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<STREET1>501 GRANDVIEW DRIVE
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<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>



================================================================================

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

                            ________________________

                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934
                                 (Amendment No.)

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 toss.240.14a-11(c) orss.240.14a-12


                           ACCUIMAGE DIAGNOSTICS CORP.
                ________________________________________________
                (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)  Dated Filed:

================================================================================


<PAGE>


                           ACCUIMAGE DIAGNOSTICS CORP.
                         501 GRANDVIEW DRIVE, SUITE 100
                      SOUTH SAN FRANCISCO, CALIFORNIA 94080

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                 AUGUST 6, 2004

TO THE SHAREHOLDERS:

         NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
AccuImage Diagnostics Corp., a Nevada corporation (the "Company"), will be held
on August 6, 2004, at 10:00 a.m., local time, at 400 Oyster Point Boulevard,
Suite 201, South San Francisco, California 94080 for the following purposes:

1.   To elect seven directors to serve for the ensuing year and until their
     successors are elected and qualified.

2.   To consider and take action on the proposal to amend the Amended and
     Restated Articles of Incorporation to authorize an additional 25 million
     shares of Common Stock.

3.   To ratify the appointment of Odenberg, Ullakko, Muranishi & Co., L.L.P. as
     the Company's independent accountants.

4.   To transact such other business as may properly come before the meeting or
     any adjournment thereof.

     The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

         Only shareholders of record at the close of business on June 28, 2004
are entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.

                                 By order of the Board of Directors,



                                 /s/ AVIEL FALIKS
                                 ___________________________
                                     Aviel Faliks
                                     Chairman, President and
                                     Chief Executive Officer


South San Francisco, California
July 6, 2004





ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. HOWEVER,
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE, SIGN, AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE.


<PAGE>


                           ACCUIMAGE DIAGNOSTICS CORP.
                         501 GRANDVIEW DRIVE, SUITE 100
                      SOUTH SAN FRANCISCO, CALIFORNIA 94080

                                 PROXY STATEMENT

GENERAL

     The  enclosed  proxy is  solicited  on behalf of the Board of  Directors of
AccuImage  Diagnostics Corp., a Nevada  corporation (the "Company"),  for use at
the Annual Meeting of  Shareholders  to be held on August 6, 2004 at 10:00 a.m.,
local time. Only holders of record of the Company's Common Stock at the close of
business  on June 28,  2004,  the record  date fixed by the  Company's  Board of
Directors  (the  "Record  Date"),  are  entitled to notice of and to vote at the
Annual Meeting.  As of the Record Date, the Company had  outstanding  48,336,295
shares  of  Common  Stock.  The  Annual  Meeting  will be held at the  Company's
headquarters,  which on the date of the  Annual  Meeting  will be located at 400
Oyster Pointe Boulevard, Suite 201, South San Francisco, California 94080.


VOTING AND REVOCABILITY OF PROXIES

     All  properly  executed  proxies  that are not revoked will be voted at the
meeting  in  accordance  with  the  instructions   contained  therein.   Proxies
containing no  instructions  regarding  the  proposals  specified in the form of
proxy  will be voted  FOR  approval  of all  proposals  in  accordance  with the
recommendation of the Company's Board of Directors. Any person giving a proxy in
the form  accompanying  this statement has the power to revoke such proxy at any
time before its  exercise.  The proxy may be revoked by filing with the Chairman
of the Board of the  Company  at the  Company's  principal  executive  office an
instrument  of  revocation  or a duly  executed  proxy  bearing a later date, by
filing written  notice of revocation  with the secretary of the meeting prior to
the voting of the proxy or by voting the shares  subject to the proxy by written
ballot or by voting in person at the annual meeting.

     Holders of Common  Stock are  entitled to one vote for each share of Common
Stock held to vote on each matter to be considered  and acted upon at the Annual
Meeting.  There are no  cumulative  voting  rights in the election of directors.
Broker  non-votes and shares held by stockholders  present in person or by proxy
at the meeting but abstaining on a vote will be counted in determining whether a
quorum is present at the Annual Meeting, but will have no effect on the election
of directors.


SOLICITATION

     The  Company  will  bear  the  entire  cost  of   solicitation,   including
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional material furnished to shareholders.  Original solicitation of
proxies  by  mail  may be  supplemented  by  telephone,  telegram,  or  personal
solicitation by directors,  officers, or employees of the Company; no additional
compensation will be paid for any such services.  Except as described above, the
Company does not intend to solicit proxies other than by mail.

