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, 2002

|_|   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, 2002, 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 ....................................................................................................2

         ITEM 1.    DESCRIPTION OF BUSINESS................................................................2
         ITEM 2.    DESCRIPTION OF PROPERTY................................................................6
         ITEM 3.    LEGAL PROCEEDINGS......................................................................6
         ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................6

PART II ...................................................................................................7

         ITEM 5.    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
                    PURCHASES OF EQUITY SECURITIES.........................................................7
         ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..............................8
         ITEM 7.    FINANCIAL STATEMENTS .................................................................10
         ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..11
         ITEM 8A    CONTROLS AND PROCEDURES ..............................................................11
         ITEM 8B    OTHER INFORMATION.....................................................................12

PART III .................................................................................................13

         ITEM 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................................13
         ITEM 10.   EXECUTIVE COMPENSATION................................................................14
         ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                    STOCKHOLDER MATTERS...................................................................18
         ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................19
         ITEM 13.   EXHIBITS..............................................................................21
         ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES................................................21

SIGNATURES ...............................................................................................22
EXHIBIT INDEX ............................................................................................23
</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, 2001, 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 and discontinued  reporting  activities until January 2005. 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  effected 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

Special Meeting of Stockholders

      The Company held a Special  Meeting of  Stockholders on September 25, 2001
(the "Special  Meeting").  At the Special  Meeting,  holders of shares of common
stock and  Series A  Convertible  Preferred  Shares  (the  "Series  A  Preferred
Shares")  were  entitled to cast  votes.  Of the 34,131  shares of common  stock
entitled  to vote at the Special  Meeting,  17,187  shares of common  stock were
present  in person  or by proxy  and  entitled  to vote.  Such  number of shares
represented  approximately 50.36% of the Company's  outstanding shares of common
stock.  Of the 2,826 Series A Preferred  Shares  entitled to vote at the Special
Meeting,  1,878 Series A Preferred Shares were present in person or by proxy and
entitled to vote. Such number of shares represented  approximately 66.45% of the
Company's outstanding Series A Preferred Shares.


                                       2
<PAGE>

      At the Special Meeting,  the Company's  stockholders were asked to approve
the following proposals:

      o     to amend the Company's  Certificate of  Incorporation  to change the
            Amended  Certificate  of  Designations,  Preferences  and Rights and
            Number of Shares of Series A Convertible  Preferred Stock, which was
            filed on October 26, 1996 (the  "Certificate  of  Designation"),  to
            amend the conversion  terms of the Series A Preferred  Shares and to
            convert all 2,826 issued and outstanding  Series A Preferred  Shares
            into an aggregate of 214,070 shares of the Company's common stock at
            a conversion rate of $13.20 per share (such proposal,  "Proposal No.
            1");

      o     to ratify a seven year stock option  grant to J. Marvin  Feigenbaum,
            the Company's Chairman, President, Chief Executive Officer and Chief
            Financial Officer,  in the amount of 25,000 options,  exercisable at
            $13.20  per  share,  of  which  options  to  purchase  12,500  would
            immediately  vest with the balance  vesting in equal  proportions on
            July 31, 2002, and 2003 ("Proposal No. 2");

      o     to elect:  (i) Robert B.  Fagenson  as a Class 1  Director  to serve
            until  the  2002  annual  meeting  of  stockholders;  (ii)  David A.
            Sterling  as a Class 2  Director  to serve  until  the  2003  annual
            meeting of stockholders; and (iii) J. Marvin Feigenbaum as a Class 3
            Director  to serve  until the 2004  annual  meeting of  stockholders
            ("Proposal No. 3").

      The  affirmative  vote of a separate  majority of each of the  outstanding
shares of common  stock and Series A  Preferred  Shares was  required to approve
Proposal No. 1. The affirmative vote by a majority of the outstanding  shares of
common stock was required to approve  Proposal No. 2. The affirmative  vote of a
plurality of the  outstanding  shares of common  stock  entitled to vote for the
election of  directors at the Special  Meeting was  required to elect  directors
under Proposal No. 3.

