                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ]      Preliminary Proxy Statement
[ ]      Confidential, for Use of the Commission Only (as permitted by Rule
         14a-6(e)(2))
[X]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to Section 240.14a-12

                             AFP Imaging Corporation
                (Name of Registrant as Specified In Its Charter)

                                 Not Applicable
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):
[X]      No fee required.
[ ]      Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
         0-11.
         1)     Title of each class of securities to which transaction applies:
         2)     Aggregate number of securities to which transaction applies:
         3)     Per unit price or other underlying value of transaction computed
                pursuant to Exchange Act Rule 0-11 (set forth the amount on
                which the filing fee is calculated and state how it was
                determined):
         4)     Proposed maximum aggregate value of transaction:
         5)     Total fee paid:
[ ]      Fee paid previously with preliminary materials.
[ ]      Check box if any part of the fee is offset as provided by Exchange Act
         Rule 0-11(a)(2) and identify the filing for which the offsetting fee
         was paid previously.  Identify the previous filing by registration
         statement number, or the Form or Schedule, and the date of its filing.
         1)       Amount Previously Paid:
         2)       Form, Schedule or Registration Statement No.:
         3)       Filing Party:
         4)       Date Filed:


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<PAGE>

                             AFP Imaging Corporation

                    Notice of Annual Meeting of Shareholders
                                December 10, 2004


To the Shareholders of
 AFP Imaging Corporation:

NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Shareholders of AFP Imaging Corporation (the "Company") will be held at the
offices of the Company, located at 250 Clearbrook Road, Elmsford, New York, on
Friday, December 10, 2004, commencing at 9:00 a.m. (local time), for the
following purposes:

1.   To elect four persons to the Board of Directors of the Company, each to
     serve until the next annual meeting of shareholders of the Company or until
     such person shall resign, be removed or otherwise leave office;

2.   To consider and act upon a proposal to approve the Company's 2004 Equity
     Incentive Plan;

3.   To consider and act upon a proposal to approve an amendment to the
     Company's Certificate of Incorporation; and

4.   To consider and act upon any other proposal as may properly come before the
     Annual Meeting.

The foregoing matters are more fully described in the Proxy Statement
accompanying this Notice, to which your attention is directed.

Only shareholders of record on the books of the Company at the close of
business on October 28, 2004 will be entitled to vote at the Annual Meeting. You
are requested to sign, date and return the enclosed proxy card at your earliest
convenience in order that your shares may be voted for you as specified.


                                        By Order of the Board of Directors,


                                        David Vozick, Secretary

November 12, 2004
Elmsford, New York

  Each shareholder is urged to complete, date, sign and return the accompanying
        proxy card to assure that the shareholder's vote will be counted.

                                       2
<PAGE>

                      [THIS PAGE INTENTIONALLY LEFT BLANK]


                                       3
<PAGE>

                             AFP Imaging Corporation
                               250 Clearbrook Road
                            Elmsford, New York 10523

                                 Proxy Statement
                         Annual Meeting of Shareholders
                                December 10, 2004

The 2004 Annual Meeting of Shareholders of AFP Imaging Corporation, a New
York corporation, will be held on Friday, December 10, 2004, at the offices of
the Company, located at 250 Clearbrook Road, Elmsford, New York, commencing at
9:00 a.m., local time, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. This proxy statement is being furnished in
connection with the solicitation of proxies by and on behalf of our board of
directors for use at the annual meeting, and at any adjournments and
postponements of the annual meeting. We will bear the entire costs of such
solicitation. The approximate date on which this proxy statement and the
enclosed proxy card are being first mailed to our shareholders is November 12,
2004.

If the proxy card in the accompanying form is duly completed, executed,
dated and returned, the shares represented by such proxy card will be voted as
specified, subject to any applicable voting or irrevocable proxy agreements. Any
person executing a proxy card may revoke it prior to its use. You are directed
to the section entitled "Procedure for Voting by Proxy" for further information
concerning a shareholder's ability to vote by proxy and to revoke a proxy once
given.

Throughout this proxy statement, the terms "we," "us," "our" and "our
company" refers to AFP Imaging Corporation and, unless the context indicates
otherwise, our subsidiaries on a consolidated basis; and "you" and "your" refers
to the shareholders of our company.

Record Date

We have established October 28, 2004 as the record date for the annual
meeting. Only holders of record of our voting securities at the close of
business on such date will be eligible to vote at the annual meeting. Our common
stock currently is the only class of our securities entitled to be voted at the
annual meeting. A list of shareholders entitled to vote at the annual meeting
will be available for examination by any shareholder, for any purpose relating
to the annual meeting, at our executive offices during ordinary business hours
for the ten days immediately prior to the annual meeting. The shareholder list
also will be available for examination at the annual meeting.

Proposals to be Considered at the Meeting

You will be asked to consider and vote at the annual meeting on the matters
listed in the accompanying Notice of Annual Meeting of Shareholders and
described in this proxy statement.

We do not expect that any other matter will be brought before the annual
meeting. If, however, other matters are properly presented, the individuals
named on your proxy card will vote on these other matters in accordance with
their judgment and to the extent permitted by applicable law.

Vote Required to Approve the Proposals

Holders of our common stock are entitled to one vote per share on each of
the proposals scheduled for vote at the annual meeting. We had 9,399,617 issued
and outstanding shares of our common stock as of the record date. Accordingly,
there are 9,399,617 votes eligible to be cast at the annual meeting.

The election of directors (proposal number 1) is by a plurality of votes
cast. Approval of our 2004 Equity Incentive Plan (proposal number 2) requires
the affirmative vote of a majority of the votes actually cast on such matter.
Approval of the amendment to our certificate of incorporation requires the
affirmative vote of a majority of the votes entitled to be cast at the annual
meeting.

Abstentions will not be included in the vote totals and, in instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy card to the brokers, so called "broker
non-votes," those votes will not be included in the vote totals for purposes of
determining whether proposals have received the requisite number of affirmative
votes cast. Therefore, the effect of abstentions and broker non-votes is the
same as a vote "against" the



                                       4
<PAGE>

amendment to our certificate of incorporation (proposal 3) while
abstentions and non-votes will have no effect on the vote on all of the other
proposals scheduled for vote at the annual meeting. Abstentions and broker
non-votes, however, will be counted in the determination of whether a quorum
exists for the purposes of transacting business at the annual meeting.

Our directors, director-nominees and executive officers control
approximately 37.6% of the voting power entitled to be cast at the annual
meeting. We anticipate that these directors and executive officers will cast all
of their votes in favor of each of the director-nominees and company proposals
being considered at the annual meeting.

Quorum

We must have a quorum in order to carry on business at the annual meeting.
Under our bylaws, as amended through the record date, we must have present, in
person or by proxy, holders of at least a majority of the entire number of votes
entitled to be cast at the annual meeting in order for a quorum to exist.
Accordingly, we must have present, in person or by proxy, holders owning of
record at least 4,699,809 shares of our common stock in order for any business
to be conducted at the annual meeting. Abstentions and broker non-votes will
count for quorum purposes.

Procedure for Voting by Proxy

A form of proxy card is enclosed for your use. To vote without attending
the annual meeting in person, you should complete, sign, date and return the
proxy card in the accompanying envelope, which is postage-paid if mailed in the
United States.

If you properly fill in your proxy card in the accompanying form and send
it to us in time to be voted, your shares will be voted as you have directed on
the proxy card, subject to any applicable voting or irrevocable proxy agreements
to which you may be a party. If you sign the proxy card, but do not make
specific choices, the individuals named on your proxy card will vote your shares
FOR approval of each of the company proposals scheduled for vote at the annual
meeting.

You can still vote in person at the annual meeting, even if you have
completed and returned a proxy card. You may revoke your proxy at any time
before it is voted by:

     o    submitting a new proxy with a later date;

     o    by voting in person at the annual meeting; or

     o    by filing with our corporate secretary a written revocation of the
          proxy.

