenses; and (ii) $12,000, representing
accrued but unpaid fees owed to Mr. Sterling relating to his service to the
Company as a member of the Board of Directors.

Conversion of Preferred Stock to Common Shares and Reverse Stock Split Pursuant
to Information Statement

      Conversion of Preferred Stock to Common Shares

      In order to rectify the error which occurred during 2002, the Company
filed a Schedule 14C Information Statement on February 21, 2003, setting forth a
proposed amendment to the Certificate of Designations, Preferences, and Rights
and Number of Shares of Series A Convertible Preferred Stock. The amendment was
approved via written consent by 50.01% of the holders of voting stock, in lieu
of a meeting of the shareholders. Amendment No. 1 provided for the conversion of
all outstanding series A convertible preferred stock. This amendment became
effective on March 13, 2003.

      Amendment No. 1 was made as a result of a stockholder proposal made by
four holders of the series A convertible preferred stock: Barras Investment,
Gorra Holding, Agudath Shalom Banaich Inc., and Mifal Klita. Management did not
participate in any negotiations with the preferred stockholders who put forth
Amendment No. 1. Amendment No. 1 provided that the terms of the series A
convertible preferred stock be revised to change each share of series A
convertible preferred stock into approximately 76 shares of common stock
effective immediately upon the adoption of Amendment No 1. Each share of series
A convertible preferred stock cost $1,000. Amendment No. 1 changed each share of
series A convertible preferred stock into approximately 76 shares of common
stock representing an effective rate of value to the common stock of $13.20 per
share for purposes of the rate of exchange. As a result, each outstanding share
of series A convertible preferred stock represented approximately 76 shares of
common stock. No certificates or cash representing fractional shares of common
stock were issued to stockholders because of the adoption of Amendment No. 1.
All outstanding certificates for shares of series A convertible preferred stock
have ceased to represent series A convertible preferred stock and solely
represent the right to receive common stock at the rate described above.


                                       2
<PAGE>

      Pursuant to Amendment No. 1, during March of 2003, all of the outstanding
shares of series A convertible preferred stock were converted into an aggregate
of 214,070 shares of common stock. All of the preferred stockholders as a group
owned 246,283 shares of common stock (before the conversion) or approximately
37.94% of the outstanding common stock and the four preferred stockholders who
proposed Amendment No. 1 owned in the aggregate 144,264 shares of common stock
(before the conversion) or approximately 22.22% of the outstanding common stock.

      Reverse Stock Split in a 1 for 20 Ratio

      Amendment No. 2 provided for the reverse stock split in the ratio of 1 for
20 for all issued and outstanding shares of common stock including the pre-split
shares issued upon conversion of the preferred stock provided for in Amendment
No. 1 as described above. Prior to the effectiveness of Amendment No. 1, there
was an aggregate of 12,982,512 shares of common stock outstanding (including
issuance of shares to directors as described above and issuance of shares upon
conversion of outstanding preferred stock as described above). Management
believed that this was too many shares outstanding for an inactive corporation.
It was management's intention to attempt to create stockholder value by
acquiring an operating entity and/or raising additional capital. However, if
there were too many shares of stock outstanding, management believed that the
Company would be unable to attract financing or acquire an active business. Upon
the effectiveness of Amendment No. 2, there is an aggregate of 649,126 shares of
common stock outstanding.

Employees

      As of January 15, 2005, the Company had one at-will employee, its one
executive officer. The Company's employee is not represented by a labor union,
and the Company considers its relationship with its employee to be good.

ITEM 2.  DESCRIPTION OF PROPERTY

      The Company's principal administrative office address is 124 W. 60th
Street, #33L, New York, New York 10023. The Company believes that its present
facilities are adequate for its present needs.

ITEM 3.  LEGAL PROCEEDINGS

      During 2001, an action was instituted in the Superior Court of the State
of California, County of Los Angeles, Case No. BC 255622, by Richard M. Brooks
("Brooks") against Oaktree Capital Management LLC ("Oaktree") and Nu-Tech
Bio-Med, Inc. (now known as United Diagnostic, Inc.). Brooks was the Chief
Financial Officer of Physicians Clinical Laboratory, Inc. ("PCL"). This action
arises out of the Company's acquisition of a majority interest in PCL, PCL's
Chapter 11 bankruptcy proceedings and subsequent sale of certain shares of the
common stock of PCL by the Company to Oaktree in prior years. The plaintiff
seeks to assert liability against the defendants for approximately $3.5 million


                                       3
<PAGE>

with respect to an administrative claim which Brooks claims to have had against
PCL and which he could not collect on because the proceeds of the May 1999 sale
of PCL's assets allegedly went to Oaktree and Nu-Tech Bio-Med, Inc. A Demurrer
was filed by the defendants, which was granted by the Court with leave to
replead and, upon plaintiff filing a First Amended Complaint, the Demurrer to
that complaint was also sustained. The plaintiff has taken an appeal from the
lower court's action and if the plaintiff were to be successful on such appeal,
the litigation could then proceed in the lower court. Due to the fact that the
Company had no assets or means available to it to retain or pay counsel, the
Company determined not to take any active role in the appeal, but rather rely on
the positions taken by Oaktree, its co-defendant. Oral argument was held by the
court on February 21, 2003. On April 2, 2003, the Court of Appeals of the State
of California, Second Appellate District affirmed the judgment of the Superior
Court of the State of California, County of Los Angeles in favor of Oaktree and
the Company against Brooks.


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

      None.


                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]


                                       4
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
         BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

                               MARKET INFORMATION

      The Company believes that there is currently no established public trading
market for the Common Stock. Subsequent to May 15, 1998, the last date that the
Common Stock was quoted on Nasdaq, the Common Stock was quoted on the "pink
sheets" maintained by the National Quotation Bureau, Inc. under the symbol
"UNDI." The Company believes if the Common Stock is currently being traded, it
is being traded on the "pink sheets."

      The following table sets forth the range of high and low reported bid
prices for the years ended December 31, 2003 and 2002. The Company does not
believe that its common stock is the subject of an active market. On January 30,
2003, the high bid and low ask prices of such stock as reported in the "pink
sheets" were $.0010 and $.0010, respectively. For purposes of calculating the
market value of the Company's common stock, the Company has utilized $.0010, the
closing sale price for the common stock as reported by the "pink sheets" on
January 27, 2003, the last date on which an actual transaction was reported.
Quotations represent prices between dealers and do not reflect retail markups,
mark-downs or commissions and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                                         Bid Prices of Common Stock
                                                                    -------------------------------------
                                                                            Low                High
                                                                    ------------------  -----------------
<S>                                                                      <C>                    <C>
Year Ended December 31, 2003:
    First Quarter (1)...........................................         .00                    .00
    Second Quarter (1)..........................................         .00                    .00
    Third Quarter (1)...........................................         .00                    .00
    Fourth Quarter (1)..........................................         .00                    .00
Year Ended December 31, 2002:
    First Quarter (1)...........................................         .06                    .14
    Second Quarter (1)..........................................         .05                    .06
    Third Quarter (1)...........................................         .00                    .05
    Fourth Quarter (1)..........................................         .00                    .05
</TABLE>

---------------------
(1) As quoted on the "pink sheets" maintained by the National Quotation Bureau,
    Inc.

                                     HOLDERS

      The number of holders of record of the Company's Common Stock as of
January 2005, was approximately 1,100.


                                       5
<PAGE>

                                    DIVIDENDS

      The Company has never paid a dividend, whether in cash or property, on its
shares of Common Stock, and has no present expectation of doing so in the
foreseeable future.

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

      The following discussion should be read in conjunction with the financial
statements of the Company and related notes included elsewhere in this Report.
All statements contained herein (other than historical facts) including, but not
limited to, statements regarding the Company's future development plans, the
Company's ability to generate cash from its operations and any losses related
thereto, are based upon current expectations. These statements are forward
looking in nature and involve a number of risks and uncertainties. Actual
results may differ materially from the anticipated results or other expectations
expressed in the Company's forward looking statements. Generally, the words
"anticipate", "believe", "estimate", "expects", and similar expressions as they
relate to the Company and/or its management, are intended to identify forward
looking statements. Among the factors that could cause actual results to differ
materially are the following: the inability of the Company to obtain additional
financing to meet its capital needs and general business and economic
conditions.

Twelve months ended December 31, 2003, compared with twelve months ended
December 31, 2002

      Results of Operations

      The Company reported no operating revenues for the twelve months ended
December 31, 2003, and 2002 because it had no operating business.

      Total operating costs and expenses for the twelve months ended December
31, 2003, were $19,390 compared to $307,579 for the twelve months ended December
31, 2002. The decrease of $288,189 is due to a decrease in general and
administrative expenses.

      General and administrative expenses for the twelve months ended December
31, 2003, were $19,390 compared to $307,579 (which includes a $208,000 severance
accrual to the Company's Chief Executive Officer pursuant to his employment
agreement) for the twelve months ended December 31, 2002. The decrease of
$288,189 is primarily due to a reduction in payroll expenses.

      Interest expense for the twelve months ended December 31, 2003, and 2002,
was $6,259 representing the approximate annual interest incurred for funds
loaned to the Company (see Pledge of Principal Assets to Secure Existing Loans
from the State of Rhode Island).

      Net loss for the twelve months ended December 31, 2003, was $25,649 as
compared to $313,838 for the twelve months ended December 31, 2002. The decrease
of $288,189 in net loss is due to a decrease in general and administrative.

      Net loss per share of Common Stock for the twelve months ended December
31, 2003, was $.04 compared to $2.91 for the year ended December 31, 2002. The
decrease is due to a reduction in net loss and an increase in weighted average
shares outstanding . Weighted average shares outstanding was 606,898 for the
year ended December 31, 2003, compared to 107,725 for the year ended December
31, 2002.


                                       6
<PAGE>

Liquidity and Capital Resources

      Presently, the Company does not operate or have an equity investment in a
business which is a source of revenue from operations. No assurance can be given
that the Company will be able to identify attractive acquisition opportunities,
obtain financing for acquisitions on satisfactory terms or successfully acquire,
integrate, and operate identified acquisition targets. The Company has sustained
net losses of $25,649 and $313,838, respectively during the years ended December
31, 2003, and 2002, and has expended all cash from operations. The amount of
stockholders' capital deficiency and working capital deficiency at December 31,
2003, was $644,643. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Among other things, the Company
continues to seek additional debt and/or equity financing; however, there is no
assurance that it will be successful in that endeavor.