     Arrangements  will also be made with brokerage firms and other  custodians,
nominees and fiduciaries to forward proxy material to certain  beneficial owners
of the Company's  Common Stock,  and the Company will  reimburse  such brokerage
firms,  custodians,   nominees  and  fiduciaries  for  reasonable  out-of-pocket
expenses incurred by them in connection therewith.

     The Company intends to mail this proxy statement on or about July 6, 2004.

     A copy of each of the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 2003 and the Company's  Quarterly Report on Form 10-QSB
for the quarter ended March 31, 2004,  without exhibits  thereto,  as filed with
the  Securities  and  Exchange  Commission  (the "SEC")  accompanies  this Proxy
Statement.  Shareholders  may  obtain,  for the cost of  copying,  a copy of any
exhibits thereto by writing:  AccuImage  Diagnostics Corp., 501 Grandview Drive,
Suite 100,  South San  Francisco,  California  94080-4920,  Attention:  Investor
Relations.  In addition,  we are subject to the information  requirements of the
Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act")  and are
required to file reports,  proxy statements and other  information with the SEC.
You may inspect and copy our reports,  proxy statements and other information at
the Public  Reference  Section of the SEC at Room 1024,  450 Fifth Street,  N.W.
Washington,  D.C. 20549 at the prescribed rates. The SEC maintains a web site on


                                       1


<PAGE>


the internet at http://www.sec.gov that contains reports,  proxies,  information
statements, and registration statements and other information filed with the SEC
through the EDGAR system.


SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

     Any  proposal  that a  shareholder  may  desire  to  have  included  in the
Company's  proxy material for  presentation  at the Annual Meeting to be held in
2005 must be received by the Company at its  executive  offices at 501 Grandview
Drive,  Suite 100, South San Francisco,  California  94080-4920 (after August 1,
2004 at the Company's new executive offices at 400 Oyster Point Boulevard, Suite
201, South San Francisco, California 94080) Attention: Investor Relations, on or
prior to September 16, 2004, or such proposal will be considered untimely.

     The proxy or proxies  designated  by the  Company  will have  discretionary
authority  to  vote  on any  matter  properly  presented  by a  shareholder  for
consideration  at the Annual Meeting of  Shareholders to be held in 2005 but not
submitted for inclusion in the proxy materials for such meeting unless notice of
the matter is  received  by the Company at its  principal  executive  office not
later than  November 30, 2004 and certain  other  conditions  of the  applicable
rules of the SEC are satisfied.

EXECUTIVE OFFICERS

     The names of our executive  officers and other  information  about them are
shown below.

NAME                         AGE           POSITION

Aviel Faliks, Ph.D            29           President and Chief Executive Officer
Ray Vallejo                   56           Chief Operating Officer
Kathleen Ryan                 47           Chief Financial Officer

     AVIEL  FALIKS,  PH.D.,  has  served  as a  Director  of the  Company  since
December,  2003 and as the Chairman of the Board,  President and Chief Executive
Officer of the Company since January, 2004. Dr. Faliks is a managing director of
A-Squared  Management LLC, a financial  management  company.  Prior to A-Squared
Management,  Dr.  Faliks  was a managing  director  of BC Equity  Partners  from
2001-2003. Dr. Faliks was a proprietary trader on the statistical arbitrage desk
of Bear Stearns from 1999 to 2001. From 1995 to 1999 Dr. Faliks earned his Ph.D.
in Chemical  Physics from Princeton  University.  He also holds an undergraduate
degree in mathematics from Harvard University.

     RAY VALLEJO,  has served as the  Company's  Chief  Operating  Officer since
January,  2004. Before joining the Company, Mr. Vallejo served as Vice President
of  Operations  with  Malibu  Networks,  Inc.,  a start-up  that  developed  and
manufactured  802.11 broadband wireless and QoS software products.  From 2000 to
2001,  he  served  as  Senior  Vice  President  of  Operations  with  Bridgewave
Communications, Inc., a start-up that developed and manufactured licensed 3.5GHz
to 26GHz  broadband  wireless  products.  From 1998 to 2000,  Mr.  Vallejo was a
Senior  Director  with SGI, the  professional  service  division of a $3 billion
company providing custom hardware and software solutions.  Mr. Vallejo brings 23
years of diverse operations  management experience in start-up to billion dollar
companies.  His product experience includes  computing,  cable and broadcasting,
wireless,  networking,  video serving, 3D graphics and visual storage solutions,
storage, and medical test and measurement.