Attendance at the annual meeting will not of itself constitute revocation
of a proxy. You must note your appearance with the inspector(s) of election,
tell the inspector(s) that you previously granted a proxy with respect to the
annual meeting, which you are revoking and request a ballot in order to
personally vote at the annual meeting.

If you hold shares through a broker, you should contact your broker to
determine the procedures through which you can vote your shares in person.


                  STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Our common stock is the only class of our voting securities presently
outstanding.

The following table sets forth information with respect to the beneficial
ownership of shares of our common stock as of the record date for the annual
meeting by:

     o    each person known by us to beneficially own 5% or more of the
          outstanding shares of such class of stock, based on filings with the
          Securities and Exchange Commission and certain other information,

     o    each of our "named executive officers" and directors, and

     o    all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power. In addition, under SEC rules, a person
is deemed to be the beneficial owner of securities which may be acquired by such
person upon the exercise of options and warrants or the conversion of
convertible securities within 60 days from the date on which beneficial
ownership is to be determined.

The term "named executive officers" is defined in the SEC rules as those
executive officers who are required to be listed in the Summary Compensation
Table provided in the discussion in this proxy statement concerning proposal
number 1.


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<PAGE>

Except as otherwise indicated in the notes to the following table,

     o    we believe that all shares are beneficially owned, and investment and
          voting power is held by, the persons named as owners, and

     o    the address for each beneficial owner listed in the table is AFP
          Imaging Corporation, 250 Clearbrook Road, Elmsford, New York 10523.
<TABLE>
<CAPTION>

                                                                          Amount and Nature of          Percentage of
Name and Address of Shareholder                                           Beneficial Ownership       Outstanding Shares
-------------------------------                                           --------------------       ------------------
<S>          <C>                                                             <C>       <C>                  <C>
David Vozick (1).......................................................      1,376,603 (2)                  14.6
Donald Rabinovitch (3).................................................      1,323,803 (4)                  14.0
Robert A. Blatt (5)....................................................        780,963 (6)                   8.2
Elise Nissen (7).......................................................        144,000 (8)                   1.5
Jack Becker (9)........................................................        122,522 (10)                  1.3
Aida McKinney (11).....................................................        114,500 (12)                  1.2

All executive officers and directors as a group (six persons)..........      3,862,391 (13)                 39.5
__________
</TABLE>

     (1)  Mr. Vozick is our chairman of the board, co-chief executive officer,
          secretary and treasurer.

     (2)  Includes (a) 30,000 shares which are issuable upon exercise of options
          granted to Mr. Vozick, which shares are exercisable within the 60 days
          following the date of this proxy statement and (b) 140,000 shares of
          our common stock owned of record by Mr. Vozick's family foundation, of
          which Mr. Vozick has shared voting and dispositive powers with his
          spouse. Mr. Vozick disclaims beneficial ownership to the shares owned
          by Mr. Vozick's family foundation. Does not include 150,000 shares
          issuable upon exercise of an option granted to Mr. Vozick which
          requires the occurrence of specified events in order to become
          exercisable.

     (3)  Mr. Rabinovitch is our president, co-chief executive officer and one
          of our directors.

     (4)  Includes (a) 66,000 shares of our common stock held in the name of Mr.
          Rabinovitch's spouse as custodian for Mr. Rabinovitch's children,
          (b) 30,000 shares which are issuable upon exercise of options granted
          to Mr. Rabinovitch, which shares are exercisable within the 60 days
          following the date of this proxy statement, and (c) 125,000 shares of
          our common stock owned of record by Mr. Rabinovitch's family
          foundation, of which Mr. Rabinovitch has shared voting and dispositive
          powers with his spouse. Mr. Rabinovitch disclaims beneficial ownership
          to the shares owned by Mr. Rabinovitch's family foundation. Does not
          include 150,000 shares issuable upon exercise of an option granted to
          Mr. Rabinovitch which requires the occurrence of specified events in
          order to become exercisable.

     (5)  Mr. Blatt is one of our directors. The address for Mr. Blatt is 1890
          Palmer Avenue, Larchmont, New York 10538.

     (6)  Includes 77,000 shares which are issuable upon exercise of options
          granted to Mr. Blatt, which shares are exercisable within the 60 days
          following the date of this proxy statement.

     (7)  Ms. Nissen is our chief financial officer.

     (8)  Includes 89,000 shares which are issuable upon exercise of options
          granted to Ms. Nissen, which shares are exercisable within the 60 days
          following the date of this proxy statement.

     (9)  Mr. Becker is one of our directors. The address for Mr. Becker c/o
          Snow Becker Krauss P.C., 605 Third Avenue, New York, New York 10158.

     (10) Includes (a) 25,000 shares owned of record by Snow Becker Krauss P.C.,
          a law firm which acts as our outside general counsel and of which Mr.
          Becker is a principal, and (b) 90,500 shares of our common stock
          issuable upon exercise of options granted to Mr. Becker, which shares
          are exercisable within the 60 days following the date of this proxy
          statement.

     (11) Ms. McKinney is our vice-president of administration.

     (12) Includes 69,500 shares of our common stock issuable upon exercise of
          options granted to Ms. McKinney, which shares are exercisable within
          the 60 days following the date of this proxy statement.

     (13) Includes those shares beneficially owned by our current executive
          officers and directors, as set forth in notes (2), (4), (6), (8), (10)
          and (12).


                                PROPOSAL NUMBER 1
                              ELECTION OF DIRECTORS

Four individuals are to be elected as directors of our company at the
annual meeting, each to hold office until the next annual meeting of
shareholders, unless he shall resign, become disqualified, disabled or shall
otherwise be removed from office. Our board of directors has nominated each of
the following persons for election as directors at the annual meeting:

                    Robert A. Blatt                Jack Becker
                    Donald Rabinovitch             David Vozick


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<PAGE>

Shares represented by executed proxy cards in the form enclosed will be
voted, if authority to do so is not withheld, for the election as directors of
each of the above-stated nominees, unless such nominee shall be unavailable, in
which case such shares will be voted for the substitute nominee designated by
our board of directors. Our board of directors has no reason to believe that any
of these nominees will be unavailable or, if elected, will decline to serve.
Only a plurality of votes cast are necessary for the election of the directors.

Information Concerning Director-Nominees and Executive Officers

Set forth below is a brief description of the background of each of the
director-nominees, based on information provided to us by them.
<TABLE>
<CAPTION>

                                    Principal Positions and                                                      Director
Name                        Age     Offices with our Company                                                       Since
----                        ---     ------------------------                                                       -----
<S>                         <C>                                                                                    <C>
Robert A. Blatt             63      Director                                                                       1995
Jack Becker                 69      Director                                                                       1997
Aida McKinney               48      Vice-President of Administration                                                N/A
Elise Nissen                50      Chief Financial Officer                                                         N/A
Donald Rabinovitch          58      President, Co-Chief Executive Officer                                          1978
David Vozick                64      Chairman of the Board, Co-Chief Executive Officer, Secretary and Treasurer     1978
</TABLE>

Robert A. Blatt is the chairman and majority owner of CRC Group, Inc., a
developer, owner and operator of commercial real estate. Mr. Blatt has been a
member (seat-holder) of the New York Stock Exchange, Inc. since 1985. Mr. Blatt
is a director, vice-president and chairman of the finance committee of MTR
Gaming Group, Inc., a Nasdaq-listed company (NASDQ: MNTG). Mr. Blatt is the
chief executive officer and managing member of New England National, LLC, an
entity which filed a voluntary petition under Chapter 11 of the federal
bankruptcy laws (District of Connecticut) in August 2002. Mr. Blatt has
indicated to us that this bankruptcy filing was necessitated by a court's
upholding the imposition of real estate taxes at rates applicable to golf
courses, rather than vacant land, for periods prior to the entity's development
of the property. He is a member of the State Bar of California.

Jack Becker has been a practicing attorney in New York State since 1960 and
is a principal of Snow Becker Krauss P.C., our outside general counsel. He has
served since 1969 as a director of Paxar Corporation, a New York Stock
Exchange-listed company (NYSE: PXR) providing value added identification and
tracking solutions to retailers, apparel manufacturers and selected markets.