      Following  the  Special  Meeting,  believing  that  it  had  obtained  the
requisite  vote from its  stockholders  to approve  Proposal  No. 1, the Company
filed a certificate  of amendment  with the State of Delaware  which amended the
Company's  Certificate of  Incorporation by amending the conversion terms of and
converting all 2,826 outstanding  Series A Preferred Shares into an aggregate of
214,070 shares of the Company's common stock.

      Subsequent  to the filing of the  certificate  of amendment and during the
preparation  of  certain  delinquent  periodic  reports  to be  filed  with  the
Securities and Exchange  Commission,  the Company determined that it had not, in
fact,  obtained a  sufficient  number of votes from  stockholders  necessary  to
approve  Proposal  No.  1. As a  result,  the  Company  filed a  certificate  of
correction of certificate of designation on December 11, 2002, with the State of
Delaware.


                                       3
<PAGE>

      Proposal No. 2 was approved by the Company's stockholders as follows:


Shares            Shares Voting Against       Shares           Broker
Voting For        or Authority Withheld       Abstaining       Non-Votes
----------        ---------------------       ----------       ---------

7,457                      399                    91             9,242

      Although  Proposal No. 2 was approved by the Company's  stockholders,  the
options granted to Mr. Feigenbaum were never issued,  and on September 26, 2001,
Mr. Feigenbaum relinquished any and all rights to the options granted.

      Proposal No. 3 was approved by the Company's stockholders as follows:

                      Shares       Shares Voting Against   Shares      Broker
Nominee               Voting For   or Authority Withheld   Abstaining  Non-Votes
-------               ----------   ---------------------   ----------  ---------

Robert B. Fagenson        16,883           304                N/A         N/A
David A. Sterling         16,883           304                N/A         N/A
J. Marvin Feigenbaum      16,883           304                N/A         N/A

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 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  Chairman,  President,  Chief
Executive Officer and Chief Financial Officer.

      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
Officer as of December 31, 2002.

      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.


                                       4
<PAGE>

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.

      Pursuant to  Amendment  No. 1, all of the  outstanding  shares of series A
convertible  preferred  stock were converted into an aggregate of 214,070 shares
of common stock during March 2003. 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 during March 2003, there is an aggregate of
649,126  shares of common stock  outstanding.  This 1 for 20 reverse stock split
has been  retroactively  effected  throughout  this filing and the  incorporated
financial statements.


                                       5
<PAGE>

EMPLOYEES

      As of January  2005,  the  Company  had one  at-will  employee,  its chief
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.  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
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


                                       6
<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, 2002 and 2001.  Quotations  represent
prices  between  dealers  and do  not  reflect  retail  markups,  mark-downs  or
commissions and may not necessarily represent actual transactions.

                                                     Bid Prices of Common Stock
                                                    ----------------------------
                                                        Low              High
                                                    -----------      -----------

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
Year Ended December 31, 2001:
    First Quarter (1)...............................     .11            1.05
    Second Quarter (1)..............................     .11             .11
    Third Quarter (1)...............................     .07             .07
    Fourth Quarter (1)..............................     .06             .07

---------------------
(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.

                                    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.


                                       7
<PAGE>

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,  2002,  compared  with twelve  months ended
December 31, 2001

      Results of Operations

      The Company  reported no operating  revenues  for the twelve  months ended
December 31, 2002, and 2001 because it had no operating business.

      Total  operating  costs and expenses for the twelve months ended  December
31,  2002,  were  $307,579  compared to  $596,594  for the twelve  months  ended
December  31, 2001.  The decrease of $289,015 is primarily  due to a decrease in
general and administrative expenses.

      General and  administrative  expenses for the twelve months ended December
31, 2002,  were $307,579  (which  includes a $208,000  severance  accrual to the
Company's Chief Executive Officer pursuant to an employment  agreement) compared
to $595,206  for the twelve  months ended  December  31,  2001.  The decrease of
$287,627 is primarily due to a reduction in employee costs,  professional  fees,
travel, insurance and shareholder expenses.

      Operating loss for the twelve months ended December 31, 2002, was $307,579
compared to $596,594 for the twelve months ended December 31, 2001. The decrease
of  $289,015  is  primarily  due to a  decrease  in general  and  administrative
expenses.

      The  Company  did not earn  interest  income for the twelve  months  ended
December 31, 2002, as compared to $16,677 for the twelve  months ended  December
31,  2001.  The  decrease of $16,677 is due to the  reduction of cash upon which
interest is earned.