     KATHLEEN RYAN, has served as  the Company's Chief  Financial  Officer since
February,   2004.  She  has  over  twenty-five  years  experience  in  financial
management and accounting.  Ms. Ryan is a co-founder and Chief Operating Officer
of Macias & Ryan,  Inc., a financial  consulting firm founded in 1993 to provide
outsourced accounting and financial management to corporations.  She also served
as Director if Finance at Quantum Corporation,  a disk drive manufacturer,  from
1986 to 1993.  She  started  her  career at  PricewaterhouseCoopers  in 1978 and
worked in both the audit and tax  departments  until 1986. Ms. Ryan is a CPA and
holds a bachelor's degree from Santa Clara University.

BENEFICIAL OWNERSHIP OF COMMON STOCK

     Under the proxy rules of the SEC, a person who directly or  indirectly  has
or shares  voting  power or  investment  power with  respect  to a  security  is
considered a beneficial owner of the security. Voting power is the power to vote
or direct the voting of shares,  and investment power is the power to dispose of
or  direct  the  disposition  of  shares.  Shares  as to which  voting  power or


                                       2


<PAGE>


investment  power  may be  acquired  within  60  days  are  also  considered  as
beneficially owned under the proxy rules. The following table sets forth certain
information  as of  March  31,  2004,  regarding  beneficial  ownership  of  the
Company's  Common  Stock by (i) each  person who is known to the  Company to own
beneficially  more than five percent of the Company's  Common  Stock,  (ii) each
director and each nominee for election as a director of the Company,  (iii) each
executive  officer  named in the  Summary  Compensation  Table set forth in this
Proxy Statement,  and (iv) all current directors and current executive  officers
of the Company as a group. The information on beneficial  ownership in the table
and the  footnotes  thereto is based  upon the  Company's  records  and the most
recent  Schedule 13D or 13G filed by each such person or entity and  information
supplied to the Company by such person or entity.  Unless  otherwise  indicated,
each person has sole voting power and sole investment  power with respect to the
shares shown.

                                                AMOUNT AND NATURE
                    NAME & ADDRESS OF             OF BENEFICIAL       PERCENT OF
TITLE OF CLASS     BENEFICIAL OWNER(1)            OWNERSHIP (2)         CLASS
______________     ___________________          _________________     __________


Common Stock       Aviel Faliks, Ph.D               25,050,000          47.0%

Common Stock       Joel L. Blank, Ph.D              -                       *

Common Stock       C. Allen Wall, M.D.              7,253,577(3)        13.6%

Common Stock       Chung Lew                        1,800,000(4)         3.4%

Common Stock       Leon Kaufman, Ph.D.              -                       *

Common Stock       Shelly Powers                    -                       *

Common Stock       Oscar Gils Carbo                 -                       *

Common Stock       Hirsch Handmaker, M.D.           -                       *

                   All Directors and Executive
Common Stock       Officers as a Group                                  50.4%

(*)  Less than 1.0%.
(1)  The address for each of the individuals listed, unless otherwise stated,
     is: 501 Grandview Drive, Suite 100, South San Francisco, CA 94080 (after
     August 1, 2004 at 400 Oyster Point Boulevard, Suite 201, South San
     Francisco, California 94080).
(2)  As of the Record Date, 48,336,295 shares of common stock were outstanding.
     Unless otherwise noted, the security ownership disclosed in this table is
     of record and beneficial. The term beneficial ownership with respect to a
     security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
     as consisting of sole or shared voting power (including the power to vote
     or direct the vote) and/or sole or shared investment power (including the
     power to dispose or direct the disposition) with respect to the security
     through any contact, arrangement, understanding, relationship, or
     otherwise. Stock warrants and options are exercised for the Company's
     Common Stock, pursuant to the Plan.
(3)  Includes 3,000,000 shares owned directly, 3,378,577 owned by C. A. Wall
     Family Foundation, which is beneficially owned and controlled by Dr. Wall,
     and 875,000 vested stock options, as of March 31, 2004 or exercisable
     within 60 days thereafter.
(4)  Includes 1,500,000 shares owned directly and 300,000 warrants exercisable
     for common stock.