Aida McKinney has served as our vice president of administration since
1986. From 1980 to 1986, she served as our administrative manager.

Elise Nissen has served as our chief financial officer since 1997. From
1982 to 1997, she served as our vice president of finance and controller.

Donald Rabinovitch has served as our president and co-chief executive
officer, as well as one of our directors, since our formation in 1978. He was
one of our original co-founders. Mr. Rabinovitch is a cousin of David Vozick.

David Vozick has served as chairman of our board of directors, secretary,
treasurer and co-chief executive officer, as well as one of our directors, since
our formation in 1978. He was one of our original co-founders. Mr. Vozick is a
cousin of Donald Rabinovitch.

Director Compensation

We compensate our non-employee directors on a per meeting basis. We do not
compensate our employee-directors in their capacities as directors. Accordingly,
our non-employee directors, Robert Blatt and Jack Becker, each receive
compensation based on each meeting of our board of directors that they attend.
We compensated each of our non-employee directors with the payment of $2,500 and
the grant of a ten-year option to purchase 3,000 shares of our common stock for
each board meeting attended. The exercise price of such options is equal to the
closing price of our common stock on the date of the attended meeting. Effective
May 2004, this compensation was increased to a payment of $4,000 and a ten-year
option to purchase 5,000 shares of our common stock per board meeting attended,
with a mandatory requirement of four meetings per


                                       7
<PAGE>

year. For our fiscal year ended June 30, 2004, we paid each of Messrs.
Blatt and Becker $10,000 and granted each of them options to purchase an
aggregate of 12,000 shares of our common stock.

We also reimburse our directors for their reasonable expenses that they may
incur for our benefit.

We also refer you to the subsections entitled "Executive Compensation" and
"Certain Relationships and Transactions" for additional information concerning
other compensation we have paid, or have agreed to pay, to certain of our
directors in consideration for other services performed, or to be performed, on
our behalf.

Committees of Our Board of Directors

Our board of directors has not established standing audit or compensation
committees, nor committees performing similar functions, to assist it in the
discharge of the board's duties.

Our board of directors has not established a nominating committee, nor did
it adopt a nominating committee charter. Our board believes that its size
negates the need for establishing a separate nominating committee. However, all
of our board's nominees for election as directors of our company are approved by
our directors who meet the definition of "independent" under the Marketplace
Rules of The Nasdaq Stock Market. Our independent directors will consider
recommendations for election as directors submitted by our shareholders. These
recommendations will be discussed at board meetings and appropriate candidates
will be invited to meet with our independent directors and entire board to
discuss their qualifications for serving on our board. Our board has not
established minimum qualifications for candidates recommended by our
shareholders. Any determination to include a shareholder-recommended candidate
as a board nominee remains a subjective determination to be made by our
independent directors.

Shareholder Communications

Shareholders wishing to communicate to our board, other than to submit
proposals for action at meetings of our shareholders pursuant to SEC Rule 14a-8,
should do so in writing, addressed to David Vozick, c/o AFP Imaging Corporation,
250 Clearbrook Road, Elmsford, New York 10523. The envelope delivering such
written communications should be marked "Shareholder Communication."

Meetings of the Board of Directors

Our board of directors held four formal meetings during our fiscal year
ended June 30, 2004. Each member of our board of directors attended all meetings
of our board held during our fiscal year ended June 30, 2004.

Our board has not established any procedure with respect to director
attendance at our annual meetings of shareholders.

Report of the Board of Directors on our Audited Financial Statements

This report of the audit committee of our board of directors does not
constitute soliciting material and shall not be deemed filed or incorporated by
reference into any of our other filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this report by reference in such other filings.

We do not have an audit committee of our board of directors. We believe
that each member of our board has the expertise and experience to adequately
serve our shareholders' interests while serving as directors.

We note that management is responsible for the preparation and integrity of
our financial statements, as well as establishing appropriate internal controls
and the financial reporting processes. Goldstein Golub Kessler LLP is
responsible for performing an independent audit of our financial statements and
issuing a report on such financial statements. A director's responsibility is to
monitor and oversee these processes.

We reviewed the audited financial statements of our company for the year
ended June 30, 2004 and met with both management and the independent auditors,
separately and together, to discuss such financial statements. Our non-employee
directors also were given the opportunity to meet separately with the
independent auditors. Management and the auditors have represented to us that
the financial statements were prepared in accordance with accounting principles
generally accepted in the United States. We also received written disclosures
and a letter from our auditors regarding their independence from us, as required
by Independence Standards Board Standard No. 1 and discussed with the auditors
such


                                       8
<PAGE>

auditors' independence with respect to all services that it rendered to us.
We also discussed with the auditors any matters required to be discussed by
Statement on Statement on Auditing Standards No. 61, as amended by Statement on
Auditing Standards No. 90. Based upon these reviews and discussions, we
authorized and directed that the audited financial statements be included in our
Annual Report on Form 10-K for the year ended June 30, 2004.

Respectfully submitted,
Robert A. Blatt            Jack Becker
Donald Rabinovitch         David Vozick

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 and amendments to these
forms furnished to us, together with written representations received by us from
applicable parties that no Form 5 was required to be filed by such parties, all
parties subject to the reporting requirements of Section 16(a) of the Exchange
Act filed all such required reports during and with respect to our fiscal year
ended June 30, 2004.

Executive Compensation

The following table sets forth, with respect to our fiscal years ended June
30, 2004, 2003 and 2002, all compensation earned, whether paid or otherwise
accrued, by those persons serving our co-chief executive officers during our
2004 fiscal year and our other officers who were serving as executive officers
of our company as of the close of business on June 30, 2004 and whose total
annual salary and bonus earned during the twelve months ended June 30, 2004
exceeded $100,000.
<TABLE>
<CAPTION>

                                                Summary Compensation Table
                                                                                                               Long-Term
                                                                                                             Compensation
                                                                           Annual Compensation                  Awards
                                                                           -------------------                  ------
                                                    Fiscal                                                    Securities
        Name and Principal                       Year Ended                               Other Annual        Underlying
             Position                              June 30,        Salary       Bonus     Compensation          Options
             --------                              --------        ------       -----     ------------          -------
<S>                                                  <C>        <C>          <C>         <C>       <C>          <C>    <C>
David Vozick, Chairman of the Board,                 2004       $   246,299  $  50,000   $   9,682 (1)          30,000 (2)
   Co- Chief Executive Officer, Secretary            2003           278,464          0      52,329 (1)               0
   and Treasurer                                     2002           287,857          0      62,169 (1)               0

Donald Rabinovitch, Co-Chief Executive               2004       $   246,299  $  50,000   $  11,183 (1)          30,000 (2)
   Officer and President                             2003           278,464          0       7,055 (1)               0
                                                     2002           287,857          0       3,526 (1)               0

Elise Nissen, Chief Financial Officer                2004       $   121,908     20,000           0              15,000 (3)
                                                     2003           112,000          0           0                   0
                                                     2002           112,000      3,000           0                   0

Aida McKinney, Vice-President of                     2004           106,770     20,000           0              15,000 (3)
   Administration                                    2003            98,000          0           0                   0
                                                     2002            98,000      3,000           0                   0
__________
</TABLE>

     (1)  Represents premiums we paid on life and disability insurance policies
          which the named executive officer has the right to name the
          beneficiaries and automobile expense allowances.

     (2)  Represents an option to purchase 30,000 shares of our common stock at
          an exercise price of $1.265 per share granted in May 2004.

     (3)  Represents an option to purchase 15,000 shares of our common stock at
          an exercise price of $1.15 per share granted in May 2004.