      Interest expense for the twelve months ended December 31, 2002, was $6,259
compared to $6,968 for the twelve months ended  December 31, 2001,  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, 2002,  was $313,838 as
compared to $586,885 for the twelve months ended December 31, 2001. The decrease
of  $273,047  in  net  loss  is  primarily  due to a  decrease  in  general  and
administrative, offset by the loss of interest income.


                                       8
<PAGE>

      Net loss per share of Common Stock for the twelve  months  ended  December
31, 2002,  was $2.91 compared to $17.20 for the twelve months ended December 31,
2001. The decrease is due to a reduction in net loss and an increase in weighted
average shares. Weighted average shares were 107,725 for the twelve months ended
December 31, 2002, as compared to 34,131 for the year ended December 31, 2001.

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  $313,838  and  $586,885,  respectively  during  the years  ended
December 31, 2002, and 2001 and has expended virtually all cash from operations.
The amount of stockholders' capital deficiency and working capital deficiency at
December 31, 2002, was $618,994.  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 $3,987 in cash at December 31, 2002, as compared to $4,540
at December 31, 2001.

      Prepaid  expenses  and other  current  assets were $16,389 at December 31,
2002,  as compared to $7,637 at December  31,  2001.  The  increase of $8,752 is
primarily due to an overpayment of franchise taxes to the State of Delaware.

      Total current  liabilities at December 31, 2002, were $639,370 as compared
to $397,518 at December 31, 2001.  The increase of $241,852 is primarily  due to
increases in amounts due to officer.  The majority of this  increase  relates to
the one year severance  accrual to the Company's Chief  Executive  Officer as it
relates to his employment agreement.

      Amounts due to officer  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; Mr. Feigenbaum is also the Company's President, Chief Executive Officer
and Chief Financial Officer.


                                       9
<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 Officer as of December 31,
2002.

            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, 2002, 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.


                                       10
<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, J. 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.


                                       11
<PAGE>

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
filed 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

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]


                                       12
<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, 2002.

       NAME                    AGE                POSITION
       ----                    ---                --------

J. Marvin Feigenbaum           52      Chairman of the Board of Directors,
                                       President and Chief Executive
                                       Officer of the Company

David A. Sterling              46      Secretary and Director of the Company

      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, 2002:

      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.


                                       13
<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, 2002,  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, 2002,  2001 and 2000, to the Chief  Executive  Officer.  No other  executive
officer was paid a salary in excess of $100,000 during such year.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]


                                       14
<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        2002      $277,333(5)        $                 --              --             $   916(2)
President and Chief         2001      $214,667           $10,340(4)        --              --             $29,804(3)
Executive Officer(1)        2000      $208,000           $ 7,673(4)        --              --             $55,212(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, 2002

      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, 2002.

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, 2002.

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.


                                       15
<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, 2002, Mr.  Feigenbaum was not paid. Mr.
Feigenbaum  received  a salary in the amount of  $208,000  during the year ended
December  31,  2001,  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.

      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.


                                       16
<PAGE>

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.

      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.


                                       17
<PAGE>

      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, 2002,  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 142 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 4 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 6
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, 2002, 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 2003, 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.


                                       18
<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 2,826 shares
of Preferred Stock.


          NAME AND ADDRESS                  AMOUNT OF AND NATURE      PERCENTAGE
         OF BENEFICIAL OWNER              OF BENEFICIAL OWNERSHIP      OF CLASS
         -------------------              -----------------------     ----------
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%

(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
      during  October  2002,  (see Item 12.  Certain  Relationships  and Related
      Transactions - Issuance of Common Shares).

(2)   Represents  85,000  shares of Common Stock issued to Mr.  Sterling  during
      October 2002, (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. At that time, Mr.  Feigenbaum and Mr.  Sterling  constituted the Board of
Directors of the Company,  and Mr. Feigenbaum was also the Company's  President,
Chief Executive Officer and Chief Financial Officer.

      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 of 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  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 Officer as of December 31,
2002.