                                       3


<PAGE>


CHANGE OF CONTROL OF THE COMPANY

     Pursuant to a Common  Stock  Purchase  Agreement  dated  October 24,  2003,
between Dr. Aviel Faliks and the Company,  on that date,  Dr.  Faliks  purchased
25,050,000 shares of the Company's Common Stock for an aggregate  purchase price
of $1,002,000,  or $.04 per share. Dr. Faliks funded the investment  through use
of personal funds. As a result of his investment,  Dr. Faliks  beneficially owns
52.2% of the Company's outstanding Common Stock. As a result of the voting power
associated with such stock, Dr. Faliks controls the Company.


                                  PROPOSAL ONE

                              ELECTION OF DIRECTORS

DIRECTOR NOMINEES

                                                                        DIRECTOR
NAME                       AGE             POSITION                      SINCE
____                       ___             ________                     ________

Aviel Faliks, Ph.D          29     Chairman of the Board, President       2003
                                   and Chief Executive Officer
Joel L. Blank, Ph. D.       62     Director                               2004
Hirsch Handmaker, M.D.      63     Director                               2004
David Goldbrenner           29     Director                               2004
Sourav Goswami              29     Director                               2004
Ron Schilling               64     Director                               2004
Chung Lew                   45     Director                               2004

     Each director to be elected will hold office until the next annual  meeting
of shareholders  and until his successor is elected and has qualified,  or until
his death, resignation, or removal.

     There are seven nominees for the seven Board positions currently able to be
filled  pursuant to the  Company's  Bylaws.  All nominees are  currently  acting
directors of the Company. Each person nominated for election has agreed to serve
if elected,  and  management  has no reason to believe  that any nominee will be
unavailable to serve.  If any director is unable to stand for  re-election,  the
Board may designate a substitute. Unless otherwise instructed, the proxy holders
will vote the  proxies  received  by them for the seven  nominees  named  below.
Directors  are elected by a plurality  of the votes cast,  which means the seven
candidates  receiving  the greatest  number of  affirmative  votes of the shares
entitled to vote at the Annual Meeting will be elected directors of the Company.


REQUIRED VOTE

     Directors  are  elected by a plurality  of the votes cast,  which means the
seven  nominees  who receive  the  highest  number of votes FOR, in person or by
proxy,  will be elected as directors.  Abstentions and broker non-votes will not
have an effect upon the outcome of the election.

        THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
                            FOR DIRECTOR NAMED BELOW


     Seven  directors  will be  elected  at the  Annual  Meeting  to serve for a
one-year term expiring on the date of the annual meeting in 2005. Proxies can be
voted  for  no  more  than  seven  nominees.  Certain  biographical  information
regarding the Company's directors and nominees is set forth below.

     AVIEL FALIKS, PH.D.,  DIRECTOR,  CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER.  Information  regarding Dr. Faliks is included in the section
titled "Executive Officers" above.


                                       4


<PAGE>


     JOEL L. BLANK, PH.D., DIRECTOR, has over thirty (30) years of experience in
the advanced technology, medical equipment and medical service fields, including
management  of  marketing,   sales,   service,   research  and  development  and
manufacturing  operations and medical service business general  management.  Dr.
Blank is a founder and principal of Radiosurgical Centers Corporation, a company
formed in 1992 to develop and operate radiosurgery  centers, and is the managing
partner for San Diego Gamma Knife  Center,  L.P. Dr. Blank was a founder and CEO
of Corgentech Inc., a private company formed in 1999 to develop and market novel
molecular and genetic-based  therapies for treatment of cardiovascular and other
disorders.  Dr.  Blank was the  founding  president  and CEO of SYNARC  Inc.,  a
private company formed in 1998 to provide services to  pharmaceutical  companies
on the use of advanced  medical imaging  techniques in the design and conduct of
clinical  trials.  Until 1988,  Dr. Blank was a vice  president of Diasonics MRI
Division,  participating in the start up of Diasonics' MRI business,  which grew
from a  research  and  development  project in 1981 to a $125  million  per year
business.  Prior to joining Diasonics in 1981, Dr. Blank served as a director of
new product  marketing and as director of production for Pfizer Medical Systems,
and as a research leader at Western Electric's  Engineering Research Center. Dr.
Blank received his Ph.D. in plasma physics and his M.Eng.  from Yale  University
and his BME from Cooper Union.