      On May 18, 2004, the Company entered into a Term Sheet regarding a
proposed transaction whereby the Company would acquire all of the outstanding
capital stock of a privately held company (the "target company") in exchange for
issuing a 90% interest to the stockholders of the target company. The
transaction is expected to be treated as a recapitalization of the target
company with the target company as the accounting acquirer (reverse
acquisition). The proposed transaction is subject to the negotiation, execution
and delivery of definitive agreements as well as the satisfaction of certain
significant additional conditions. The target company also agreed in the Term
Sheet to pay up to $115,000 to the Company to be used to pay certain debts of
the Company and the Company's legal and accounting fees in connection with
negotiating the Term Sheet, the definitive documents for the proposed
transaction and the preparation and filing of the Company's past due SEC
reports. The parties are in the process of finalizing definitive agreements
relating to the proposed transaction.

      The Company had no cash at December 31, 2003, as compared to $3,987 at
December 31, 2002.

      Prepaid expenses and other current assets were $16,447 at December 31,
2003, as compared to $16,389 at December 31, 2002.

      Total current liabilities at December 31, 2003 were $661,090 as compared
to $639,370 at December 31, 2002. The majority of this increase relates to
advances to the Company by its Chief Executive Officer.

      Amounts due to related parties represent advances to the Company by its
officers and a one year severance accrual of approximately $208,000 pursuant to
the Chief Executive Officer's employment agreement.

      Issuance of Common Shares

      On October 25, 2002, the Board of Directors of the Company approved the
conversion of certain debts amounting to $80,185 owed by the Company to Mr. J.
Marvin Feigenbaum and David Sterling into 400,925 shares of the Company's common
stock. Mr. Feigenbaum and Mr. Sterling constitute the Board of Directors of the
Company, and Mr. Feigenbaum also is the Company's President, Chief Executive
Officer and Chief Financial Officer.


                                       7
<PAGE>

      The Company converted an aggregate of $63,185 of loan repayments and other
obligations owed by the Company to Mr. J. Marvin Feigenbaum into 315,925 shares
of the Company's common stock at an estimated fair value of $0.20 per share.
Such shares of common stock were issued in full payment and satisfaction of the
$63,185 owed by the Company to Mr. Feigenbaum, which consisted of: (i) a $15,000
demand loan made by Mr. Feigenbaum to the Company during 2002, to assist the
Company in paying certain of its expenses; (ii) $28,185, representing accrued
but unpaid reimbursement of medical, life and other insurance premiums and other
expenses which the Company was obligated to pay on Mr. Feigenbaum's behalf under
the terms of his employment agreement with the Company, which expired in April
2002; and (iii) $20,000 of an aggregate of approximately $280,000, representing
a portion of accrued but unpaid salary owed to Mr. Feigenbaum under the terms of
his employment agreement with the Company. The remaining amount approximating
$260,000 of accrued salary owed to Mr. Feigenbaum remained as an unpaid
obligation of the Company and is classified as Due to Related Parties as of
December 31, 2003.

      In addition, the Company converted during October 2002, an aggregate of
$17,000 of loan repayments and other obligations owed by the Company to David
Sterling into 85,000 shares of the Company's common stock at an estimated fair
value of $0.20 per share. Such shares of common stock were issued in full
payment and satisfaction of the $17,000 owed by the Company to Mr. Sterling,
which consisted of: (i) a $5,000 demand loan made by Mr. Sterling to the Company
during August 2002, to assist the Company in paying certain of its expenses; and
(ii) $12,000, representing accrued but unpaid director fees owed to Mr. Sterling
relating to his service to the Company as a member of the Board of Directors.

      Pledge of Principal Assets to Secure Existing Loans from the State of
      Rhode Island

      In connection with a series of loans obtained during 1993 and 1994 by the
Company from the State of Rhode Island Economic Development Small Business Loan
Fund Corporation ("SBLFC") in the principal aggregate amount of $791,000, the
Company executed two patent security agreements granting the SBLFC a security
interest in ABC's patents to secure $541,000 of the $791,000 of SBLFC loans (the
principal balance of which, as of December 31, 2003, was approximately $66,000).
All of the SBLFC loans, including those which were subject to the patent
security interest, were further secured by a security interest in the Company's
accounts receivable, inventory and equipment. Each of these loans were for a
term of five years from its respective loan date, bearing interest at the rate
of 5.4% and, as to each loan, after the first year is amortized monthly as to
principal and interest. In June 1998, the terms of these loans were modified to
9.5% interest with principal due on demand. The aggregate amount of monthly
interest payments is approximately $600 per month. The Company is not in
compliance with certain terms of these loans. In the event that the Company, for
whatever reason, is unable to continue to meet its loan repayment obligations,
the assets which are pledged will be subject to the rights of the SBLFC as a
secured party. Further, until the SBLFC loans are repaid, it is unlikely that
the Company or ABC will be able to obtain additional secured financing utilizing
this collateral as security for new loans.

ITEM 7.  FINANCIAL STATEMENTS

      See Index to Financial Statements attached hereto.


                                       8
<PAGE>

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

      On November 19, 2004, United Diagnostic, Inc. (the "Company") dismissed
Eisner LLP as its independent accountant. Eisner LLP had been previously engaged
as the principal accountant to audit the Company's financial statements. The
reason for the termination was that a company with which the Company is
negotiating a potential reverse merger transaction requested a change in
accountants.

      Eisner LLP did not audit the Company's financial statements for any period
after the fiscal year ended December 31, 2001.Eisner LLP's report on the
financial statements for the fiscal year ended December 31, 2001 did not contain
an adverse opinion or disclaimer of opinion and was not modified as to
uncertainty, audit scope, or accounting principles.


      The decision to change accountants was approved by the Company's Board of
Directors.

      During the Company's two most recent fiscal years, and the subsequent
interim periods, there were no disagreements with Eisner LLP on any matter of
accounting principles or practices, financial statement disclosure, auditing
scope, or procedure, which disagreements, if not resolved to the satisfaction of
Eisner LLP, would have caused it to make reference to the subject matter of the
disagreement in connection with its reports.

      On November 19, 2004, the Company retained Marcum & Kliegman, LLP as its
new independent accountant. Marcum & Kliegman, LLP is located at 655 Third
Avenue, 16th Floor, New York, New York 10017.

ITEM 8A. CONTROLS AND PROCEDURES

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management to allow timely decisions regarding required
disclosure. Management necessarily applied its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control objectives.

      In connection with this report, Marvin Feigenbaum, our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of our disclosure controls and procedures. Based upon that
evaluation he concluded that our disclosure controls and procedures were
effective in alerting him in a timely manner to information relating to the
Company required to be disclosed in this report.

ITEM 8B. OTHER INFORMATION

Reports on Form 8-K.

During the period commencing the last quarter of the period covered by this
Report until the date of filing of this Report, the following report was fled on
Form 8-K by the Company:

Date of Report      Item Reported           Description of Item
--------------      -------------           -------------------

November 19, 2004   Item 4.01  Changes in   The Company reported the termination
                    Company's Certifying    of Eisner LLP and the engagement of
                    Accountant              Marcum & Kliegman LLP




                                       9
<PAGE>



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                                       10
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

      Set forth below is certain information relating to the members of the
Board of Directors of the Company as of December 31, 2003.


<TABLE>
<CAPTION>
              NAME                     AGE                                    POSITION
              ----                     ---                                    --------
<S>                                    <C>     <C>
J. Marvin Feigenbaum                   53      Chairman of the Board of Directors, President and Chief Executive
                                               Officer of the Company

David A. Sterling                      47      Secretary and Director of the Company
</TABLE>

      The number of directors comprising the entire Board of Directors is such
number as determined in accordance with the By-Laws of the Company. The
Company's By-Laws provide for the number of directors to be not less than three
or more than eleven in number. Due to the Company's current financial condition
and the fact that it has no assets or operations, and owns no interest in any
entity conducting operations, management believes that it is not necessary at
this time to fill the vacancy on the Board of Directors created by Mr.
Fagenson's resignation. At such time as the Company acquires an interest in an
entity conducting business operations, the Company will undertake to fill the
vacancy on the Board. The Company's Certificate of Incorporation provides for a
classified or "staggered" Board of Directors. The classified or "staggered"
Board of Directors is comprised of three classes of directors elected for three
(3) year terms. By reason of the classified Board of Directors, one class of the
Board comes up for re-election each year. Any further amendment to the Company's
Certificate of Incorporation affecting the classified Board may only be adopted
upon the affirmative vote of not less than 75% of the issued and outstanding
shares entitled to vote thereon.

      At a Special Meeting of Shareholders held September 25, 2001, Mr. Sterling
was elected as a Class 2 Director to serve until the 2003 annual meeting and Mr.
Feigenbaum was elected as a Class 3 Director to serve until the 2004 annual
meeting. The following sets forth certain biographical information for the
Directors and Officers as of December 31, 2003:

      J. Marvin Feigenbaum. Mr. J. Marvin Feigenbaum was first elected to the
Board of Directors in June 1994, at which time he was also elected to the Board
of Directors of ABC and appointed Chief Executive Officer of the Company and
Chief Executive and Chief Financial Officer of ABC. Mr. Feigenbaum has served as
President of the Company since June 1, 1994, and as Chairman of the Board,
President and Chief Executive Officer of PCL from October 3, 1997 until May 12,
1999. From August 1993 to June 1994, Mr. Feigenbaum served as a consultant to
the Company, primarily with respect to the Company's business development and
plans and programs relating to the marketing of the Company's laboratory and
medical testing services. From 1987 to June 1994, Mr. Feigenbaum acted as an
independent consultant in the medical and health care industry. He has over 25
years of experience in the health care industry. Prior to being an independent
consultant, Mr. Feigenbaum, from 1982 to mid-1987, served as Chairman, President
and Chief Executive Officer of Temco Home Health Care Products, Inc., a durable
medical equipment manufacturer. For a period of four years until he voluntarily
resigned in May, 1999, Mr. Feigenbaum served as a member of the Board of
Directors and Vice-Chairman of Comprehensive Care Corporation ("CompCare"), a
publicly owned company engaged in the health care business, previously listed on
the New York Stock Exchange.


                                       11
<PAGE>

      David A. Sterling. Mr. David A. Sterling was elected to the Board of
Directors on December 6, 1994. Mr. Sterling, for in excess of seven years, has
been President of Sterling & Sterling, Inc., a general insurance agency. Mr.
Sterling holds a BBA Degree from Hofstra University, New York.