                                       19
<PAGE>

      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 shares,  which is also par value of 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 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]


                                       20
<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 year
ended  December 31, 2001 by Eisner LLP and fees billed to us for the fiscal year
ended December 31, 2002 by Marcum & Kliegman LLP:

                                           Fiscal Year        Fiscal Year
                                              Ended              Ended
                                        December 31, 2001  December 31, 2002
                                        -----------------  -----------------
        Audit Fees (1)                  $          20,000  $          25,000
        Audit Related Fees                             --                 --
        Tax Fees                                       --                 --
        All Other Fees                                 --                 --

(1)   Consists of fees billed for professional  services rendered for the audits
      of our  consolidated  financial  statements  and  reviews  of our  interim
      financial statements included in our quarterly reports.

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, 2002,
100% of the Audit Related Fees and all other fees were approved by the Board.


                                       21
<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


                                       22
<PAGE>


                                    CONTENTS


                                                                            Page

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS             F-2 - F-3

CONSOLIDATED FINANCIAL STATEMENTS

         BALANCE SHEET AS OF DECEMBER 31, 2002                              F-4

         STATEMENTS OF OPERATIONS FOR THE
         YEARS ENDED DECEMBER 31, 2002 AND 2001                             F-5

         STATEMENTS OF CAPITAL DEFICIENCY
         FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001                     F-6

         STATEMENTS OF CASH FLOWS
         FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001                     F-7

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         F-8


                                       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, 2002 and
the related consolidated  statements of operations,  capital deficiency and cash
flows for the year then ended. These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted  our audit 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
audit provides 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, 2002, and the consolidated
results of their operations and their  consolidated cash flows for the year then
ended 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>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
United Diagnostic, Inc.

We have audited the accompanying consolidated statements of operations,  changes
in capital  deficiency  and cash flows of United  Diagnostic,  Inc. for the year
ended  December  31,  2001.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the financial statements enumerated above present fairly, in all
material respects,  the consolidated results of operations of United Diagnostic,
Inc. and their  consolidated  cash flows for the year ended December 31, 2001 in
conformity with U.S. generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will continue as a going concern. As more fully described in Note 1,
the Company currently has no revenue producing  activities,  has experienced net
losses  and  has  working  and  capital  deficiencies.  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  discussed  in Note 1. The
consolidated  financial  statements do not include any  adjustments to assets or
the amounts of liabilities that may result from the outcome of this uncertainty.


/s/ Eisner LLP

New York, New York
October 14, 2002

With respect to the first paragraph of Note 3(a)
October 25, 2002

With respect to the fourth paragraph of Note 1
February 7, 2003



                                      F-3
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                            DECEMBER 31
                                                                               2002
                                                                           -------------
<S>                                                                         <C>
      ASSETS
      Current assets:
         Cash                                                                   $ 3,987
         Prepaid expenses and other current assets                               16,389
                                                                           -------------
                                                                               $ 20,376
                                                                           =============

      LIABILITIES AND CAPITAL DEFICIENCY
      Current liabilities:
         Notes payable, in default                                             $ 65,888
         Accounts payable                                                       178,101
         Accrued expenses                                                        70,912
         Due to related parties                                                 268,898
         Contract payable                                                        55,571
                                                                           -------------
             Total current liabilities                                          639,370
                                                                           -------------

      Commitments and Contingencies

      Capital deficiency
         Series A convertible preferred stock, $.01 par value;
             2,000,000 authorized; 2,826 issued and outstanding
             (liquidation preference of $2,826,000)                                  28
         Common stock, $.01 par value; 50,000,000 shares
             authorized; 435,056 shares issued and outstanding                    4,350
         Additional paid-in capital                                          59,799,531
         Accumulated deficit                                                (60,422,903)
                                                                           -------------
      Total capital deficiency                                                 (618,994)
                                                                           -------------
             Total liabilities and capital deficiency                          $ 20,376
                                                                           =============
</TABLE>


See accompanying notes to the consolidated financial statements.