     HIRSCH HANDMAKER,  M.D., DIRECTOR, earned his Bachelor of Science degree at
The University of Arizona and his M.D. at The University of Southern  California
College of Medicine.  He was a founder,  President and Chairman of the Boards of
RadPharm,  Inc.,  and  Diagnostic  Networks,  Inc., was a member of the Board of
Directors of The Cyclotron Corporation and Diatide,  Inc., has been a consultant
or advisor to  various  other  public  and  private  companies,  and served as a
Director of the Society of Nuclear Medicine  Education and Research  Foundation.
He is the Founder and President of Healthcare Technology Group, a management and
consulting  firm  specializing  in providing  technical  and business  advice to
investors,  private and public corporations,  hospitals,  medical practices, and
individuals  interested  in the  health  care and  medical  technology  business
sectors.  Dr. Handmaker served as Executive Director of the Arizona Institute of
Nuclear  Medicine  and  Medical  Director  of Papago  Imaging,  both in Phoenix,
Arizona, from 1994 to 1997. He previously was Vice-Chairman of the Department of
Nuclear  Medicine,  California  Pacific  Medical  Center and Director of Nuclear
Medicine  at  Children's  Hospital  of San  Francisco  for 22 years prior to his
return to Arizona.  He is a diplomat of the  American  Boards of  Radiology  and
Nuclear Medicine and a Fellow of the American College of Nuclear Physicians.  He
has authored and co-authored over fifty original  publications and two textbooks
concerned with nuclear medicine and diagnostic imaging.  Dr. Handmaker currently
serves as Chairman and Acting CEO of VirtuRad,  serves on The Advisory  Board of
The Arizona Cancer Center and is  Chairperson  of the Steering  Committee of the
Women's Cancer Prevention arm of The Arizona Cancer Center.

     DAVID  GOLDBRENNER,  DIRECTOR,  worked at a commodity  futures trading firm
before  entering the field of technology  consulting.  In 1998, Mr.  Goldbrenner
started  Idyllix  Corporation  to provide  information  management  software  to
publishing  companies,  and  designed  a data  indexing  system  for  one of his
clients.  In 2001, Mr.  Goldbrenner joined Oracle  Corporation's  Internet Files
System group.  In 2003 Mr.  Goldbrenner  began  teaching  mathematics in the San
Francisco  area. Mr.  Goldbrenner  has a degree in electrical  engineering  from
Harvard University.

     SOURAV  GOSWAMI,   DIRECTOR,   is  co-founder  and  General  Manager/VP  of
Operations  for Signet  Programming  Services,  a clinical  informatics  company
providing  software  solutions to the government and  pharmaceutical  companies.
Prior to Signet PSI, Mr. Goswami was a serial  entrepreneur with eight (8) years
of experience in  management,  finance and  technology.  Mr. Goswami was a VP of
Finance  for  Systems  on  Silicon,  a  semiconductor  startup  that was sold to
TranSwitch  Corporation a public semiconductor  company,  where he helped manage
venture capital  operations.  Mr. Goswami was  instrumental in establishing  and
staffing the software  research and  development  division of Mutual of New York
from 1998 to 1999. He also co-founded  Lydstrom,  Inc., a media startup company,
in 1998 and consulted for NX Technologies,  a relational database company,  from
1999 to 2000.  Mr.  Goswami has consulted  extensively  in the areas of business
strategy,  IT  Strategy  and  finance  for such  clients  as MONY  and  Medicare
Services, the largest private health insurance  administration company in India.
In addition,  Mr. Goswami was an associate at Reckson Strategic Venture Partners
from 1999 to 2003 and an analyst at Goldman,  Sachs and Co.,  from 1996 to 1998.
Mr. Goswami serves on the board for Signet Programming Services and the Board of
Advisors for Accordion Networks. Mr. Goswami received his Bachelor's degree from
Harvard University and his MBA from Columbia University.