Section 16 Reporting

      No person who, during the year ended December 31, 2003, was a director,
officer or beneficial owner of more than ten percent of the Company's Common
Stock (which is the only class of securities of the Company registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years. The foregoing is based
solely upon a review by the Company of Forms 3 and 4 during such fiscal year as
furnished to the Company under Rule 16a-3(d) under the Act, and Forms 5 and
amendments thereto furnished to the Company with respect to such fiscal year,
and any representation received by the Company from any reporting person that no
Form 5 is required.

Code of Ethics

      The Company has been inactive since early 2003 and has not yet adopted a
Code of Ethics applying to its executive officers. The Company intends to adopt
a Code of Ethics applying to such persons during the first quarter of the fiscal
year ending December 31, 2005

ITEM 10. EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation.

Executive Compensation.

      The following provides certain information concerning all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, paid or accrued by the Company during the years ended December
31, 2003, 2002 and 2001, to the Chief Executive. No other executive officer was
paid a salary in excess of $100,000 during such year.


                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]


                                       12
<PAGE>

Summary Compensation Table.

<TABLE>
<CAPTION>
                                               ANNUAL COMPENSATION           LONG TERM COMPENSATION AWARDS
                                               -------------------           -----------------------------
                                                                                RESTRICTED SECURITIES               PAYOUTS
                                                                                ---------------------               -------
          NAME AND                                        OTHER ANNUAL       STOCK           UNDERLYING             ALL OTHER
     PRINCIPAL POSITION           YEAR     SALARY         COMPENSATION       AWARD(S)         OPTIONS              COMPENSATION
     ------------------           ----     ------         ------------       --------         -------              ------------
<S>                               <C>    <C>                <C>                <C>                <C>                <C>
   J. Marvin Feigenbaum           2003   $   -----          $ -----            --                 --                 $ -----
   President and Chief            2002   $277,333(5)        $ -----            --                 --                 $   916(2)
   Executive Officer(1)           2001   $214,667           $10,340(4)         --                 --                 $29,804(3)
</TABLE>

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

(1)   President and Chief Executive Officer commencing June 1, 1994. Chief
      Financial Officer from June 1, 1994 until present. President and Chief
      Executive Officer of PCL from October 3, 1997 until May 12, 1999. PCL was
      a majority-owned subsidiary of the Company from October 3, 1997 until June
      12, 1998. Prior to October 3, 1997 and until PCL emerged from its Chapter
      11 proceeding, Mr. Feigenbaum served as Chief Operating Officer of PCL.

(2)   Represents automobile garage fees.

(3)   Represents automobile allowance, automobile insurance premiums, automobile
      maintenance and garage fees, life insurance premium, disability insurance
      premiums and long-term care insurance premiums.

(4)   Represents accrued vacation paid in cash.

(5)   Includes $208,000 (one year) severance accrual pursuant to the Employment
      Agreement

Options/SAR Grants in Fiscal Year Ended December 31, 2003

      No options or stock appreciation rights were granted to the Company's
Chief Executive officer or any other executive officer during the fiscal year
ended December 31, 2003.

      Aggregated Options/SAR Exercises in Most Recent Fiscal Year and Fiscal
      Year-End Options/SAR Values.

      No options or stock appreciation rights were held by the Company's Chief
Executive officer or any other executive officer during the fiscal year ended
December 31, 2003.

Employment Agreements.

      The Company entered into an Amended and Restated Employment Agreement (the
"Restated Agreement") with Mr. Feigenbaum, the Company's Chairman, President,
Chief Executive Officer and Chief Financial Officer, dated May 19, 1999. The
Restated Agreement amended and extended Mr. Feigenbaum's original employment
agreement with the Company, dated June 1, 1994, as amended. The Restated
Agreement is effective as of May 1, 1999 and expired April 30, 2002. The
Restated Agreement provided for Mr. Feigenbaum's continued employment as
Chairman of the Board, President, Chief Executive Officer and Chief Financial
Officer of the Company, as well as Mr. Feigenbaum's continued employment as
Chief Executive and Chief Financial Officer of ABC and contemporaneous
employment as Chairman, President and Chief Executive Officer of PCL. Pursuant
to the Restated Agreement, the Company agreed to pay Mr. Feigenbaum a base
salary of $208,000 per year (such amount does not include any compensation from
PCL). The Company further agreed to (a) make a lump sum payment to Mr.
Feigenbaum in an amount equal to that portion of his salary deferred by Mr.
Feigenbaum, as a convenience to the Company, since June, 1998, with simple
interest at a rate of 12%, and (b) pay to Mr. Feigenbaum a one-time bonus in the
amount of $50,000 upon execution of the Restated Agreement. In addition, the
Restated Agreement provided for vacation benefits, life insurance, an automobile
allowance, relocation expenses, and cellular telephone and travel and
entertainment expenses. The Restated Agreement further contained provisions for
termination of the Restated Agreement by mutual consent, for cause, without
cause by the Company, for death or disability of Mr. Feigenbaum and for good
reason by Mr. Feigenbaum, as well as provisions regarding the failure of the
parties to renew the Restated Agreement for an additional term. In addition, the
Restated Agreement provided that in the event of a change in control of the
Company (as defined), Mr. Feigenbaum will be paid for the remainder of the
unexpired term of the Restated Agreement plus an additional sum of $208,000.


                                       13
<PAGE>

      On April 30, 2002, the Restated Agreement expired by its terms and was not
renewed. However, Mr. Feigenbaum remains the Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer of the Company on an at-will
employment basis. Effective May 1, 2002, pursuant to the terms of the Restated
Agreement, the Company accrued a severance payment of $208,000. As of the date
of the filing of this report, this severance has not been paid.

      During the year ended December 31, 2003, Mr. Feigenbaum did not receive a
salary. Mr. Feigenbaum received a salary in the amount of $277,333 during the
year ended December 31, 2002 which includes a $208,000 one-year severance
accrual, pursuant to the then current Employment Agreement, as amended. Due to
the financial condition of the Company, during the year ended December 31, 1998,
approximately $47,667 of cash compensation which should have been paid to Mr.
Feigenbaum in 1998 was voluntarily deferred by Mr. Feigenbaum until 1999 as a
convenience to the Company. On September 26, 2001, J. Marvin Feigenbaum,
relinquished any and all rights to options granted to him that were voted upon
and approved by the holders of shares of Common Stock of the Company at a
Special Meeting of Stockholders of the Company held on September 25, 2001. The
option grant was for 500,000 shares of the Company's Common Stock at an exercise
price of $.66 per share. Accordingly, the options were never issued.

Compensation of Directors

      Directors who are employees of the Company do not receive any fee in
addition to their regular salary for serving on the Board of Directors.
Directors who are not employees of the Company receive a directors fee of $6,000
per annum, paid quarterly, and an attendance fee of $500 per meeting attended.
In addition, Directors are reimbursed for travel expenses for attendance at
board meetings. Non-Employee Directors are also eligible for an initial and
annual grant of stock options under the Company's Non-Employee Director Stock
Option Plan (see "Non-Employee Director Stock Option Plan" below).

      Effective May 1, 2002, Mr. J. Marvin Feigenbaum remains the Chairman of
the Board, President, Chief Executive Officer and Chief Financial Officer of the
Company on an at-will employment basis.


                                       14
<PAGE>

      Pursuant to the resolution of the Board of Directors on October 25, 2002,
Mr. David Sterling agreed to waive his right to receive any future fees for his
services as a director under certain circumstances (see Item 1. Description of
Business - for further details).

1994 Incentive Stock Option Plan

      In August, 1994, the Board of Directors adopted a 1994 Incentive Stock
Option Plan (the "Plan") which Plan was approved and adopted by the stockholders
of the Company on November 16, 1994. The Plan provides for the issuance of up to
250 shares of the Company's Common Stock upon the exercise of options granted to
officers, directors, full time employees and consultants rendering services to
the Company. Under the terms of the Plan, options granted thereunder will be
designated as options which qualify for incentive stock option treatment
("ISO's") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or options which do not so qualify ("Non-ISO's"). Unless sooner
terminated, the Plan will expire on August 1, 2004, and options may be granted
at any time or from time to time through such date. The purpose of the Plan is
to promote the interests of the Company and its stockholders by strengthening
the ability of the Company to attract and retain officers, employees and
consultants by furnishing suitable recognition of their ability to contribute to
the success of the Company and to align their interests and efforts with the
long term interest of the Company. The Plan succeeds the Company's 1992
Incentive Stock Option Plan, which has been terminated.

      The Plan is administered by the Board of Directors or by a Stock Option
Committee designated by the Board of Directors (the "Plan Administrator"). The
Plan Administrator has the discretion to determine the eligible employees and
consultants to whom, and the times and the prices at which, options will be
granted; whether such options shall be ISO's or Non-ISO's; the periods during
which each option will be granted; and the number of shares subject to each
option. The Plan Administrator shall have full authority to interpret the plan
and to establish and amend rules and regulations relating thereto.

      Under the Plan, the exercise price of an option designated as an ISO shall
not be less than the fair market value of the Common Stock on the date the
option is granted. However, in the event an option designated as an ISO is
granted to a ten percent stockholder (as defined in the Plan) such exercise
price shall be at least 110% of such fair market value. Exercise prices of
Non-ISO's may not be less than 85% of such fair market value. The aggregate fair
market value of shares subject to an option designated as an ISO for which any
participant may be granted such an option in any calendar year, shall not exceed
$100,000 plus any unused carryovers (as defined in Section 422 of the Code) from
a prior year. The "fair market value" will be the closing Nasdaq bid price or,
if the Company's Common Stock is not quoted by Nasdaq, the low bid as reported
by the National Quotation Bureau, Inc. or a market maker of the Company's Common
Stock or, if the Common Stock is not quoted by any of the above, by the Board of
Directors acting in good faith.

      Options may be granted under the Plan for such periods as determined by
the Plan Administrator; provided however that no option designated as an ISO
granted under the Plan shall be exercisable over a period in excess of ten
years, or in the case of a ten percent stockholder, five years. Options may be
exercised in whole at any time or in part from time to time. Options are not
transferable except to the estate of an option holder; provided, however, in the
case of a Non-ISO, and subject to Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") and prevailing
interpretations thereunder by the staff of the Commission, a recipient of a
Non-ISO may, with the consent of the Plan Administrator, designate a named
beneficiary of the Non-ISO in the event of the death of such recipient, or
assign such Non-ISO.