Option Grants in Last Fiscal Year

The following table sets forth:

     o    the number of shares underlying options we granted during our fiscal
          year ended June 30, 2004 to each of the named executive officers
          listed in the Summary Compensation Table contained in the "Executive
          Compensation" subsection of this proxy statement,

     o    the percentage that the option grant represents of the total options
          granted to all of our employees during our 2004 fiscal year,

     o    the per share exercise price of each option,

     o    the expiration date of each option, and

     o    the potential realizable value of each option at assumed annual rates
          of stock appreciation from the date of grant to the expiration date.


                                       9
<PAGE>
<TABLE>
<CAPTION>

                            Number         Percentage of                                    Potential Realizable Value at
                           of Shares       Total Options                                    Assumed Rates of Stock Price
                           Underlying     Granted to All    Exercise     Expiration         Appreciation for Option Term
        Name                Option           Employees        Price         Date                5%                10%
        ----                ------           ---------        -----         ----                --                ---
<S>                          <C>               <C>          <C>            <C>  <C>         <C>                <C>
David Vozick                 30,000            12.7%        $ 1.265        5/13/14          $ 20,923           $ 51,534
Donald Rabinovitch           30,000            12.7           1.265        5/13/14            20,923             51,534
Elise Nissen                 15,000             6.4           1.15         5/13/14             9,510             23,425
Aida McKinney                15,000             6.4           1.15         5/13/14             9,510             23,425
</TABLE>

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

None of the named executive officers listed in the Summary Compensation
Table contained in the "Executive Compensation" subsection of this proxy
statement exercised any of their options during our the fiscal year ended June
30, 2004.

The following tables set forth:

     o    the total number of unexercised options held, as of June 30, 2004, by
          each of the named executive officers listed in the Summary
          Compensation Table contained in the "Executive Compensation"
          subsection of this proxy statement, separately identified between
          those exercisable and those not exercisable, and

     o    the aggregate value of in-the-money, unexercised options held, as of
          June 30, 2004, by each of the named executive officers, separately
          identified between those exercisable and those not exercisable.
<TABLE>
<CAPTION>

                                                              Number of                         Value of Unexercised
                                                         Unexercised Options                    In-the-Money Options
                                                         as of June 30, 2004                     as of June 30, 2004
Name                                               Exercisable       Unexercisable         Exercisable       Unexercisable
----                                               -----------       -------------         -----------       -------------
<S>                                                    <C>               <C>                <C>                <C>
David Vozick ..................................        30,000            150,000            $ 7,050            $ 178,500
Donald Rabinovitch.............................        30,000            150,000              7,050              178,500
Elise Nissen...................................        89,000                  0            142,050                    0
Aida McKinney..................................        69,500                  0            120,113                    0
</TABLE>

The value of unexercised in-the-money options is calculated by subtracting
the aggregate exercise price of the options from the aggregate market price of
the shares underlying the options as of June 30, 2004 of $1.50 per share.

Our Stock Plans and Other Outstanding Options and Warrants

We currently have outstanding options granted under two stock plans, our
1995 Stock Option Plan and 1999 Incentive Stock Option Plan. There were
1,100,000 shares of our common stock issuable upon exercise of options granted
under the 1995 plan, and 500,000 shares issuable upon exercise of options
granted under the 1999 plan, each as of the record date for the annual meeting.
The 1995 plan has available for issuance 631,000 shares of our common stock and
our 1999 plan has available for issuance 12,500 shares of our common stock, in
addition to the shares underlying options outstanding as of the record date for
the annual meeting.

The following tables set forth, as of June 30, 2004:

     o    the number of shares of our common stock issuable upon exercise of
          outstanding options, warrants and rights, separately identified by
          those granted under equity incentive plans approved by our
          shareholders and those granted under plans, including individual
          compensation contracts, not approved by our shareholders (column A),

     o    the weighted average exercise price of such options, warrants and
          rights, also as separately identified (column B), and

     o    the number of shares remaining available for future issuance under
          such plans, other than those shares issuable upon exercise of
          outstanding options, warrants and rights (column C).

                                       10
<PAGE>

<TABLE>
<CAPTION>

                                             Column A                    Column B                       Column C
                                             Number of                                              Number of shares
                                        shares to be issued          Weighted average            remaining available for
                                         upon exercise of            exercise price of        future issuance under equity
                                       outstanding options,         outstanding options       compensation plans (excluding
                                        warrants and rights         warrants and rights       shares reflected in column A)
                                        -------------------         -------------------       -----------------------------
<S>                                         <C>                           <C>                            <C>
Equity incentive plans
   approved by shareholders                 1,008,500                     $ 0.57                         591,500
Equity incentive plans not
   approved by shareholders                         0                        N/A                         400,000
Totals                                      1,008,500                     $ 0.57                         991,500
</TABLE>

The shares to be issued upon exercise of outstanding options, warrants and
rights granted under plans not approved by shareholders consist of 400,000
shares reserved for issuance under our 1980 restricted stock purchase. We may
sell our common stock under the 1980 plan to our officers, directors, employees
and consultants at prices to be determined from time to time by our board of
directors.

The table does not include 100,000 shares underlying warrants we issued to
our lender in connection with the establishment of our revolving credit facility
in September 2001.

Performance Graph

The following graph sets forth the annual changes for the five-year period
indicated in a theoretical cumulative total shareholder return of an investment
of $100 in our common stock and each comparison indices, assuming reinvestment
of dividends, if any.

AFP IMAGING CORP
<TABLE>
<CAPTION>

                                                                            Cumulative Total Return
                                                    -------------------------------------------------------------------------
                                                           6/99        6/00         6/01        6/02        6/03        6/04



<S>                                                      <C>         <C>           <C>         <C>         <C>        <C>
AFP IMAGING CORPORATION                                  100.00      128.00        82.86       48.57       51.43      428.57
NASDAQ STOCK MARKET (U.S.)                               100.00      192.65        68.58       58.24       56.04       76.42
PEER GROUP                                               100.00       89.56       124.73      150.65      156.26      224.29
</TABLE>

The peer group is comprised of Apogent Technologies Inc., Biolase
Technology, Inc., Dentsply International, Inc., Milestone Scientific, Inc.,
Patterson Companies Inc., and Henry Schein Inc.

Compensation Committee Interlocks and Insider Participation

Our board of directors does not have a compensation committee. Executive
compensation, including compensation for our co-chief executive officers, is
determined by our board in its entirety, based on each executive's
responsibilities and the executive compensation philosophy determined by our
board. Donald Rabinovitch and David Vozick, our co-chief executive offices who
each serve on our board, participated in the deliberations of our board
concerning executive officer compensation. None of our executive officers served
at any time during our fiscal year ended June 30, 2004, on the board of
directors or compensation committee (or committee performing equivalent
functions) of any other entity one of whose executive officers served on our
board.

Report of the Board of Directors on Executive Compensation

Executive Compensation

Our executive compensation philosophy is to provide competitive levels of
compensation by recognizing the need for multi- discipline management
responsibilities, achievement of our company's overall performance goals,
individual initiative and achievement, and allowing our company to attract and
retain management with the skills critical to its long-term success. Management
compensation is intended to be set at levels that we believe is consistent with
that provided in comparable companies. Our company's compensation programs are
designed to motivate executive officers to meet annual corporate performance
goals and to enhance long-term stockholder value. Our company's executive
compensation has four major components: base salary, performance incentive,
incentive stock options and other compensation.


                                       11
<PAGE>

Executive Base Salaries
-----------------------

Base salaries are determined by evaluating the various responsibilities for
the position held, the experience of the individual and by comparing
compensation levels for similar positions at companies within our principal
industry. We review our executives' base salaries and determine increases based
upon an officer's contribution to corporate performance, current economic
trends, and competitive market conditions.

Performance Incentives
----------------------

We utilize performance incentives based upon criteria relating to
performance in special projects undertaken during the past fiscal year,
contribution to the development of new products, marketing strategies,
manufacturing efficiencies, revenues, income and other operating goals to
augment the base salaries received by executive officers.