     CHUNG LEW, DIRECTOR,  has over twenty years experience in asset management.
Mr. Lew has held management  positions with  Prudential  Securities from 1982 to
1986,  Kleinwort Benson N.A. from 1986 to 1992,  Salomon Brothers Inc. from 1992
to 1994,  Millennium Capital Management from 1994 to 1995 and U.S. Trust Company
of New York  from  1995 to  2003,  with a focus on  domestic  and  international
investments.  Mr.  Lew has been a hedge  fund  manager  with  A-Squared  Capital
Management since 2003, where he oversees trading and research operations for LBF
Fund,  LP. Mr. Lew  received a  Bachelor's  degree in  Chemistry  from The Johns
Hopkins University.


                                       5


<PAGE>


     RON  SCHILLING,  PH.D.,  DIRECTOR,  has 37 years of  experience  launching,
managing and leading the growth of high technology companies.  Dr. Schilling has
held various executive  management positions at Toshiba (from 1988 to 1997), RCA
(from 1984 to 1988) and  Diasonics  (from  1979 to 1984).  Dr.  Schilling  was a
participant in the development of CMOS semiconductor memory, and led the world's
first commercial  introduction of Magnetic resonance imaging. Dr. Schilling is a
member of the Board of  Advisors of the Society  for  Computer  Applications  in
Radiology,  the Radiology Outreach Foundation and DIAGNOSTIC IMAGING and APPLIED
RADIOLOGY magazines. He is a past member of FutuRad of the Radiologic Society of
North America, an organization established to determine the future of radiology.
Dr.  Schilling is a member of the  Management  Committee of the Stanford  Alumni
Consulting  Team and of the  Advisory  Board of the  Dean of  Engineering  at UC
Davis. In addition,  Dr. Schilling is a director of the Alzheimer's  Association
of the Greater Day Area. Dr.  Schilling holds degrees in electrical  engineering
and  management  from the  City  College  of New  York,  Princeton,  Polytechnic
Institute of NY and Stanford University.

INDEPENDENCE OF DIRECTORS

     The  Company's  common  stock is not  currently  quoted on the Nasdaq Stock
Market or listed on any national stock exchange. Accordingly, the Company is not
subject to the  standards  imposed by  self-regulatory  agencies such as the New
York Stock Exchange or Nasdaq regarding independence of directors.  Furthermore,
were it to be subject to such rules,as a "controlled company", the Company would
be exempt from the  requirements  (a) that listed  companies  have a majority of
independent directors and (b) that the members of the Compensation  Committee be
composed entirely of independent directors. A "controlled company" is defined by
Nasdaq  and the New York Stock  Exchange  as a company of which more than 50% of
the voting power is held by an individual,  group or other company. If its stock
were listed or quoted, the Company would be a "controlled  company" in that more
than  50% of its  voting  stock is owned  by Dr.  Faliks.  Nevertheless,  in the
judgment  of the Board of  Directors,  each of the  following  directors  of the
Company meets the standards of independence  required by Nasdaq:  Dr. Blank, Dr.
Handmaker, Mr. Goldbrenner, Mr. Goswami, and Dr. Schilling.

CODE OF ETHICS

     The Company has not adopted a code of ethics.


TRANSACTIONS WITH MANAGEMENT AND OTHERS

     On October 24, 2003 Dr. Aviel Faliks,  Chairman of the Board, President and
Chief  Executive  Officer of the  Company,  purchased  25,050,000  shares of the
Company's  Common Stock for an aggregate  purchase price of $1,002,000,  or $.04
per share.  On October 23, 2003, Dr. Faliks loaned the Company  $500,000 and the
Company  issued Dr.  Faliks a Promissory  Note,  in the amount of $500,000.  The
Promissory  Note bears interest at a rate of 5% per annum and matures in October
2004. On November 6, 2003, Dr. Faliks loaned the Company an additional  $500,000
and the  Company  issued Dr.  Faliks a second  Promissory  Note in the amount of
$500,000.  The second  Promissory  Note also bears  interest at 5% per annum and
matures in November 2004.

     Dr. Leon Kaufman, Ph.D., former Chief Executive Officer and director of the
Company  until   February  2004,  is  also   President  of   International   MRI
Accreditation  Resources,  LLC.  (IMAR).  IMAR provides  services for one of the
Company's  customers and was paid $1,583 and $6,417 during fiscal years 2003 and
2002, respectively.  The Company paid Dr. Kaufman $1,250 in each of fiscal years
2003 and 2002, in interest on a June 2001 loan.