                                       15
<PAGE>

      Except as described below, the Plan Administrator may from time to time
amend the Plan as it deems proper and in the best interests of the Company
without further approval of the stockholders.

      The Board of Directors and the Plan Administrator may not amend certain
features of the Plan without the approval of the Company's stockholders to the
extent such approval is required for compliance with Section 422 of the Code
with respect to ISO's, Section 162(m) of the Code with respect to Non-ISO's or
Rule 16b-3 promulgated under Section 16 of the Exchange Act with respect to
awards made to individuals subject to Section 16 of the Exchange Act. Such
amendments would include (a) increasing the maximum number of shares of Common
Stock that may be issued under the Plan, (b) materially modifying the
requirements as to eligibility for participation in the Plan, or (c) otherwise
materially increasing the benefits accruing to participants under the Plan.

      As of December 31, 2003, there are no outstanding options granted under
this plan.

Non-Employee Director Stock Option Plan

      In August, 1994, the Board of Directors adopted the Non-Employee Director
Stock Option Plan (the "Director Plan") which Director Plan was approved and
adopted by the stockholders of the Company on November 16, 1994, and amended by
the stockholders of the Company on August 27, 1996. The Director Plan provides
for issuance of a maximum of 2,857 shares of Common Stock upon the exercise of
stock options granted under the Director Plan. Options may be granted under the
Director Plan until August 1, 2004, to the Company's non-employee directors (as
defined). The Director Plan provides that each non-employee director will
automatically be granted an option to purchase 71 shares upon joining the Board
of Directors (or, for those persons who are directors on the date of approval of
the Director Plan by the stockholders, on such date), and options to purchase
114 shares on each anniversary of the initial date of service or date of
approval, as the case may be. No options have been granted under the Director
Plan since 1996 because the Company essentially became inactive during 1997 and
a market for the Company's Common Stock has neither been established or
sustained since that time.

      Under the terms of the Director Plan, the sum of the number of shares to
be received upon any grant multiplied by the fair market value of each share at
the time of grant may not exceed $75,000. All awards shall be reduced to the
extent they exceed such amount. The exercise price for options granted under the
Director Plan shall be 100% of the fair market value of the Common Stock on the
date of grant. Until otherwise provided in the Director Plan, the exercise price
of options granted under the Director Plan must be paid at the time of exercise,
either in cash, by delivery of shares of Common Stock of the Company or by a
combination of each. The term of each option is five years from the date of
grant, unless terminated sooner as provided in the Director Plan. The Director
Plan is administered by a committee of the Board of Directors composed of not
fewer than two persons who are officers of the Company (the "Committee"). The
Committee has no discretion to determine which non-employee director will
receive options or the number of shares subject to the option, the term of the
option or the exercisability of the option. However, the Committee will make all
determinations of the interpretation of the Director Plan. Options granted under
the Director Plan do not qualify for incentive stock option treatment. As of
December 31, 2003, there are no options outstanding under this plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information as of March 2004, with
respect to the ownership of Common Stock by (i) the persons (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended), known by the Company to be the beneficial owner of more
than five percent of any class of the Company's voting securities, (ii) each
director and each officer identified in the Summary Compensation Table, and
(iii) directors and executive officers as a group. The most current information
available to the Company is set forth below.


                                       16
<PAGE>

      The Company believes that relevant to an understanding of the ownership of
the Common Stock is the fact that from December 1996 to March 13, 2003, the most
recent date on which Preferred Stock was converted, the Company issued an
aggregate of 214,070 shares of Common Stock upon the conversion of 14,000 shares
of Preferred Stock.

<TABLE>
<CAPTION>
                      NAME AND ADDRESS                        AMOUNT OF AND NATURE            PERCENTAGE
                     OF BENEFICIAL OWNER                     OF BENEFICIAL OWNERSHIP           OF CLASS
                     -------------------                     -----------------------           --------
<S>                                                                  <C>                         <C>
       J. Marvin Feigenbaum                                          315,964 (1)                 48.7%
       124 W. 60th Street, #33L
       New York, New York  10023

       David Sterling                                                 85,000 (2)                 13.1%
       33 Windsor Drive
       Muttontown, New York  11753

       All Officers and Directors as a Group (2
       persons in number)                                            400,964(1,2)                61.8%
</TABLE>

(1)   Includes (i) 7 shares of Common Stock owned by Mr. Feigenbaum; (ii) 32
      shares of Common Stock held in a trust for the benefit of a minor child of
      Mr. Feigenbaum, as to which shares Mr. Feigenbaum disclaims beneficial
      ownership; (iii) 315,925 shares of Common Stock issued to Mr. Feigenbaum
      on February 6, 2003, (see Item 12. Certain Relationships and Related
      Transactions - Issuance of Common Shares).

(2)   Represents 85,000 shares of Common Stock issued to Mr. Sterling on
      February 6, 2003 (see Item 12. Certain Relationships and Related
      Transactions - Issuance of Common Shares).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Issuance of Common Shares

      On October 25, 2002, the Board of Directors of the Company approved the
conversion of certain debts amounting to $80,185 owed by the Company to Mr. J.
Marvin Feigenbaum and David Sterling into 400,925 shares of the Company's common
stock. Mr. Feigenbaum and Mr. Sterling constitute the Board of Directors of the
Company, and Mr. Feigenbaum also is the Company's President, Chief Executive
Officer and Chief Financial Officer.


                                       17
<PAGE>

      The Company converted an aggregate of $63,185 of loan repayments and other
obligations owed by the Company to Mr. J. Marvin Feigenbaum into 315,925 shares
of the Company's common stock at an estimated fair value of $0.20 per share.
Such shares of common stock were issued in full payment and satisfaction of the
$63,185 owed by the Company to Mr. Feigenbaum, which consisted of: (i) a $15,000
demand loan made by Mr. Feigenbaum to the Company during 2002, to assist the
Company in paying certain of its expenses; (ii) $28,185, representing accrued
but unpaid reimbursement of medical, life and other insurance premiums and other
expenses which the Company was obligated to pay on Mr. Feigenbaum's behalf under
the terms of his employment agreement with the Company, which expired in April
2002; and (iii) $20,000 of an aggregate of approximately $280,000, representing
a portion of accrued but unpaid salary owed to Mr. Feigenbaum under the terms of
his employment agreement with the Company. The remaining amount approximating
$260,000 of accrued salary owed to Mr. Feigenbaum remained as an unpaid
obligation of the Company and is classified as Due to Related Parties as of
December 31, 2003.

      In addition, the Company converted during October 2002, an aggregate of
$17,000 of loan repayments and other obligations owed by the Company to David
Sterling into 85,000 shares of the Company's common stock at an estimated fair
value of $0.20 per share. Such shares of common stock were issued in full
payment and satisfaction of the $17,000 owed by the Company to Mr. Sterling,
which consisted of: (i) a $5,000 demand loan made by Mr. Sterling to the Company
during August 2002, to assist the Company in paying certain of its expenses; and
(ii) $12,000, representing accrued but unpaid director fees owed to Mr. Sterling
relating to his service to the Company as a member of the Board of Directors.

      Employment Agreement

      The Company had an employment agreement with Mr. J. Marvin Feigenbaum, its
president and CEO, with a term of three years at a base salary of $208,000
through April 30, 2002. Other benefits typical of such agreements were also
provided. Per the terms of the agreement, a severance equal to one year's base
salary would be due if the agreement was not renewed by the Company. On April
30, 2002, Mr. Feigenbaum's employment agreement expired by its terms and was not
renewed. However, Mr. Feigenbaum remains the Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer of the Company on an at-will
employment basis. Effective May 1, 2002, as per the terms of the Employment
Agreement, the Company accrued a severance payment of $208,000.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]


                                       18
<PAGE>

ITEM 13. EXHIBITS

      Incorporated by reference to the Exhibit Index at the end of this Report.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The following table sets forth the fees billed to us for the fiscal years
ended December 31, 2002 and December 31, 2003 by Marcum & Kliegman LLP
("MKLLP"):

                                     Fiscal Year                Fiscal Year
                                        Ended                      Ended
                                  December 31, 2002          December 31, 2003
                                  -----------------          -----------------


      Audit Fees (1)                  $25,000                     $25,000
      Audit Related Fees                 --                           --
      Tax Fees                           --                           --
      All Other Fees                     --                           --

      (1) Consists of fees billed for professional services rendered for the
audit of the financial statements of the Company as of December 31, 2002 and
December 31, 2003 and reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-QSB for the quarters during such fiscal
years. MKLLP was retained in November 2004 to conduct an audit of the Company's
financial statements as of December 31, 2002 and December 31, 2003 and for the
years the ended as well a review of the financial statements to be included in
the Forms 10-QSB for such years. The amount of Audit Fees reported in each
column of the table includes the fees billed for both fiscal year since such
fees were not separately allocated to each of the two years.

Pre-Approval of Services by the Independent Auditor

      The Board of Directors has adopted a policy for approval of audit and
permitted non-audit services by our independent auditor. The Board will consider
annually and approve the provision of audit services by our independent auditor
and consider and, if appropriate, approve the provision of certain defined audit
and non-audit services. Our management, may, however, approve de minimus amounts
for non-audit services without the approval of the Board.

      The Board also will consider on a case-by-case basis and, if appropriate,
approve specific engagements. Any proposed specific engagement may be presented
to the Board for consideration at its next regular meeting or, if earlier
consideration is required, to the any member of the Board who will then call a
special meeting of the Board to consider such engagement. Currently, there is
only one member of the Board. During the fiscal year ended December 31, 2003,
100% of the Audit Related Fees and all other fees were approved by the Board.


                                       19
<PAGE>

                                   SIGNATURES


      Pursuant to the requirements of Section 13 or 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, on February 16, 2005.


                                 UNITED DIAGNOSTIC, INC.


                                  By: /s/ J. Marvin Feigenbaum
                                      ------------------------
                                      J. Marvin Feigenbaum
                                      Chairman of the Board of Directors,
                                      President, Chief Executive Officer and
                                      Chief Financial Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                    Signature
                                    ---------



                                     /s/ J. Marvin Feigenbaum  February 16, 2005
                                     ------------------------
                                     J. Marvin Feigenbaum
                                     Chairman of the Board of Directors,
                                     President, Chief Executive Officer
                                     and Chief Financial Officer



                                       20
<PAGE>

                                  EXHIBIT INDEX

      Exhibits designated with an asterisk (*) have previously been filed with
      the Commission and are incorporated herein by reference to the document
      referenced in parentheticals following the descriptions of such exhibits.