                                      F-4
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                            FOR THE  YEARS ENDED DECEMBER 31,

                                               2002                    2001
                                        ----------------------------------------
<S>                                        <C>                     <C>
Revenues:                                  $        -             $         -
                                        ----------------------------------------

Operating costs and expenses:
General and administrative                    307,579                 595,206

Depreciation                                        -                   1,388
                                        ----------------------------------------
Total operating costs and expenses            307,579                 596,594
                                        ----------------------------------------

Operating loss                               (307,579)               (596,594)
                                        ----------------------------------------

Other (expense) income:
  Interest and other income                         -                  16,677
  Interest expense                             (6,259)                 (6,968)
                                        ----------------------------------------
Total other (expense) income                   (6,259)                  9,709
                                        ----------------------------------------

Net loss                                  $  (313,838)            $  (586,885)
                                        ========================================
Net loss per common share -               $     (2.91)            $    (17.20)
 basic and diluted
                                        ========================================

Weighted average shares outstanding           107,725                  34,131
                                        ========================================
</TABLE>


See accompanying notes to the consolidated financial statements.

                                      F-5
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENT OF CAPITAL 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      ACCUMULATED
                                  STOCK         VALUE        STOCK      PAR VALUE        CAPITAL         DEFICIT         TOTAL
                               -----------------------------------------------------------------------------------------------------
<S>                                <C>           <C>       <C>         <C>            <C>            <C>               <C>
Balance at December 31, 2000       2,826         $ 28       34,131       $ 341        $ 59,723,355   $ (59,522,180)    $  201,544

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

Balance at December 31, 2001       2,826         $ 28       34,131       $ 341        $ 59,723,355   $ (60,109,065)    $ (385,341)


Issuance of common stock for
conversion of related party           -             -      400,925       4,009              76,176              -          80,185
debt
Net Loss                              -             -            -           -                   -        (313,838)      (313,838)
                               -----------------------------------------------------------------------------------------------------

Balance at December 31, 2002      2,826         $ 28       435,056     $ 4,350        $ 59,799,531   $ (60,422,903)   $  (618,994)
                               =====================================================================================================
</TABLE>


See accompanying notes to the consolidated financial statements.

                                      F-6
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                            FOR THE YEARS ENDED DECEMBER 31,
                                                                2002              2001
                                                        ---------------------------------------
<S>                                                      <C>                   <C>
Operating activities:
Net loss                                                 $    (313,838)        $ (586,885)
Adjustments to reconcile net loss to net
   cash used in operating activities:
     Depreciation                                                    -              1,388
     Loss in disposal of assets                                      -              2,959
     Changes in operating assets and liabilities:
       Prepaids expenses and other current assets               (8,752)             3,255
       Accounts payable                                        (34,329)            46,469
       Accrued expenses                                         19,362
       Due to officers - including severance,
          fees and expenses                                    307,004              6,515
                                                        ---------------------------------------
Net cash used in operating activities                          (30,553)          (526,299)
                                                        ---------------------------------------

Financing activities:
Advances from related parties                                   30,000                  -
Repayment of note payable                                            -            (10,000)
                                                        ------------------------------------
Net cash used in financing activities                           30,000            (10,000)
                                                        ------------------------------------
Net decrease in cash                                              (553)          (536,299)
Cash at beginning of period                                      4,540            540,839
                                                        ------------------------------------
Cash at end of period                                    $       3,987         $    4,540
                                                        ====================================

Supplemental disclosure of cash flow information:
   Interest paid                                         $           -         $    5,914
                                                        ===============       ==============


Issuance of common stock for
   conversion of related party debt                      $      80,185         $        -
                                                        ===============       ==============
</TABLE>

See accompanying notes to the consolidated financial statements.

                                      F-7
<PAGE>

                    UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001

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 $313,838 and  $586,885,  respectively  during the years
ended  December 31, 2002,  and 2001, is not in compliance  with certain terms of
its notes  payable,  and has expended  virtually all cash from  operations.  The
amount of capital  deficiency  and working  capital  deficiency  at December 31,
2002, was $618,994. 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-8
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


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.       Cash and Cash Equivalents

         The Company  considers all highly liquid  instruments  with an original
maturity of three months or less to be cash equivalents.

         d.       Furniture and Equipment

         Furniture  and equipment  are recorded at cost.  Depreciation  has been
provided using the straight-line  method over five years for financial reporting
purposes.

         e.       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  Principles  Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees."