Incentive Stock Options
-----------------------

Our company uses incentive stock options granted under its stock option
plans as a means to attract, retain and encourage management and to align the
interests of executive officers with the long-term interest of our company's
shareholders. Incentive stock options are typically granted at the commencement
of employment of key personnel and have been augmented by subsequent periodical
grants. All of our company's stock option plans have been approved by our
shareholders.

Benefits and Other Compensation
-------------------------------

Our company offers a life, health and disability benefits to its executive
officers, which is similar to the benefits offered to all of its employees. Our
company also provides supplemental life and disability insurance coverage as
well as an automobile allowance to its two senior executive officers as
additional compensation.

Retirement and Post Retirement Benefits

Our company does not offer a post-retirement health plan to its executive
officers or employees. However, our company does offer a Section 401(k)
retirement savings plan to its executive officers, which is the same plan
offered to all of its employees. Our company maintains a profit sharing plan and
trust pursuant to which participants receive certain benefits upon retirement,
death, and disability and, to a limited extent, upon termination of employment
for other reasons. Allocation among participants' interests, including officers
and directors who are employees, is in accordance with current Internal Revenue
Service regulations. The aggregate amount contributed by our company each fiscal
year is determined by us following a review of the operating results and other
financial information with respect to such fiscal year. The defined contribution
plan requires no minimum contribution by our company. Our company contributed an
aggregate of $60,000 to the savings plan for our fiscal year ended June 30,
2004. Our company did not contribute to the savings plan for our fiscal years
ended June 30, 2003 and 2002.

Respectfully submitted,
David Vozick        Donald Rabinovitch
Robert Blatt        Jack Becker

Code of Ethics

Our board of directors has established a code of ethics that applies to our
principal executive, financial and accounting officer(s). A copy of our code of
ethics has been made Exhibit 14 to our Quarterly Report on Form 10-Q for the
quarter ended December 31, 2003. Upon the written request of a shareholder,
addressed to David Vozick, Secretary, AFP Imaging Corporation, 250 Clearbrook
Road, Elmsford, New York, 10523, we will provide without charge to such
shareholder a copy of our code of ethics. A copy of our code of ethics can also
be obtained from the SEC's EDGAR Database at www.sec.gov.


                                       12
<PAGE>

Certain Relationships and Related Transactions

One of our directors, Robert Blatt, serves as a paid consultant to our
company on various business matters. In our fiscal year ended June 30, 2004, he
earned $16,100 in consulting fees. We paid Snow Becker Krauss P.C., our outside
general counsel, approximately $24,484 during our fiscal year ended June 30,
2004 for services rendered and reimbursements of expenses incurred on our
behalf. One of our directors, Jack Becker, is a principal of Snow Becker Krauss
P.C.

Recommendation of Our Board of Directors

Our board of directors recommends that shareholders vote FOR the election
as directors of the board's nominees as listed above.


                                PROPOSAL NUMBER 2
                   APPROVAL OF OUR 2004 EQUITY INCENTIVE PLAN

Our board of directors has adopted the AFP Imaging Corporation 2004 Equity
Incentive Plan and, under this proposal, we are asking that you, our
shareholders, approve the 2004 plan.

We believe that the 2004 plan is integral to our compensation strategies
and programs. There is an ongoing "battle for talent" within the industries in
which we operate and within the overall domestic employment market. In order to
retain and secure employees in this intensely competitive employment
environment, we must have competitive compensation programs, particularly with
respect to equity-based awards. The use of stock options and other stock awards
among public companies is widely prevalent. The 2004 plan will give us more
flexibility to keep pace with our competitors.

With shareholder approval of the 2004 plan, we expect to use stock options
as our most widely used form of long-term incentives for our directors,
executive officers, employees and consultants. The 2004 plan also will permit
stock bonus grants, restricted stock grants, performance stock grants, stock
appreciation rights grants and other types of awards.

Our board of directors adopted the 2004 plan in anticipation of the
expiration of our 1995 Stock Option Plan in December 2005. There are 469,000
shares of our common stock issuable upon exercise of outstanding options under
our 1995 plan and an additional 631,000 shares are available for grant under our
1995 plan, each as of the record date for the annual meeting.

We have not granted any stock options or other awards under the 2004 plan
through the date of this proxy statement.

Plan Summary

A summary of the principal features of the 2004 plan is provided below, but
is qualified in its entirety by reference to the actual 2004 plan. We have filed
the 2004 plan as an exhibit to our Current Report on Form 8-K (Date of Report:
September 23, 2004), which was filed with the Securities and Exchange Commission
on October 8, 2004. Upon the written request of a shareholder, addressed to
David Vozick, Secretary, AFP Imaging Corporation, 250 Clearbrook Road, Elmsford,
New York, 10523, we will provide without charge to such shareholder a copy of
the 2004 plan. A copy of the 2004 plan can also be obtained from the SEC's EDGAR
Database at www.sec.gov.

Purposes

The purposes of the 2004 plan are to:

     o    enable us and our subsidiaries and affiliates to attract and retain
          highly qualified personnel who will contribute to our success, and

     o    provide incentives to participants in the 2004 plan that are linked
          directly to increases in shareholder value which will therefore inure
          to the benefit of all of our shareholders.

Shares Available for Issuance

The maximum number of shares of our common stock that initially may be
issued under the 2004 plan is 600,000.

The number of shares that may be granted pursuant to the 2004 plan and the
exercise prices of and number of shares subject to outstanding options and other
awards will be proportionately adjusted, subject to any required action by our
board of directors or shareholders and compliance with applicable securities
laws, in the event of a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in our
capital structure involving our common stock.


                                       13
<PAGE>

Administration

The 2004 plan will be administered by of our board of directors, or a
committee of the board in which each member will be an independent director.
Throughout the remainder of this discussion of the 2004 plan, the term
"administrator" refers to the board or the committee delegated authority to
administer the 2004 plan.

The 2004 plan provides for the administrator to have full authority, in its
discretion, to:

     o    select the persons to whom awards will be granted,

     o    grant awards,

     o    determine the number of shares to be covered by each award,

     o    determine the type, nature, amount, pricing, timing and other terms of
          each award, and

     o    interpret, construe and implement the provisions of the 2004 plan,
          including the authority to adopt rules and regulations.

Eligibility

Participation in the 2004 plan is limited to our, our subsidiaries' and our
affiliates':

     o    employees, including officers,

     o    directors,

     o    consultants, and

     o    advisors.

Types of Awards

Under the 2004 plan, the administrator is authorized to award:

     o    stock options,

     o    stock bonuses,

     o    restricted stock,

     o    stock appreciation rights, commonly referred to as "SARs,"

     o    performance grants, and

     o    other types of awards.

Stock Options
-------------

The administrator is authorized to grant stock options, which may be either
incentive stock options qualifying for favorable tax treatment under the
Internal Revenue Code, referred to as "ISOs," or nonqualified stock options,
referred to as "NSOs." The exercise price of an ISO must be no less than 100% of
the fair market value of our common stock on the date of the grant; and the
exercise price of an NSO must be no less than 85% of such fair market value. For
purposes of the 2004 plan, fair market value shall be equal to the closing
market price of our common stock on the principal stock market in which the
common stock trades. In the absence of a market price, fair market value shall
be determined in such manner as the administrator may deem equitable, or as
required by applicable law or regulation.

At the time of grant, the administrator will determine when options are
exercisable and when they expire. In absence of such determination, each option
will have a ten year term, with one quarter of the shares subject to the option
becoming exercisable on the first anniversary of the option grant and with an
additional one-quarter becoming exercisable on each of the next three
anniversary dates. The term of an option cannot exceed ten years, except in the
case of an ISO granted to a person who beneficially owns 10% or more of the
total combined voting power of all of our equity securities, referred to as a
"10% shareholder." An ISO granted to a 10% shareholder cannot have a term
exceeding five years, nor may such an ISO be exercisable at less than 110% of
the fair market value of our common stock on the date of grant. ISOs may not be
granted more than ten years after the date of adoption of the 2004 plan by our
board of directors, which was on September 24, 2004.