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

2.1*     Asset Purchase Agreement dated September 13, 1996, among Nu-Tech
         Bio-Med, Inc., NTBM Billing Services, Inc., Prompt Medical Services,
         Inc., Judith Prussin and Jeffrey Prussin (filed without exhibits or
         schedules) (filed as Exhibit 2.1 to Current Report on Form 8-K filed
         September 25, 1996).

2.2*     Order Confirming Medical Science Institute's First Amended Plan of
         Reorganization dated November 18, 1996 (US Central District of
         California Case No. LA 95-37790 ID) together with First Amended
         Disclosure Statement and Plan of Reorganization for Medical Science
         Institute (filed as Exhibit 2.2 to Current Report on Form 8-K filed on
         December 3, 1996).

2.3*     Disclosure Statement of Physicians Clinical Laboratory as filed with
         the U.S. Bankruptcy Court (Central District of California Case No.
         SV96-23185-GM) (filed as Exhibit 2.3 to Form S-3 File No. 333-17859).

2.4*     Joint Plan of Reorganization of Physicians Clinical Laboratory as filed
         with the U.S. Bankruptcy Court (Central District of California Case No.
         SV96-23185-GM) (filed as Exhibit 2.4 to Form S-3 File No. 333-17859).

2.5*     Motion of PCL for Entry of Order authorizing PCL to acquire all of the
         Issued and Outstanding Stock of Medical Science Institute (filed as
         Exhibit 2.5 to Current Report on Form 8-K filed January 29, 1997).

3.1*     Amended and Restated Certificate of Incorporation filed with the
         Secretary of State of Delaware on November 16, 1994 (filed as Exhibit
         3.1.5 to Amendment No. 1 to Registration Statement on Form SB-2, File
         No. 33-84622).

3.2*     Amended Certificate of Designations, Preferences and Rights and Number
         of Shares of Series A Preferred Stock as filed with the Secretary of
         State of Delaware on October 23, 1996 (filed as Exhibit 3.3 to Report
         on Form 10QSB for the fiscal quarter ended September 30, 1996).

3.3*     Certificate of Amendment of Amended Certificate of Designations,
         Preferences and Rights and Number of Shares of Series A Convertible
         Preferred Stock as filed with the Secretary of State of Delaware on
         November 20, 1996.

3.4*     Amendment to the Registrant's Certificate of Incorporation (filed as
         Exhibit 3 to Current Report on Form 8-K for October 23, 1997).

3.5*     Amended and Restated Certificate of Incorporation filed with the
         Secretary of State of Delaware on October 21, 1997 (filed as Exhibit 3
         to Current Report on Form 8-K for November 4, 1997).

3.6*     Amendment to the Registrant's Certificate of Incorporation filed with
         the Secretary of State of Delaware on December 23, 1998 (filed as
         Exhibit 3.6 to Report on Form 10-KSB for the fiscal year ended December
         31, 1997).

3.7*     Amended and Restated By-Laws effective July 11, 2000 (filed as Exhibit
         3(ii) to Current Report on Form 8-K filed July 13, 2000)


                                       21
<PAGE>

4.1*     Form of Common Stock Certificate (filed as Exhibit 4.1 to Registration
         Statement on Form SB-2, File No. 33-84622).

4.2*     Form of Warrant and Warrant Agreement relating to Warrants to purchase
         an aggregate of 114,286 shares of Common Stock issued to certain
         individuals on August 9, 1994 in connection with a Bridge Financing
         (filed as Exhibit 4.2 to Registration Statement on Form SB-2, File No.
         33-84622).

4.3*     Form of Warrant Agreement issued to Starr Securities, Inc. and Stein,
         Shore Securities, Inc. (filed as Exhibit 4.4 to Registration Statement
         on Form SB-2, File No. 33-84622).

4.4*     Form of Registration Rights Agreement dated August 9, 1994 between the
         Registrant and certain individuals in connection with completed Bridge
         Financing (filed as Exhibit 4.5 to Registration Statement on Form SB-2,
         File No. 33-84622).

10.1*    Amended and Restated Employment Agreement with J. Marvin Feigenbaum
         (filed as Exhibit 10.2 to Registration Statement on Form SB-2, File No.
         33-84622).

10.2*    Employment Agreement with Dr. Kenneth E. Blackman as of July 1, 1994
         (filed as Exhibit 10.3 to Registration Statement on Form SB-2, File No.
         33-84622).

10.3*    Patent No. 4,559,299 dated December 17, 1985 (filed as Exhibit 10.4 to
         Registration Statement on Form SB-2, File No. 33-84622).

10.4*    Patent No. 4,734,372 dated March 29, 1988 (filed as Exhibit 10.5 to
         Registration Statement on Form SB- 2, File No. 33-84622).

10.5*    Patent No. 4,937,298 dated June 26, 1990 (filed as Exhibit 10.6 to
         Registration Statement on Form SB-2, File No. 33-84622).

10.6*    Assignment of Patent No. 4,559,299, recorded on March 29, 1993, by
         Brown University Research Foundation, in favor of Analytical Biosystems
         Corporation (filed as Exhibit 10.7 to Registration Statement on Form
         SB-2, File No. 33-84622).

10.7*    Assignment of Patent No. 4,734,372, recorded on March 29, 1993, by
         Brown University Research Foundation, Inc., in favor of Analytical
         Biosystems Corporation (filed as Exhibit 10.8 to Registration Statement
         on Form SB-2, File No. 33-84622).

10.8*    Assignment of Patent No. 4,937,187, recorded on March 29, 1993, by
         Brown University Research Foundation, Inc. in favor of Analytical
         Biosystems Corporation (filed as Exhibit 10.9 to Registration Statement
         on Form SB-2, File No. 33-84622).

10.9*    Consulting Agreement with Starr Securities, Inc. (filed as Exhibit
         10.10 to Amendment No. 1 to Registration Statement on Form SB-2, File
         No. 33-84622).

10.10*   Funding Agreement dated December 14, 1990 between Rhode Island
         Partnership for Science and Technology and Analytical Biosystems
         Corporation (filed as Exhibit 10.11 to Registration Statement on Form
         SB-2, File No. 33-84622).

10.11*   Loan Agreement dated February 11, 1993 between State of Rhode Island
         Economic Development Small Business Loan Fund Corporation ("SBLFC") and
         Analytical Biosystems Corporation in the amount of $150,000 (filed as
         Exhibit 10(iii) to Report on Form 10-KSB for the fiscal year ended
         December 31, 1992).


                                       22
<PAGE>

10.12*   Loan Agreement dated February 25, 1993 between SBLFC and Analytical
         Biosystems Corporation in the amount of $100,000 (filed as Exhibit
         10(iii) to Report on Form 10-KSB for the fiscal year ended December 31,
         1992).

10.13*   Loan Agreement dated April 19, 1993 between SBLFC and Analytical
         Biosystems Corporation in the amount of $250,000 (filed as Exhibit
         10(i)(a) to Current Report on Form 8-K dated April 30, 1993).

10.14*   Loan Agreement dated October 22, 1993 between SBLFC and Analytical
         Biosystems Corporation in the amount of $166,666 (filed as Exhibit
         10(iii)(d) to Report on Form 10-KSB for the fiscal year ended December
         31, 1993).

10.15*   Loan Agreement dated February 17, 1994 between SBLFC and Analytical
         Biosystems Corporation in the amount of $125,000 (filed as Exhibit
         10(iii)(e) to Report on Form 10-KSB for the fiscal year ended December
         31, 1993).

10.16*   Security Agreement dated October 22, 1993 between SBLFC and Analytical
         Biosystems Corporation (filed as Exhibit 10.17 to Registration
         Statement on Form SB-2, File No. 33-84622).

10.17*   Patent Security Agreement dated April 19, 1993 between SBLFC and
         Analytical Biosystems Corporation (filed as Exhibit 10.18 to
         Registration Statement on Form SB-2, File No. 33-84622).

10.18*   Patent Security Agreement dated October 22, 1993 between SBLFC and
         Analytical Biosystems Corporation (filed as Exhibit 10.19 to
         Registration Statement on Form SB-2, File No. 33-84622).

10.19*   Form of Indemnification Agreements between Registrant and Registrant's
         Directors and Officers (filed as Exhibit 10.20 to Registration
         Statement on Form SB-2, File No. 33-84622).

10.20*   Consulting Agreement and Warrant with Dr. Elliot Fishkin (filed as
         Exhibit 10.22 to Amendment No. 1 to Registration Statement on Form
         SB-2, File No. 33-84622).

10.21*   Redacted copy of Clinical Trials Agreement dated August 14, 1995
         between Analytical Biosystems Corporation and research institution and
         certain individuals (filed as Exhibit 10.1 to Current Report on Form
         8-K dated August 11, 1995).

10.22*   Agreement dated April 10, 1995 between Analytical Biosystems
         Corporation and Loats Associates (filed as Exhibit 10.1 to Current
         Report on Form 8-K dated April 20, 1995).

10.23*   Form of Registration Rights Agreement entered into among the Company
         and the holders of the Company's Series A Preferred Stock entered into
         on December 2, 1996 (filed as Exhibit 10.24 to Registration Statement
         on Form S-3 File 333-17857).

10.24*   Form of Registration Rights Agreement entered into among the Company
         and certain holders of the Company's Common Stock entered into on April
         12, 1996 in connection with private placement offering completed on
         April 12, 1996 (filed as Exhibit 10.25 to Registration Statement on
         Form S-3 File 333-17857).

10.25*   Form of Promissory Note of Nu-Tech Bio-Med, Inc. in the principal
         amount of $2,000,000 dated January 23, 1997 in favor of The Michael
         Jesselson Trust (filed as Exhibit 10.29 to Current Report on Form 8-K
         filed January 29, 1997).


                                       23
<PAGE>

10.26*   Security Agreement dated January 23, 1997 between Nu-Tech Bio-Med, Inc.
         and The Michael Jesselson Trust (filed as Exhibit 10.30 to Current
         Report on Form 8-K filed January 29, 1997).

10.27*   Form of Common Stock Purchase Warrant dated January 23, 1997 to
         purchase 100,000 shares of Common Stock at an exercise price of $11.50
         per share (filed as Exhibit 10.31 to Current Report on Form 8-K filed
         January 29, 1997).