         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

                                      F-9
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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, 2002 and 2001,  the Company did not
incur any compensation expense in connection with such options and warrants.

         f.       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.

         g.       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 2,200  and  2,442,  respectively,  for the  years  ended
December 31, 2002 and 2001 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, 2002
-----------------------------------------
Consolidated net loss                               $ (313,838)
                                                  ---------------

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

Year ended December 31, 2001
-----------------------------------------
Consolidated net loss                               $ (586,885)
                                                  ---------------

Loss Per Share-basic and diluted
Loss attributable to common stockholders            $ (586,885)     34,131          $ (17.20)
                                                  =============================================
</TABLE>

                                      F-10
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         h.       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 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  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 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 which were charged to operations.

                                      F-11
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


3.       CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - CONTINUED


         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 $268,898 at December  31, 2002
represents  advances  to the  Company  and  accrued  and  unpaid  salary  to the
Company's  Chief Executive  Officer.  Effective May 1, 2002, as per the terms of
the Employment Agreement, the Company accrued a severance payment of $208,000 to
the Chief Executive Officer.


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 the Company                                                  $ 65,888
                                                                      =========

                                      F-12

<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


4. NOTES PAYABLE - IN DEFAULT- CONTINUED

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 a 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% per annum  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.

5. ACCRUED EXPENSES

         Accrued expenses consist of the following:

                                                             2002
                                                          -----------
              Professional fees                            $ 38,130
              Payroll Taxes                                  13,463
              Vacation                                       12,006
              Other expenses                                  7,313
                                                          -----------
                                                           $ 70,912
                                                          ===========


6.       LEASE COMMITMENTS

         On October 15, 2001, the Company closed its office in Wakefield,  Rhode
Island. From January through September of 2002, the Company paid an aggregate of
$11,900 to its Chief Executive Officers' landlord for use of office space at his
personal residence.  Effective October 2002, such  month-to-month  agreement was
terminated  as the Company did not have any further need for office  space.  The
Company also leased storage space for its records on a month-to-month basis.

                                      F-13
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


         Rent  expense was $12,709 and $17,480 for the years ended  December 31,
2002, and 2001, respectively.


7.       CONTRACT PAYABLE

         A contract  payable  with a balance of $55,571 at  December  31,  2002,
represents the balance due to Brown  University from a prior research  agreement
which is no longer in effect.


8.       CAPITAL DEFICIENCY

         a.       Series A Convertible Preferred Stock

         As of December 31, 2002,  the Company has  outstanding  2,826 shares of
Series A Convertible Preferred Stock ("Preferred Stock").  During February 2003,
the  Company  amended  the  terms  of the  Preferred  Stock  and  the  Preferred
stockholders  converted the Preferred  Stock into common stock.  See Note 11 for
additional  information about the amendment and conversion.  The Preferred Stock
was convertible into such number of shares of common stock as shall equal $1,000
divided  by a  conversion  rate  equal to the  lesser of (i) 75% of the  average
closing bid price of the common  stock as quoted on the Nasdaq  SmallCap  Market
for  the 5 days  immediately  preceding  the  date  of the  holder's  notice  of
conversion or (ii) $1,225.00, subject to certain adjustments.  Effective June 1,
1998, the Company's common stock was delisted from the Nasdaq SmallCap Market.

         Holders of shares of the Series A Convertible  Preferred  Stock are not
entitled to receive dividends in cash or otherwise. The holders of shares of the
Series A Convertible Preferred Stock are not entitled to voting rights.

         b.        Stock Option Plans

         At December 31, 2002, 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

                                      F-14
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


8.       CAPITAL DEFICIENCY-CONTINUED

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 Directors, there is no functioning committee.
As of December 31, 2002,  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, 2002, 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.

                                      F-15
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


8.       CAPITAL DEFICIENCY-CONTINUED

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

<TABLE>
<CAPTION>
                                                        2002                                       2001
-------------------------------------------------------------------------------------------------------------------------
                                                                 WEIGHTED                                 WEIGHTED
                                                                  AVERAGE                                  AVERAGE
                                                                 EXERCISE                                 EXERCISE
                                             OPTIONS               PRICE                OPTIONS             PRICE
-------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>                       <C>             <C>
Outstanding at January 1                       129              $ 9,767                   137             $ 10,328
Granted                                          -                                          -
Exercised                                        -                                          -
Canceled                                      (129)               9,767                    (8)              19,775
                                          --------------------------------------   --------------------------------------
Outstanding at December 31                       -              $     -                   129             $  9,767
                                          ======================================   ======================================