     Dr. Klock, a director of the Company until February 2004, is Chairman and a
50%  shareholder of Holistica  Hawaii,  LLC, which  purchased a workstation  and
eStation3D from the Company in fiscal year 2000.  Sales to Holistica  Hawaii for
the fiscal year ended  September  30,  2003 and 2002  amounted to $0 and $5,000,
respectively.  The  sales  were  made  on the  same  terms  as  those  given  to
unaffiliated third parties,  and the Board determined the transactions were fair
to the  Company.  The Company paid Dr. Klock $1,250 in each of fiscal years 2003
and 2002, in interest on a June 2001 loan.

     Dr. Hirsch  Handmaker,  a director of the Company until  February  2004, is
also Chairman and Acting CEO of VirtuRad.com, LLC. On March 1, 2002, the Company
entered into a contract with VirtuRad to provide AccuStitch  software,  which is
to  be  used  in  conjunction  with  VirtuRad  products  that  are  sold  and/or
distributed by VirtuRad to VirtuRad customers.  Sales to VirtuRad for the fiscal
years  ended   September   30,  2003  and  2002  amounted  to  $10,000  and  $0,
respectively.


                                       6


<PAGE>


BOARD COMMITTEES AND MEETINGS

     During fiscal year ended  September 30, 2003 the Board of Directors held 12
meetings.  Each incumbent  director attended at least 75 percent of the meetings
held during the part of fiscal year 2003 during which he was a director,  in the
aggregate,  by the  Board  and  each  committee  of the  Board of which he was a
member.  The Company's Board of Directors has the following  committees:  Audit,
Budget, Compensation, Executive, and Nominating.

     The Audit Committee recommends the engagement of the Company's  independent
accountants,  approves services  performed by such accountants,  and reviews and
evaluates the Company's  accounting system and system of internal controls.  The
Audit Committee met two times during fiscal year 2003.  Until their  resignation
as directors in February 2004, the Audit  Committee  consisted of Mr.  Shepherd,
Chair, and Dr. Kearn.  Since March 5, 2004 Messrs.  Faliks and Goswami have been
the members of the Audit Committee.

     As the  Company's  stock is not quoted on the Nasdaq Stock Market or listed
on any exchange,  it is not obligated to meet the standards for audit committees
required by such self  regulatory  organizations.  The Company has not adopted a
charter for the Audit Committee.

     The Budget Committee reviews and makes  recommendations with respect to the
Company's annual budget,  investments,  financing arrangements and the creation,
incurrence,   assumption  or  guaranty  by  the  Company  of  any  indebtedness,
obligation or liability, except, in each case, for any such transactions entered
into in the ordinary course of business of the Company. The Budget Committee met
two times during fiscal year 2003.  Until their  resignations  in February 2004,
the Budget Committee consisted of Dr. Wall, Chair, and Mr. Shepherd. Since March
5, 2004, Messrs. Faliks, Goldbrenner and Lew have been the members of the Budget
Committee.

     The Compensation  Committee makes recommendations to the Board of Directors
concerning salaries and incentive compensation paid to officers, administers the
Company's Stock Option Plan,  including the grant of options,  and performs such
other  functions  regarding   compensation  as  the  Board  may  delegate.   The
Compensation  Committee  met  four  times  in  fiscal  year  2003.  Until  their
resignations  in February  2004,  the  Compensation  Committee  consisted of Dr.
Klock, Chair, and Dr. Kearn. Since March 5, 2004, Messrs. Faliks and Goldbrenner
have been the members of the Compensation Committee.

     The Executive Committee has all powers and rights necessary to exercise the
full  authority of the Board of Directors in the  management of the business and
affairs of the Company, except as provided in the Nevada General Corporation Law
or the Bylaws of the Company.  The  Executive  Committee met ten times in fiscal
year 2003.  Until their  resignations in February 2004, the Executive  Committee
consisted of Dr. Wall,  Chair,  and Dr.  Kaufman.  Since March 5, 2004,  Messrs.
Faliks,  Handmaker  and  Schilling  have  been  the  members  of  the  Executive
Committee.