10.28*   Amended and Restated Employment Agreement by and between the Company
         and J. Marvin Feigenbaum, dated June 6, 1997 (filed as Exhibit 10 to
         Current Report on Form 8-K filed June 9, 1997).

10.29*   Amended and Restated Employment Agreement by and between the Company
         and J. Marvin Feigenbaum, dated May 19, 1999 (filed as Exhibit 10 to
         Current Report on Form 8-K for June 23, 1999).

10.30*   1992 Stock Option Plan (filed as Exhibit 28 to Report on Form 10-Q for
         the quarter ended March 31, 1992).

10.31*   1994 Incentive Stock Option (filed as Exhibit 99.2 to Registration
         Statement on Form SB-2, File No. 33-84622).

10.32*   Non Employee Director Stock Option Plan (filed as Exhibit 99.3 to
         Registration Statement on Form SB-2, File No. 33-84622).

10.33*   Amended and Restated Non-Employee Director Stock Option Plan (filed as
         Exhibit A to the Company's Proxy Statement for the Annual Meeting held
         August 27, 1996).

10.34*   Summons and Complaint in the action "Mordechai Gurary v. Isaac
         Winehouse, Isaac Winehouse d/b/a Wall & Broad Equities and Nu-Tech
         Bio-Med, Inc." Case No. 97 Civ. 3803 (LBS) in the United States
         District Court, Southern District of New York (filed as Exhibit 99 to
         Current Report on Form 8-K filed May 30, 1997).

10.35*   Indenture, dated as of September 30, 1997, among PCL and First Trust
         National Association "FTNA" (filed as Exhibit 99.1 to Current Report on
         Form 8-K for October 20, 1997).

10.36*   Security Agreement, dated as of September 30, 1997, by and among PCL
         and FTNA (filed as Exhibit 99.2 to Current Report on Form 8-K for
         October 20, 1997).

10.37*   Stockholders Agreement, dated as of September 30, 1997, by and among
         PCL, Nu-Tech and Oaktree (filed as Exhibit 99.3 to Current Report on
         Form 8-K for October 20, 1997).

10.38*   Pledge Agreement, dated as of September 30, 1997, between PCL and FTNA
         (filed as Exhibit 99.4 to Current Report on Form 8-K for October 20,
         1997).

10.39*   Employment Agreement, made as of September 30, 1997, by and among PCL
         and J. Marvin Feigenbaum (filed as Exhibit 99.5 to Current Report on
         Form 8-K for October 20, 1997).

10.40*   Noncompetition Agreement, made as of September 30, 1997, by and among
         PCL and Nu-Tech (filed as Exhibit 99.6 to Current Report on Form 8-K
         for October 20, 1997).

10.41*   Healthcare Receivables Purchase and Transfer Agreement, dated as of
         September 30, 1997 (filed as Exhibit 99.7 to Current Report on Form 8-K
         for October 20, 1997).


                                       24
<PAGE>

10.42*   Summons and Complaint in the action "Gorra Holding and Barras
         Investment v. Nu-Tech Bio-Med, Inc." Case No. 98 Civ. 764 (JMP) in the
         United States District Court, Southern District of New York (filed as
         Exhibit 99 to Current Report on Form 8-K for February 23, 1998).

10.43*   Stock Purchase Agreement, dated as of June 12, 1998 between the
         Registrant and Oaktree, acting as agent on behalf of certain funds and
         accounts (filed as Exhibit 99.1 to Current Report on Form 8-K for June
         22, 1998).

10.44*   Amended and Restated Stockholders Agreement, dated as of June 12, 1998,
         by and among the Registrant, PCL, Oaktree and J. Marvin Feigenbaum
         (filed as Exhibit 99.2 to Current Report on Form 8-K for June 22,
         1998).

16.1*    Letter dated November 19, 2004 from the Company to Eisner LLP (filed as
         Exhibit 16.1 to Current Report on Form 8-K for November 19, 2004).

16.2*    Letter dated November 22, 2004 from Eisner LLP to the Securities and
         Exchange Commission (filed as Exhibit 16.2 to Current Report on Form
         8-K for November 19, 2004).

21.1     List of Subsidiaries of the Company

31.1     Certification of Marvin Feigenbaum pursuant to Exchange Act Rules
         13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

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



                                       25
<PAGE>

                                    CONTENTS



                                                                            Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                      F-2

CONSOLIDATED FINANCIAL STATEMENTS

         BALANCE SHEET AS OF DECEMBER 31, 2003                               F-3

         STATEMENTS OF OPERATIONS FOR THE
         YEARS ENDED DECEMBER 31, 2003 AND 2002                              F-4

         STATEMENTS OF STOCKHOLDERS' DEFICIENCY
         FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002                      F-5

         STATEMENTS OF CASH FLOWS
         FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002                      F-6

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          F-7


                                      F-1

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
United Diagnostic, Inc.


We have audited the accompanying consolidated balance sheet of United
Diagnostic, Inc. and subsidiaries (the "Company") as of December 31, 2003 and
the related consolidated statements of operations, stockholders' deficiency and
cash flows for the years ended December 31, 2003 and 2002. 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
consolidated 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 consolidated financial position of United
Diagnostic, Inc., and subsidiaries as of December 31, 2003, and the consolidated
results of their operations and their consolidated cash flows for the years
ended December 31, 2003 and 2002 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company currently has no revenue producing activities, has experienced net
losses and has a working capital deficiency. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/ Marcum & Kliegman LLP
New York, NY


December 21, 2004



                                      F-2
<PAGE>


                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                                                    December 31
                                                                       2003
                                                                   ------------
ASSETS
Current assets:
  Cash                                                             $         --
  Prepaid expenses and other current assets                              16,447
                                                                   ------------
    Total current assets                                           $     16,447
                                                                   ============


LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
  Notes payable, in default                                        $     65,888
  Accounts payable                                                      192,176
  Accrued expenses                                                       62,670
  Due to related parties                                                284,785
  Contract payable                                                       55,571
                                                                   ------------


    Total current liabilities                                           661,090
                                                                   ------------

Commitments and Contingencies


Stockholders' deficiency
  Series A convertible preferred stock, $.01 par value;
    2,000,000 authorized; none issued and outstanding                        --
  Common stock, $.01 par value; 50,000,000 shares authorized;
    649,126 shares issued and outstanding                                 6,491
  Additional paid-in capital                                         59,797,418
  Accumulated deficit                                               (60,448,552)
                                                                   ------------
Total stockholders' deficiency                                         (644,643)
                                                                   ------------


    Total liabilities and stockholders' deficiency                 $     16,447
                                                                   ============

        See accompanying notes to the consolidated financial statements.



                                      F-3
<PAGE>


                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        Year Ended December 31
                                                         2003           2002
                                                       -------------------------
Revenues:
                                                       $      --      $      --
                                                       -------------------------
Operating costs and expenses:
    General and administrative                            19,390        307,579
                                                       -------------------------
Total operating costs and expenses                        19,390        307,579
                                                       -------------------------

Operating loss                                           (19,390)      (307,579)
                                                       -------------------------

Other income (expense):
    Interest expense                                      (6,259)        (6,259)
                                                       -------------------------
Total other income (expenses)                             (6,259)        (6,259)
                                                       -------------------------

Net loss                                               $ (25,649)     $(313,838)
                                                       =========================

Net loss per common share - basic and diluted          $   (0.04)     $   (2.91)
                                                       =========================

Weighted average shares outstanding                      606,898        107,725
                                                       =========================

        See accompanying notes to the consolidated financial statements.



                                      F-4
<PAGE>


                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                            CONSOLIDATED STATEMENT OF
                            STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                                             Number of     Series A
                                                             Shares of    Convertible
                                                             Series A      Preferred    Number of
                                                            Convertible    Stock at     Shares of      Common       Additional
                                                             Preferred     $.01 Par       Common    Stock at $.01     Paid-In
                                                               Stock         Value        Stock       Par Value       Capital
                                                          ------------------------------------------------------------------------
<S>                                                               <C>            <C>        <C>            <C>      <C>
Balance at December 31, 2000                                      2,826          $ 28       34,131       $   341    $ 59,723,355

Net Loss                                                             --            --           --            --              --
                                                          ------------------------------------------------------------------------

Balance at December 31, 2001                                      2,826          $ 28       34,131       $   341    $ 59,723,355
                                                          ------------------------------------------------------------------------

Issuance of common stock for
    conversion of related party debt                                 --            --      400,925         4,009          76,176

Net Loss                                                             --            --           --            --              --
                                                          ------------------------------------------------------------------------

Balance at December 31, 2002                                      2,826          $ 28      435,056       $ 4,350    $ 59,799,531
                                                          ------------------------------------------------------------------------

Issuance of unregistered common stock at $.66
    per share of Series A Convertible Preferred Stock            (2,826)          (28)     214,070         2,141          (2,113)

Net Loss                                                             --            --           --            --              --
                                                          ------------------------------------------------------------------------
Balance at December 31, 2003                                         --          $ --      649,126       $ 6,491    $ 59,797,418
                                                          ========================================================================

<CAPTION>




                                                            Accumulated
                                                              Deficit          Total
                                                          ------------------------------
<S>                                                         <C>               <C>
Balance at December 31, 2000                                $ (59,522,180)   $  201,544

Net Loss                                                         (586,885)     (586,885)
                                                          ------------------------------

Balance at December 31, 2001                                $ (60,109,065)   $ (385,341)
                                                          ------------------------------

Issuance of common stock for
    conversion of related party debt                                   --        80,185

Net Loss                                                         (313,838)     (313,838)
                                                          ------------------------------

Balance at December 31, 2002                                $ (60,422,903)   $ (618,994)
                                                          ------------------------------

Issuance of unregistered common stock at $.66
    per share of Series A Convertible Preferred Stock                  --            (0)

Net Loss                                                          (25,649)      (25,649)
                                                          ------------------------------
Balance at December 31, 2003                                $ (60,448,552)   $ (644,643)
                                                          ==============================
</TABLE>


        See accompanying notes to the consolidated financial statements.