No more than 150,000 shares that are subject to options may be granted to
any one individual in any calendar year. In addition, the aggregate fair market
value of shares first exercisable in any calendar year by an individual holding
ISOs, whether under the 2004 plan or any other plan of our company, may not
exceed $100,000. In such an event, the shares in excess of such $100,000
limitation shall be deemed granted as an NSO.

Payment for shares purchased upon exercise of a stock option must be made
in full at the time of purchase. Payment may be made in cash, or at the option
of the administrator:


                                       14
<PAGE>

     o    by reduction of indebtedness we owe to the optionee,

     o    by the transfer to us of shares of our common stock owned by the
          participant for at least six months, or obtained in the public market,
          and which are valued at fair market value on the date of transfer,

     o    in the case of employees, by interest bearing promissory note, or

     o    through a "same day sale" or "margin" commitment by an NASD member
          broker-dealer.

Restricted Stock Grants
-----------------------

Restricted stock consists of shares of our common stock which are sold to a
participant, but are subject to substantial risk of forfeiture and to
restrictions on their sale or other transfer by the participant. The
administrator determines the eligible participants to whom, and the time or
times at which, grants of restricted stock will be made, the number of shares to
be granted, the price to be paid, if any, the time within which the shares
covered by such grants will be subject to forfeiture, the time at which the
restrictions will terminate, and all other terms and conditions of the grants.
Restrictions could include, but are not limited to, performance criteria,
continuous service with us, the passage of time or other restrictions. In the
case of a 10% shareholder, restricted stock will only be issued at fair market
value.

Any performance criteria may be used to measure our performance as a whole
or the performance of any of our subsidiaries, affiliates or business units. Any
performance criteria may be adjusted to include or exclude extraordinary items.

SARs
----

An SAR is a right, denominated in shares, to receive an amount, payable in
shares, in cash or a combination of shares and cash, that is equal to the excess
of: (a) the fair market value of our common stock on the date of exercise of the
right over (b) the fair market value of our common stock on the date of grant of
the right, multiplied by the number of shares for which the right is exercised.
SARs may be awarded either in combination with the grant of an option or other
type of award or individually.

Stock Bonus Awards
------------------

The administrator may award shares of our common stock to participants
without payment therefor, as additional compensation for service to us, our
subsidiaries or our affiliates.

Performance Grants
------------------

The 2004 plan authorizes the administrator to award performance grants.
Performance grant awards are earned over a performance period determined by the
administrator at the time of the award. There may be more than one performance
award in existence at any one time, and the performance periods may differ or
overlap. Further, performance grants can be awarded separately or in tandem with
other awards.

At the time a performance grant is awarded, the administrator will
establish minimum and maximum performance goals over the performance period. The
portion of the performance award earned by the participant will be determined by
the administrator, based on the degree to which the performance goals are
achieved. No performance grants will be earned by the participant unless the
minimum performance goals are met.

Amendment of the 2004 Plan

Except as may be required for compliance with Rule 16b-3 under the Exchange
Act and Sections 162(m) or 422 of the Internal Revenue Code, our board of
directors has the right and power to amend the 2004 plan; provided, however,
that the board may not amend the 2004 plan in a manner which would impair or
adversely affect the rights of the holder of an outstanding award without such
holder's consent. If the Code or any other applicable statute, rule or
regulation, including, but not limited to, those of any securities exchange,
requires shareholder approval with respect to the 2004 plan or any type of
amendment thereto, then, to the extent so required, shareholder approval will be
obtained.

Termination of the 2004 Plan

Subject to earlier termination by our board of directors, the 2004 plan
will terminate on September 23, 2014. Termination of the 2004 plan will not in
any manner impair or adversely affect any award outstanding at the time of
termination.


                                       15
<PAGE>

Administrator's Right to Modify Benefits

Any award granted may be converted, modified, forfeited, or canceled, in
whole or in part, by the administrator if and to the extent permitted in the
2004 plan, or applicable agreement entered into in connection with an award
grant or with the consent of the participant to whom such award was granted.

Change in Control

An award agreement may provide that, upon a "change in control," all or any
portion of the award shall automatically become immediately vested and
exercisable, that restrictions relating to the award shall lapse or that the
award shall become immediately payable.

A change of control will be deemed to have occurred if:

     o    any person (other than a current shareholder or holder of rights
          entitling the holder to acquire our securities) acquires beneficial
          ownership of 50% or more of the voting power of our then-outstanding
          voting securities,

     o    members of our current board cease to constitute a majority of our
          board without the approval of our current board (or those elected with
          the approval of the directors on the board at the time of such
          member's election), or

     o    we are a party to a merger, consolidation, liquidation, dissolution or
          sale of all or substantially all of our assets, other than a merger in
          which we are the surviving corporation and such merger does not result
          in any other manner in a change in control.

Reusage

If a stock option expires or is terminated, surrendered or canceled without
having been fully exercised or if restricted stock or SARs are forfeited or
terminated without the issuance of all of the shares subject to such award, the
shares covered by such awards again will be available for use under the 2004
plan. Shares covered by an award granted under the 2004 plan will not be counted
as used unless and until they are actually and unconditionally issued and
delivered to a participant. The number of shares which are transferred to us by
a participant to pay the exercise or purchase price of an award will be
subtracted from the number of shares issued with respect to such award for the
purpose of counting shares used. Shares covered by an award granted under the
2004 plan which is settled in cash will not be counted as used.

Termination of Options

Upon the termination of an optionee's employment or other service with us,
the optionee will have three months to exercise options to the extent
exercisable as of the date of termination, except where such termination is for
cause, in which event the option will expire immediately. However, if, the
termination is due to the optionee's death or disability, then the optionee or
the optionee's estate or legal representative shall have the right to exercise
any vested options for twelve months after such death or disability. The
administrator, in its discretion, may delay the termination of such an option,
but only for up to the earlier of: (a) five years from such termination or (b)
the option's original expiration date.

Federal Income Tax Consequences

The following is a general summary, as of the date of this proxy statement,
of the federal income tax consequences to us and participants under the 2004
plan. Federal tax laws may change and the federal, state and local tax
consequences for any such participant will depend upon his, her or its
individual circumstances. Each participant shall be encouraged to seek the
advice of a qualified tax advisor regarding the tax consequences of
participation in the 2004 plan.

ISOs
----

An optionee generally does not recognize taxable income upon the grant or
upon the exercise of an ISO.

If an optionee sells ISO shares before having held them for at least one
year after the date of exercise and two years after the date of grant, the
optionee recognizes ordinary income to the extent of the lesser of: (a) the gain
realized upon the sale or (b) the difference between the exercise price and the
fair market value of the shares on the date of exercise. Any additional gain is
treated as long-term or short-term capital gain depending upon how long the
optionee has held the ISO shares prior to disposing of them in a disqualifying
disposition. In the year of disposition, we will receive a federal income tax
deduction in an amount equal to the ordinary income which the optionee
recognizes as a result of the disposition.

If an optionee sells ISO shares after having held them for at least one
year from exercise and two years from the date of grant, the optionee recognizes
income in an amount equal to the difference, if any, between the exercise price
of the ISO shares and the fair market value of those shares on the date of sale.
Such income will be taxed at long-term capital gains rates. In such an event, we
will not be entitled to a federal income tax deduction. The holding period
requirements generally are waived when an optionee dies.


                                       16
<PAGE>

The exercise of an ISO may, in some cases, trigger liability for the
alternative minimum tax.

NSOs
----

An optionee does not recognize taxable income upon the grant of an NSO.
Upon the exercise of an NSO, the optionee recognizes ordinary income to the
extent the fair market value of the shares received upon exercise of the NSO on
the date of exercise exceeds the exercise price, unless the optionee is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934. We will
receive an income tax deduction in an amount equal to the ordinary income which
the optionee recognizes upon the exercise of the stock option. If an optionee
sells shares received upon the exercise of an NSO, the optionee recognizes
capital gain income to the extent the sales proceeds exceed the fair market
value of such shares on the date of exercise. If the optionee is subject to
Section 16, absent an election to be taxed at the time of exercise, the optionee
will be taxed when the insider trading restrictions of Section 16 lapse, and
then based upon the value of the shares at the time the trading restrictions
lapse.