                                          --------------------------------------   --------------------------------------
Options exercisable at December 31               -              $     -                   129             $  9,767
                                          ======================================   ======================================
</TABLE>

         d. 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  expiration  date  for the  outstanding  2,200
warrants is December 28, 2003


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

                                      F-16
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


8.       CAPITAL DEFICIENCY-CONTINUED

<TABLE>
<CAPTION>
                                                                  2002                                 2001
                                                  -----------------------------------  -----------------------------------
                                                                          Exercise                             Exercise
                                                      Warrants              Price           Warrants             Price
                                                  -----------------------------------  -----------------------------------
<S>                                                      <C>                  <C>              <C>              <C>
Outstanding at January 1                                 2,313                $ 367            2,841            $ 2,709
Granted                                                      -                    -                -                  -
Exercised                                                    -                    -                -                  -
Canceled                                                  (113)               4,955             (528)            12,964
Outstanding at December 31                               2,200                $ 132            2,313              $ 367
                                                  ===================================  ===================================

                                                  -----------------------------------  -----------------------------------
Warrants exercisable at December 31                      2,200                $ 132            2,313              $ 367
                                                  ===================================  ===================================
</TABLE>


The following table presents  weighted average price and life information  about
the Company's warrants outstanding at December 31, 2002:

<TABLE>
<CAPTION>
                                       Warrants Outstanding                                         Warrants Exercisable
                                ---------------------------------------------------------   --------------------------------------
                                                      Weighted
                                                       Average             Weighted                                  Weighted
                                                      Remaining            Average                                   Average
                                     Number          Contractual           Exercise                Number            Exercise
Range of Exercise Prices          Outstanding        Life (Yrs.)            Price               Exercisable           Price
-----------------------------------------------------------------------------------------   --------------------------------------
<S>                                     <C>                   <C>            <C>                   <C>                <C>
$0 to $200.00                           2,200                 1              $ 132                 2,200              $ 132

                                        2,200                                                      2,200
                                  ============                                              =============
</TABLE>


         No options or warrants were granted during the years ended December 31,
2002 and 2001.

                                      F-17
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


9.       INCOME TAXES

         a.       Net Operating Loss Carryforwards

         The  Company  files  consolidated  tax  returns  with its  wholly-owned
subsidiaries.   At  December  31,  2002,   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 2005  through  2022,  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                  $ 9,243,000
              Allowance for bad debts                                40,000
              Alternative minimum tax credit                         40,000
              Federal general business tax credits                  150,000
              Vacation and payroll accrual                          112,000
                                                               -------------
                                                                  9,585,000
              Valuation allowance                                (9,585,000)
                                                               -------------
              Net deferred tax assets                           $        --
                                                               =============



         Deferred tax assets are reduced by a valuation allowance to reflect the
uncertainty associated with their ultimate realization.  The valuation allowance
increased  by $126,000 in 2002 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.

                                      F-18

<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


10.      LEGAL PROCEEDING

         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

         a.       Amendment and conversion of Preferred Stock

         During February 2003, the Company,  by obtaining  majority  shareholder
approval, amended the terms of the preferred stock and simultaneously effected a
1 for 20 reverse stock split of its common stock.

         The  preferred  stock  was  amended  whereby  each  share  of  Series A
Convertible   Preferred  Stock  (with  a  $1,000  liquidation   preference)  was
convertible into  approximately  76 shares of common stock.  Effective March 13,
2003, the Company  converted  2,826 shares of preferred stock by issuing 214,070
share of common stock.

         b.       Proposed Transaction

                                      F-19
<PAGE>

                   UNITED DIAGNOSTIC, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2002 and 2001


         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-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).


                                       23
<PAGE>

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)

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).


                                       24
<PAGE>

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).

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).


                                       25
<PAGE>

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).

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).

21.1        List of Subsidiaries of the Company

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).


                                       26
<PAGE>

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).

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 the Chief  Executive  Officer and Chief  Financial
            Officer pursuant to Rule 13a-14(a)

32.1        Certification  of the Chief  Executive  Officer and Chief  Financial
            Officer pursuant to Rule 13a-14(b)


                                       27