                                      F-5
<PAGE>


                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                         Year Ended December 31
                                                            2003        2002
                                                         -----------------------
Operating activities:
Net loss                                                 $ (25,649)   $(313,838)
                                                         -----------------------
Adjustments to reconcile net loss to net
    cash used in operating activities:
       Changes in operating assets and liabilities:
          Prepaids expenses and other current assets           (58)      (8,752)
          Accounts payable                                  14,076      (34,329)
          Accrued expenses                                  (8,243)      19,362
          Due to officers                                       --      307,004
                                                         -----------------------
Net cash used in operating activities                      (19,874)     (30,553)
                                                         -----------------------

Financing activities:
Advances from related parties                               15,887       30,000
                                                         -----------------------
Net cash provided by financing activities                   15,887       30,000
                                                         -----------------------
Net decrease in cash                                        (3,987)        (553)
Cash at beginning of period                                  3,987        4,540
                                                         -----------------------
Cash at end of period                                    $      --    $  (3,987)
                                                         =======================

Supplemental schedule of non-cash
    investing and financing activities:

Issuance of common stock for conversion
    of related party debt                                $      --    $  80,185
                                                         =======================

        See accompanying notes to the consolidated financial statements.


                                      F-6

<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

1. BASIS OF PRESENTATION

      United Diagnostic, Inc. ("United" or the "Company"), was organized under
the laws of Delaware in September 1981 under the name of "Applied DNA Systems,
Inc." On November 16, 1994, the Company changed its name to Nu-Tech Bio-Med,
Inc. On December 23, 1998, the Company changed its name to United Diagnostic,
Inc.

      The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Analytical Biosystems Corporation ("ABC") and
Prompt Medical Billing, Inc. All material intercompany transactions and balances
have been eliminated. ABC was a clinical oncology laboratory service and
research company located in Rhode Island. As of November 3, 1997, ABC suspended
its laboratory operations. Prompt Medical Billing ceased operations in 1998.

      The consolidated financial statements have been prepared on the basis that
the Company will continue as a going concern, which assumes the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company does not at the present time have any revenue generating operations, has
sustained net losses of $25,649 and $313,838, respectively during the years
ended December 31, 2003, and 2002, is not in compliance with certain terms of
its notes payable, and has expended all cash from operations. The amount of
stockholders' deficiency and working capital deficiency at December 31, 2003,
was $644,643. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Among other things, the Company
continues to seek additional debt and/or equity financing and potential mergers
and or acquisitions with operating entities; however, there is no assurance that
it will be successful in that endeavor. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities or any other adjustments that might be necessary should the Company
be unable to continue as a going concern.

      During February 2003, by shareholder approval, the Company effectuated a 1
for 20 reverse stock split of its common stock. The financial statements have
been retroactively restated for this reverse stock split.


                                      F-7
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      a. Use of Estimates

      The preparation of the consolidated 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, liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.

      b. Fair Values of Financial Instruments

      For cash and accounts payable the carrying amounts approximate fair value
due to the short term maturity of these instruments. The carrying amount of the
Company's debt approximates fair value based on similar debt instruments
available.

      c. Stock Based Compensation

      The Company granted qualified stock options for a fixed number of shares
to employees with an exercise price equal to the fair value of the shares at the
date of grant. As permitted under SFAS No. 148, "Accounting for Stock Based
Compensation-Transition and Disclosure," which amended SFAS No. 123, "Accounting
for Stock-Based Compensation," the Company has elected to continue to follow the
intrinsic value method in accounting for its stock-based employee compensation
arrangements as defined by Accounting

      For certain non-qualified stock options, restricted stock and warrants
granted to employees, the Company recognizes as compensation expense the excess
of the market value of the common stock issuable upon exercise of such options
over the aggregate exercise price of such options. For warrants granted to
non-employees, the Company recognizes as a charge the deemed fair value of the
warrants or the value of the services provided, whichever is more reliably
measurable. Such charges are amortized over the vesting period of each option or
warrant or the recipient's service period, if shorter. For the years ended
December 31, 2003 and 2002, the Company did not incur any compensation expense
in connection with such options and warrants.


                                      F-8
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

      d. Income Taxes

      The liability method is used to account for income taxes. Deferred tax
assets and liabilities are determined based on differences between financial
reporting and income tax basis of assets and liabilities as well as net
operating loss carryforwards and are measured using the enacted tax rates and
laws that will be in effect when the differences reverse. Deferred tax assets
are reduced by a valuation allowance to reflect the uncertainty associated with
their ultimate realization.

      e. Net Loss Per Common Share

      The Company applies Statement of Financial Accounting Standards No. 128,
Earnings Per Share (SFAS 128) to compute net loss per common share. Basic net
loss per common share is computed using the weighted average number of common
shares outstanding during the year. Diluted net loss per share generally
includes potential common stock issuable through stock options, warrants and
convertible debt since their effect would be antidilutive. Potential common
shares aggregating to 0 and 2,200, respectively, for the years ended December
31, 2003 and 2002 have been excluded from the calculation since their effect
would be anti-dilutive.

<TABLE>
<CAPTION>
                                                                  Loss                Shares
                                                              (Numerator)         (Denominator)      Per Share
                                                          --------------------------------------------------------
<S>                                                            <C>                  <C>              <C>
Year ended December 31, 2003
----------------------------
Consolidated net loss                                          $ (25,649)
                                                               ----------

Loss Per Share-basic and diluted
Loss attributable to common stockholders                       $ (25,649)           606,898          $ (0.04)
                                                               ==============================================

Year ended December 31, 2002
----------------------------
Consolidated net loss                                          $ (313,838)
                                                               -----------

Loss Per Share-basic and diluted
Loss attributable to common stockholders                       $ (313,838)          107,725          $ (2.91)
                                                               ==============================================
</TABLE>


                                      F-9
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

      f. New Pronouncements


      The Company does not believe that any recently issued, but not yet
effective accounting standards would have a material effect on the accompanying
financial statements.


3. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

      a. Issuance of Common Shares

      On October 25, 2002, the Board of Directors of the Company approved the
conversion of certain debts amounting to $80,185 owed by the Company to Mr. J.
Marvin Feigenbaum and David Sterling into an aggregate of 400,925 shares of the
Company's common stock. Mr. Feigenbaum and Mr. Sterling constitute the Board of
Directors of the Company, and Mr. Feigenbaum also is the Company's President,
Chief Executive Officer and Chief Financial Officer.

      The Company converted during 2002, an aggregate of $63,185 of loan
repayments and other obligations owed by the Company to Mr. J. Marvin Feigenbaum
into 315,925 shares of the Company's common stock at an estimated fair value of
$0.20 per share. Such shares of common stock were issued in full payment and
satisfaction of $63,185 owed by the Company to Mr. Feigenbaum, which consisted
of: (i) a $15,000 demand loan made by Mr. Feigenbaum to the Company during 2002
(ii) $28,185, representing accrued but unpaid reimbursement of medical, life and
other insurance premiums and other expenses which the Company was obligated to
pay on Mr. Feigenbaum's behalf under the terms of his employment agreement with
the Company, which expired in April 2002; and (iii) $20,000 representing a
portion of approximately $280,000 representing accrued but unpaid salary owed to
Mr. Feigenbaum under the terms of his employment agreement with the Company. The
remaining amount approximating $260,000 of accrued salary owed to Mr. Feigenbaum
remained as an unpaid obligation of the Company.

      In addition, the Company converted during October 2002, an aggregate of
$17,000 of loan repayments and other obligations owed by the Company to David
Sterling into 85,000 shares of the Company's common stock at an estimated fair
value of $0.20 per shares. Such shares of common stock were issued in full
payment and satisfaction of the $17,000 owed by the Company to Mr. Sterling,
which consisted of: (i) a $5,000 demand loan made by Mr. Sterling to the Company
during August 2002 and (ii) $12,000, representing accrued but unpaid director
fees owed to Mr. Sterling relating to his service to the Company as a member of
the Board of Directors.


                                      F-10
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

      b. Employment Agreement

      The Company had an employment agreement with Mr. J. Marvin Feigenbaum, its
president and CEO, with a term of three years at a base salary of $208,000
through April 30, 2002. Other benefits typical of such agreements were also
provided. Per the terms of the agreement, a severance equal to one year's base
salary would be due if the agreement was not renewed by the Company. On April
30, 2002, Mr. Feigenbaum's employment agreement expired by its terms and was not
renewed. However, Mr. Feigenbaum remains the Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer of the Company on an at-will
employment basis. Effective May 1, 2002, as per the terms of the Employment
Agreement, the Company accrued a severance payment of $208,000.

      c. Due to Related Parties

      Due to related parties aggregating to $284,785 at December 31, 2003,
represent advances to the Company by its Chief Executive Officer and a board
member and accrued and unpaid salary to the Company's Chief Executive Officer.
Such advances are non-interest bearing and due on demand. During the year ended
December 31, 2003, net advances amounting to $15,887 were made to the Company by
such individuals.

4. NOTES PAYABLE - IN DEFAULT

    Notes payable to State of Rhode Island's
    Small Business Loan Fund Corporation (SBLFC),
    in default, 9.5% interest accruing, principal due on demand,
    collateralized by virtually all of the assets of United and ABC     $ 65,888
                                                                        ========

In connection with a series of loans obtained during 1993 and 1994 by the
Company from the State of Rhode Island Economic Development Small Business Loan
Fund Corporation ("SBLFC") in the principal aggregate amount of $791,000, the
Company executed two patent security agreements granting the SBLFC a security
interest in ABC's patents to secure $541,000 of the $791,000 of SBLFC loans. All
of the SBLFC loans, including those which were subject to patent security
interest, were further secured by a security interest in the Company's accounts
receivable, inventory and equipment. Each of these loans were for a term of five
years from its respective loan date, bearing interest at the rate of 5.4% per
annum and, as to each loan, after the first year is amortized monthly as to
principal and interest. In June 1998, the terms of these loans were modified to
9.5% interest with principal due on demand. The aggregate amount of monthly
interest payments is approximately $600 per month. The Company is not in
compliance with certain terms of these loans. In the event that the Company, for
whatever reason, is unable to


                                      F-11
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

4. NOTES PAYABLE - IN DEFAULT - CONTINUED

   Notes payable to State of Rhode Island's
   Small Business Loan Fund Corporation (SBLFC),
   in default, 9.5% interest accruing, principal due on demand,
   collateralized by virtually all of the assets of United and ABC     $ 65,888
                                                                       ========

continue to meet its loan repayment obligations, the assets which are pledged
will be subject to the rights of the SBLFC as a secured party. Further, until
the SBLFC loans are repaid, it is unlikely that the Company or ABC will be able
to obtain additional secured financing utilizing this collateral as security for
new loans.