Restricted Stock
----------------

A participant who receives an award of restricted stock does not generally
recognize taxable income at the time of the award or payment. Instead, the
participant recognizes ordinary income in the taxable year in which his or her
interest in the shares becomes either: (a) freely transferable or (b) no longer
subject to substantial risk of forfeiture. On the date restrictions lapse, the
participant includes in taxable income the fair market value of the shares less
the cash, if any, paid for the shares.

A participant may elect to recognize income at the time he or she receives
restricted stock in an amount equal to the fair market value of the restricted
stock, less any cash paid for the shares, on the date of the award.

We will receive a compensation expense deduction in the taxable year in
which restrictions lapse, or in the taxable year of the award if, at that time,
the participant had filed a timely election to accelerate recognition of income.

Other Benefits
--------------

In the case of an exercise of an SAR or an award of a performance grant, or
stock bonus, the participant will generally recognize ordinary income in an
amount equal to any cash received and the fair market value of any shares
received on the date of payment or delivery. In that taxable year, we will
receive a federal income tax deduction in an amount equal to the ordinary income
which the participant has recognized.

Million Dollar Deduction Limit
------------------------------

We may not deduct compensation of more than $1,000,000 that is paid to an
individual who, on the last day of the taxable year, is either our chief
executive officer or is among one of the four other most highly-compensated
officers for that taxable year. The limitation on deductions does not apply to
certain types of compensation, including qualified performance-based
compensation. We believe that awards in the form of stock options constitute
qualified performance-based compensation and, as such, will be exempt from the
$1,000,000 limitation on deductible compensation.

Registration and Effect of Stock Issuance

We intend to register under the Securities Act the shares of our common
stock issuable under the 2004 plan. This will make such shares immediately
eligible for resale in the public market.

The issuance of shares of our common stock under the 2004 plan will dilute
the voting power of our shareholders.

Miscellaneous

A new benefits table is not provided because no grants have been made under
the 2004 plan and all benefits are discretionary. Accordingly, benefits are not
determinable with respect to our co-chief executive officers, other named
executive officers, all current executive officers as a group, all current
directors and are not executive officer as a group and all employees, including
all current officers who are not executive officers, as a group.


                                       17
<PAGE>

Vote Required

The affirmative vote of the holders of a majority of the shares of our
common stock actually cast at the special meeting on this proposal number 2 will
be required to approve the AFP Imaging Corporation 2004 Equity Incentive Plan.

Recommendation of Our Board of Directors

Our board of directors recommends a vote FOR approval of the AFP Imaging
Corporation 2004 Equity Incentive Plan.


                                   PROPOSAL 3
          APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION

At the annual meeting, our shareholders will be asked to approve an
amendment to our certificate of incorporation. This amendment will eliminate an
article within our certificate of incorporation concerning our 12% Convertible
Subordinated Debentures Due 1997. Such debentures were paid or otherwise retired
in or prior to June 1997. As such, we believe it to be no longer necessary to
include reference to these debentures in our certificate of incorporation.

The article proposed to be eliminated reads as follows:

     "Section 1. Each holder of the Corporation's 12% Convertible Subordinate
      Debentures due 1997, principal amount $4,875,000 (the "A Debentures"),
      shall be entitled to vote on or consent to the matters specified in
      this Article Ninth on the basis of one vote for each $3.25 in
      principal amount of Debentures held by him. For purposes only of
      taking action as a class with the holders of the Debentures and not in
      limitation of any other voting rights granted to the holders of the
      Series A Preferred Stock, each holder of the Series A Preferred Stock
      shall be entitled to vote on or consent to the matters specified in
      this Article NINTH on the basis of one vote for each share of Series A
      Preferred Stock held by him. So long as the sum of (a) the number of
      shares of Series A Preferred Stock then outstanding multiplied by two
      dollars and sixty cents ($2.60) and (b) the principal amount of
      Debentures then outstanding equals at least three million seven
      hundred thirty seven thousand five hundred dollars ($3,737,500) in the
      aggregate, the Corporation shall not, without first obtaining the
      affirmative vote or written consent of the holders of the Series A
      Preferred Stock and the Debentures then outstanding, acting together
      as a class, representing at least two-thirds of the votes entitled to
      be cast by all such holders:

          (i)  sell, lease, exchange or otherwise dispose of all or
               substantially all of its assets; or
          (ii) consolidate or merge (other than a merger into the Corporation of
               a subsidiary incorporated in New York at least ninety-five
               percent (95%) of whose shares of each class are owned by the
               Corporation) into or with another corporation.

     "Section 2. Each holder of Debentures shall have the right to inspect the
      Corporation's books and records."

The Series A Preferred Stock referred to in the article to be eliminated
also is no longer outstanding. Accordingly, the effect of eliminating the
article will have no effect on our outstanding securities.

We believe the proposed elimination will alleviate any confusion as to our
authorized voting securities and will have no effect on our currently authorized
capitalization.

Interest of Our Management in the Proposal

None of our directors nor executive officers has any direct or indirect
financial or other personal interest in the authorization of the amendment to
our certificate of incorporation described in this proposal.

Vote Required

The affirmative vote of the holders of a majority of the shares of our
common stock issued and outstanding on the record date for the annual meeting
will be required to approve of this amendment to our certificate of
incorporation.

Recommendation of Our Board of Directors

Our board of directors recommends a vote FOR approval of this amendment to
our certificate of incorporation.

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<PAGE>


                             INDEPENDENT ACCOUNTANTS

Goldstein Golub Kessler LLP serves as our independent certified public
accountants. Goldstein Golub Kessler LLP, independent registered public
accounting firm, has a continuing relationship with American Express Tax &
Business Services ("TBS"), from which it leases auditing staff who are full
time, permanent employees of TBS and through which its partners provide
non-audit services. As a result of this arrangement, Goldstein Golub Kessler LLP
has no full time employees and, therefore, none of the audit services performed
were provided by permanent full time employees of Goldstein Golub Kessler LLP.
Goldstein Golub Kessler LLP manages and supervises the audit and audit staff,
and is exclusively responsible for the opinion rendered in connection with its
examination. Representatives of Goldstein Golub Kessler LLP are expected to be
present at the annual meeting, will have the opportunity to make a statement, if
they desire to do so, and are expected to be available to respond to appropriate
questions.

Principal Accountant Fees and Services.

The following table sets forth the fees billed by our independent
accountants for our fiscal years ended June 30, 2004 and 2003 for the categories
of services indicated. Goldstein Golub Kessler LLP served as our independent
accountants for our fiscal year ended June 30, 2004 and Ernst & Young LLP served
as our independent accountants for our fiscal year ended June 30, 2003.
<TABLE>
<CAPTION>

Category                                                                                      2004                2003
--------                                                                                      ----                ----
<S>        <C>                                                                              <C>                <C>
Audit fees (1)......................................................................        $ 59,703           $  80,000
Audit-related fees (2)..............................................................           2,790                   0
Tax fees ...........................................................................               0                   0
All Other Fees......................................................................               0                   0
__________
</TABLE>

     (1)  Consists of fees billed for the audit of our annual financial
          statements, review of financial statements included in our Quarterly
          Reports on Form 10-Q and services that are normally provided by the
          accountant in connection with statutory and regulatory filings or
          engagements.

     (2)  Consists of assurance and related services that are reasonably related
          to the performance of the audit and reviews of our financial
          statements and are not included in "audit fees" in this table.
          Includes $2,000 paid to an affiliate of Goldstein Golub Kessler LLP.


Change in Certifying Accountants

Goldstein Golub Kessler LLP served as our auditors for our fiscal year
ended June 30, 2004. Ernst & Young LLP served as our auditors for our fiscal
year ended June 30, 2003. Our board of directors determined not to renew the
engagement of Ernst & Young on September 19, 2003 and selected Goldstein Golub
Kessler LLP, as our new auditors with respect to our fiscal year ended June
30, 2004. Ernst & Young audited our financial statements for our fiscal years
ended June 30, 2003 and 2002.

The reports of Ernst & Young for the two fiscal years preceding the
termination of its relationship with our company did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. Further, during the two
fiscal years preceding our determination not to renew the engagement of Ernst &
Young and through the date of our determination not to renew the engagement of
Ernst & Young, we had no disagreements with Ernst & Young on any matters
relating to accounting principles or practices, financial statement disclosure
or auditing scope or procedures, which disagreement(s), if not resolved to the
satisfaction of Ernst & Young, would have caused Ernst & Young to make reference
to the subject matter of the disagreement(s) in connection with Ernst & Young's
audit report for either or both of such two fiscal years. In addition, during
the two fiscal years preceding the termination of its relationship with our
company and through the date of our determination not to renew the engagement of
Ernst & Young, neither we nor anyone acting on our behalf consulted with
Goldstein Golub Kessler LLP on matters regarding the application of accounting
principles to a specific completed or contemplated transaction, or the type of
audit opinion that might be rendered for our financial statements.

We requested that Ernst & Young furnish a letter addressed to the SEC
stating that it agreed with the above statements relating to Ernst & Young. A
copy of Ernst & Young's letter, dated October 3, 2003, was filed as exhibit 99.2
to our Current Report on Form 8-K (Date of Report: October 3, 2003), filed with
the SEC on October 3, 2003.

Pre-Approval Policy

In addition to retaining Goldstein Golub Kessler LLP to audit our
consolidated financial statements for our fiscal year ending June 30, 2005, we
retained Goldstein Golub Kessler LLP to provide other auditing and advisory
services to us in our 2005 fiscal year. We understand the need for Goldstein
Golub Kessler LLP to maintain objectivity and independence in its audit of our
financial statements. To minimize relationships that could appear to impair the
objectivity of Goldstein Golub Kessler LLP, our board of directors has
restricted the non-audit services that Goldstein Golub Kessler LLP may provide
to us primarily to tax services and merger and acquisition due diligence and
audit services, and has determined that we would obtain even these non-audit
services from Goldstein Golub Kessler LLP only when the services offered by
Goldstein Golub Kessler LLP are more effective or economical than services
available from other service providers.


                                       19
<PAGE>

Our board of directors also has adopted policies and procedures for
pre-approving all non-audit work performed by Goldstein Golub Kessler LLP and
any other accounting firms we may retain. Specifically, our board has
pre-approved the use of Goldstein Golub Kessler LLP for detailed, specific types
of services within the following categories of non-audit services: merger and
acquisition due diligence and audit services; tax services; internal control
reviews; and reviews and procedures that we request Goldstein Golub Kessler LLP
to undertake to provide assurances of accuracy on matters not required by laws
or regulations. In each case, our board has also set a specific annual limit on
the amount of such services which we would obtain from Goldstein Golub Kessler
LLP, and has required management to report the specific engagements to the
committee on a quarterly basis and to obtain specific pre-approval from the
audit committee for all engagements.


                                  OTHER MATTERS

Our board of directors is not aware of any business to be presented at the
annual meeting, other than the matters set forth in the notice of annual meeting
and described in this proxy statement. If any other business does lawfully come
before the annual meeting, it is the intention of the persons named in the
enclosed proxy card to vote on such other business in accordance with their
judgment.


                            EXPENSES OF SOLICITATION

We will pay the cost of soliciting proxies for the annual meeting. In
addition to soliciting by mail, our directors, officers and other employees may
solicit proxies in person, or by telephone, facsimile transmission or other
means of electronic communication. We also will pay brokers, nominees,
fiduciaries and other custodians their reasonable fees and expenses for sending
proxy materials to beneficial owners and obtaining their voting instructions.


                              SHAREHOLDER PROPOSALS

Shareholder Proposals for Inclusion in Next Year's Proxy Statement

To be considered for inclusion in our next year's proxy statement,
shareholder proposals must be received at our principal's executive offices no
later than the close of business on July 15, 2005. Proposals should be addressed
to David Vozick, Secretary, AFP Imaging Corporation, 250 Clearbrook Road,
Elmsford, New York 10523.

Other Shareholder Proposals for Presentation at Next Year's Annual Meeting

For any proposal that is not submitted for inclusion in our next year's
proxy statement, but is instead sought to be presented directly at next year's
annual meeting, SEC rules will permit management to vote proxies in its
discretion if we:

     o    receive notice of the proposal before the close of business on
          September 28, 2005 and advise our shareholders in our proxy statement
          for next year's annual meeting about the nature of the matter and how
          management intends to vote on such matter, or

     o    do not receive notice of the proposal prior to the close of business
          on September 28, 2005.

Notices of intention to present proposals at next year's annual meeting
should be addressed to David Vozick, Secretary, AFP Imaging Corporation, 250
Clearbrook Road, Elmsford, New York 10523.


                          AVAILABILITY OF OUR FORM 10-K

We will provide without charge to any shareholder as of the record date,
copies of our Annual Report on Form 10-K, upon written request delivered to
David Vozick, Secretary, AFP Imaging Corporation, 250 Clearbrook Road, Elmsford,
New York 10523.


                                       20
<PAGE>


                                       By order of the Board of Directors,

                                       David Vozick, Secretary

Elmsford, New York
November 12, 2004


                                       21
<PAGE>


                        ANNUAL MEETING OF SHAREHOLDERS OF

                             AFP IMAGING CORPORATION

                                December 10, 2004


                Please date, sign and mail your proxy card in the
                     envelope provided as soon as possible.


     Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------


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

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE (x)
--------------------------------------------------------------------------------


                                                   NOMINEES:
1. Election of Directors:                          O David Vozick
                                                   O Donald Rabinovitch
(  )  FOR ALL NOMINEES                             O Jack Becker
                                                   O Robert A. Blatt
(  )  WITHHOLD AUTHORITY
      FOR ALL NOMINEES

(  )  FOR ALL EXCEPT
     (See instructions below)


INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: (X)



2.   To consider and act upon a proposal to approve the Company's 2004 Equity
     Incentive Plan;

3.   To consider and act upon a proposal to approve an amendment to the
     Company's Certificate of Incorporation;

4.   Upon such other matters, which may properly come before the meeting or any
     adjournment or adjournments thereof.

THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS NOMINATED, FOR THE
RATIFICATION OF THE PROPOSAL TO APPROVE THE COMPANY'S 2004 EQUITY INCENTIVE
PLAN, FOR THE RATIFICATION OF THE PROPOSAL TO APPROVE AN AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION, AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY COME BEFORE THE ANNUAL MEETING.

A majority of such attorneys or substitutes as shall be present and shall
act at said Annual Meeting or any adjournment or adjournments thereof (or if
only one shall be present and act, then that one) shall have and may exercise
all of the powers of said attorneys-in-fact, hereunder.


To change the address on your account, please check the box at right and
indicate your new address in the address space above.  Please note that
changes to the registered name(s) on the account may not be submitted via
this method.

Signature of Shareholder  ___________________Date:__________
Signature of Shareholder_____________________Date:__________

Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.



                                       22
<PAGE>



                      THIS PROXY IS SOLICITED ON BEHALF OF
                            THE BOARD OF DIRECTORS OF
                             AFP IMAGING CORPORATION

The undersigned shareholder of AFP Imaging Corporation, a New York
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated November 12, 2004, and hereby
appoints David Vozick and Donald Rabinovitch, and each of them with full power
of substitution, proxies and attorneys-in-fact, on behalf and in the name of the
undersigned at the 2004 Annual Meeting of Shareholders of AFP Imaging
Corporation, to be held on December 10, 2004 at 9:00 a.m., local time, at the
Company's offices, 250 Clearbrook Road, Elmsford, New York 10523, and at any
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse:


                  (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)


                                       23