5. ACCRUED EXPENSES

      Accrued expenses consist of the following:

                                                         2003
                                                       -------
        Professional fees                              $23,629
        Payroll taxes                                   13,463
        Vacation                                        18,676
        Other expenses                                   6,902
                                                       -------

                                                       $62,670
                                                       =======

6. LEASE COMMITMENTS

      On October 15, 2001, the Company closed its office in Wakefield, Rhode
Island. From October 1, 2002 through July 31, 2003, the Company obtained office
services at $100 per month on a month-to-month basis. The Company also leased
storage space for its records on a month-to-month basis.

      Rent expense was $1,246 and $12,709 for the years ended December 31, 2003,
and 2002, respectively.


                                      F-12
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

7. CONTRACT PAYABLE

      A contract payable with a balance of $55,571 at December 31, 2003,
represents the balance due to Brown University from a prior research agreement
which is no longer in effect.

8. STOCKHOLDERS' DEFICIENCY

      a. Series A Convertible Preferred Stock

      The Company had outstanding 2,826 shares of Series A Convertible Preferred
Stock ("Preferred Stock"). During February 2003, the Company amended the terms
of the Preferred Stock by obtaining majority shareholder approval. The Preferred
Stock was amended whereby each share of Preferred Stock (with a $1,000
liquidation preference) was convertible into approximately 76 shares of common
stock. During March of 2003, the Company converted 2,826 of preferred stock by
issuing 214,070 shares of common stock.

      b. Common Stock

      During February 2003, by shareholder approval, the Company effectuated a 1
for 20 reverse stock split of its common stock. The financial statements have
been retroactively restated for this reverse stock split.

      c. Stock Option Plans

      At December 31, 2003, the Company has stock option plans as follows:

            i. 1994 Plan

      The Company has reserved 250 shares of common stock under the 1994
Employee Stock Option Plan (the 1994 Plan). Options granted under the 1994 Plan
may be incentive options or nonqualified stock options, and shall be designated
as such at the time of grant. The 1994 Plan permits the granting of incentive
options only to officers and full-time employees of the Company, at no less than
100% of the fair market value of the Company's common stock at the date of the
grant. Nonqualified stock options may be granted to officers, employees,
consultants, and advisors of the Company, as well as to members of the Board of
Directors, at a price determined by the Plan administrator but in no case less
than 85% of the fair market value of the Company's common stock at the date of
the grant. To the extent that any option intended to be an incentive option
shall fail to qualify as such under Section 422 of the Internal Revenue Code of
1986, such options shall be deemed to be nonqualified options. The 1994 Plan is
administered by the Option Committee of the Board of Directors, which has full
power to determine the specific terms of each option granted, subject to the
provisions of the 1994 Plan. Due to the current number of


                                      F-13
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

8. STOCKHOLDERS' DEFICIENCY - CONTINUED

Directors, there is no functioning committee. As of December 31, 2003, the
Company has no outstanding options granted under this Plan.

            ii. Director's Plan

      The Company has reserved 142 shares of common stock under the 1994
Non-Employee Director Stock Option Plan (the Director Plan). Each non-employee
director, upon election of the Company's Board of Directors, shall be granted
options for 4 shares of common stock, and each shall be granted on subsequent
annual anniversary dates of the initial grant, additional options for 6 shares
of common stock. Under the terms of the agreement, the sum of the number of
shares to be received upon any grant multiplied by the fair market value of each
share at the time of the grant may not exceed $75,000. No options have been
granted under the Director Plan since 1996 because the Company essentially
became inactive during 1997 and a market for the Company's common stock has
neither been established nor sustained since 1997. As of December 31, 2003, the
Company has no outstanding options granted under the Director Plan.

      The exercise price of each option shall be 100% of the fair market value
of the Company's common stock at the date of the grant. The Director Plan is
administered by the Director Plan Committee, which is comprised of not less than
two directors of the Company who are not entitled to participate in the Director
Plan. Due to the current number of Directors, there is no functioning committee.

      The following table presents the activity of the Company's stock option
plans for the years ended December 31:


                                      F-14
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                             2003                                          2002
                                      -----------------------------------------------   -------------------------------------------
                                                                    Weighted                                        Weighted
                                                                    Average                                         Average
                                                                    Exercise                                        Exercise
                                             Options                  Price                  Options                  Price
                                      -----------------------------------------------   -------------------------------------------
<S>                                                      <C>     <C>                                   <C>     <C>
Outstanding at January 1,                                --      $                --                    129    $             9,767
Granted                                                  --                                              --
Exercised                                                --                                              --
Canceled                                                                                               (129)                 9,767
                                      -----------------------------------------------   -------------------------------------------
Outstanding at December 31,                              --      $                --                     --    $                --
                                      ===============================================   ===========================================

                                      -----------------------------------------------   -------------------------------------------
Options exercisable at December 31,                      --      $                --                     --    $                --
                                      ===============================================   ===========================================
</TABLE>

8. STOCKHOLDERS' DEFICIENCY-CONTINUED

      e. Warrants

      The Company granted warrants during 1998 in connection with financing
activities, merger and acquisitions activity and as a form of compensation to
employees and consultants.

      The following table presents the activity for all the Company's warrants
for the years ended December 31:

<TABLE>
<CAPTION>
                                                            2003                                           2002
                                         --------------------------------------------   ------------------------------------------
                                                                        Weighted                                      Weighted
                                                                        Average                                       Average
                                                                        Exercise                                      Exercise
                                            Warrants                      Price                Warrants                 Price
                                         --------------------------------------------   ------------------------------------------
<S>                                                  <C>              <C>                            <C>           <C>
Outstanding at January 1,                             2,200           $          132                 2,313         $          367
Granted                                                  --                       --                    --                     --
Exercised                                                --                       --                    --                     --
Canceled                                             (2,200)                     132                  (113)                 4,955
                                         --------------------------------------------   ------------------------------------------
Outstanding at December 31,                              --           $           --                 2,200         $          132
                                         ============================================   ==========================================

Warrants exercisable at December 31,                     --           $           --                 2,200         $          132
                                         ============================================   ==========================================
</TABLE>


                                      F-15
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

      The Company has no outstanding options as of December 31, 2003, and as
such has no weighted average price and life information regarding significant
option groups.

      The Company has no outstanding warrants as of December 31, 2003, and as
such has no weighted average price and life information regarding significant
option groups.

9. INCOME TAXES

      a. Net Operating Loss Carryforwards

      The Company files consolidated tax returns with its wholly-owned
subsidiaries. At December 31, 2003, the Company and its wholly-owned
subsidiaries have total net operating loss carry forwards of approximately $23
million for income tax purposes. Approximately $18 million of these carry
forwards expire from 2006 through 2023, which may be substantially limited
pursuant to Section 382 of Internal Revenue Code.

      The principal components of the Company's deferred tax assets were as
follows:

         Deferred tax assets:
         Net operating loss carryforwards                  $ 9,253,000
         Allowance for bad debts                                40,000
         Alternative minimum tax credit                         40,000
         Federal general business tax credits                  150,000
         Other                                                 112,000
                                                           -----------
                                                             9,595,000
         Valuation allowance                                (9,595,000)
                                                           -----------
         Net deferred tax assets                           $        --
                                                           ===========


                                      F-16
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

      Deferred tax assets are reduced by a valuation allowance to reflect the
uncertainty associated with their ultimate realization. The valuation allowance
increased by approximately $10,000 in 2003 due to an increase in net operating
loss carry forwards.

      b. Alternative Minimum Income Tax

      An estimated alternative minimum income tax ("AMT") of $65,000 was
incurred by the Company for the year ended December 31, 1999, upon the receipt
of $3.25 million in cash in connection with the sale of assets of Physicians
Clinical Laboratory, Inc. The Company can apply such AMT payments against future
non-AMT income taxes, if any.

10. LITIGATION

      During 2001, an action was instituted in the Superior Court of the State
of California, County of Los Angeles, Case No. BC 255622, by Richard M. Brooks
("Brooks") against Oaktree Capital Management LLC ("Oaktree") and Nu-Tech
Bio-Med, Inc. (now known as United Diagnostic, Inc.). Brooks was the Chief
Financial Officer of Physicians Clinical Laboratory, Inc. ("PCL"). This action
arises out of the Company's acquisition of a majority interest in PCL, PCL's
Chapter 11 bankruptcy proceedings and subsequent sale of certain shares of the
common stock of PCL by the Company to Oaktree in prior years. The plaintiff
seeks to assert liability against the defendants for approximately $3.5 million
with respect to an administrative claim which Brooks claims to have had against
PCL and which he could not collect on because the proceeds of the May 1999 sale
of PCL's assets allegedly went to Oaktree and Nu-Tech Bio-Med, Inc. A Demurrer
was filed by the defendants, which was granted by the Court with leave to
replead and, upon plaintiff filing a First Amended Complaint, the Demurrer to
that complaint was also sustained. The plaintiff has taken an appeal from the
lower court's action and if the plaintiff were to be successful on such appeal,
the litigation could then proceed in the lower court. Due to the fact that the
Company had no assets or means available to it to retain or pay counsel, the
Company determined not to take any active role in the appeal, but rather rely on
the positions taken by Oaktree, its co-defendant. Oral argument was held by the
court on February 21, 2003. On April 2, 2003, the Court of Appeals of the State
of California, Second Appellate District affirmed the judgment of the Superior
Court of the State of California, County of Los Angeles in favor of Oaktree and
the Company against Brooks.

11. SUBSEQUENT EVENT

      Proposed Transaction


                                      F-17
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

      On May 18, 2004, the Company entered into a Term Sheet regarding a
proposed transaction whereby the Company would acquire all of the outstanding
capital stock of a privately held company (the "target company") in exchange for
issuing a 90% interest to the stockholders of the target company. The
transaction is expected to be treated as a recapitalization of the target
company with the target company as the accounting acquirer (reverse
acquisition). The proposed transaction is subject to the negotiation, execution
and delivery of definitive agreements as well as the satisfaction of certain
significant additional conditions. The target company also agreed in the Term
Sheet to pay up to $115,000 to the Company to be used to pay certain debts of
the Company and the Company's legal and accounting fees in connection with
negotiating the Term Sheet, the definitive documents for the proposed
transaction and the preparation and filing of the Company's past due Securities
and Exchange Commission reports. The parties are in the process of finalizing
definitive agreements relating to the proposed transaction.


                                      F-18