     The  Nominating  Committee  recommends  candidates to fill vacancies on the
Board of Directors or any committee  thereof,  which vacancies may be created by
the departure of any directors, or the expansion of the number of members of the
Board.  The Nominating  Committee gives  appropriate  consideration to qualified
persons  recommended by stockholders  for nomination as directors  provided that
such  recommendations  are made in accordance with the Company's  Bylaws and are
accompanied  by  information  sufficient to enable the  Nominating  Committee to
evaluate the  qualifications  of the nominee.  The Nominating  Committee met one
time in fiscal  year 2003.  Until  their  resignations  in  February  2004,  the
Nominating Committee consisted of Dr. Wall, Chair, and Dr. Krevans.  Since March
5, 2004,  Messrs.  Blank,  Faliks and  Goldbrenner  have been the members of the
Nominating Committee.


BOARD MEMBER COMPENSATION

     EMPLOYEE  DIRECTOR  COMPENSATION.  Directors who are also  employees of the
Company  receive no fees for services  provided in their  capacity as directors,
but are  reimbursed  for  out-of-pocket  expenses  incurred in  connection  with
attendance  at  meetings  of the  Board of  Directors  and its  committees.  See
"EXECUTIVE COMPENSATION."

     NON-EMPLOYEE DIRECTOR COMPENSATION.  Directors who are not employees of the
Company are reimbursed for expenses relating to attendance at Board of Directors
and  committee  meetings.  In  connection  with their  services to the  Company,
non-employee  directors are also entitled to receive a one-time  grant of 75,000
non-qualified  options  pursuant to Company's  Stock Option Plan.  Mr.  Shepherd
received  $1,202 and  $8,272 in fiscal  years  2003 and 2002,  respectively,  in


                                       7


<PAGE>


travel  reimbursements  relating  to his  service  as a  director.  Mr.  Krevans
received $1,240 in travel  reimbursements  relating to his service as a director
in fiscal year 2003.

     Options granted to  non-employee  directors have terms of ten years and the
shares  underlying  the option vest over four years at the rate of 25%  annually
from the anniversary  date. The exercise price of each option granted equals the
fair market value of the Common Stock on the date of grant.


EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The  following  Summary   Compensation  Table  shows  certain  compensation
information for the Chief  Executive  Officer and the Company's most highly paid
executive officers  (collectively referred to as the "Named Executive Officers")
in fiscal  year 2003.  Compensation  data for other  executive  officers  is not
presented  in the  graphs  because  aggregate  compensation  for such  executive
officers does not exceed $100,000 for services rendered in all capacities during
the fiscal year.  This  information  includes the dollar value of base salaries,
bonus  awards,   the  number  of   SARs/options   granted,   and  certain  other
compensation, if any, whether paid or deferred.

<TABLE>
<CAPTION>

                                                                              LONG TERM COMPENSATION AWARDS
                                                                      _____________________________________________
                                                                      OTHER            NUMBER OF
                                                                      ANNUAL           SHARES
                                                                      COMPENSATION     UNDERLYING       ALL OTHER
NAME & PRINCIPAL POSITION     YEAR     SALARY          BONUS          (G)              OPTIONS (H)     COMPENSATION
_________________________     ____     _______         ______         ____________     ___________     ____________
<S>                           <C>       <C>            <C>               <C>             <C>                <C>

Leon Kaufman, Ph.D.           2003     124,667              -                -                -             -
CEO (a)
                              2002     220,000              -                -           75,000             -

                              2001     146,667         60,000 (f)            -                -             -


Shelley Powers,               2003      83,275 (d)          -            1,500                -             -
V.P.-Clinical
Development (b)               2002     118,678 (d)          -            3,169            7,500             -

                              2001     127,326 (d)          -            3,000                -             -


Oscar Gils Carbo,             2003      85,000              -            2,550                -             -

V.P.-Operations (c)           2002     150,000         18,750 (e)        4,500           25,000             -

                              2001      75,000         28,125 (f)            -                -             -

<FN>

NOTES:
(a) Dr. Kaufman became the Company's Chief Executive Officer on February 1,
    2001. Dr. Kaufman resigned from the Company on May 16, 2003.
(b) Ms. Powers started with the Company on June 22, 1998. On October 23, 2000,
    she was promoted to Vice President - Clinical Development; prior to this
    date, she was Vice President-Sales. Ms. Powers resigned from the Company on
    April 8, 2003.
(c) Mr. Gils Carbo started with the Company on April 1, 2001. Mr. Gils Carbo
    resigned from the Company on May 16, 2003.


                                       8


<PAGE>


(d) Includes $23,198, $18,554 and $34,468 in sales commissions paid for fiscal
    years 2003, 2002 and 2001, respectively.
(e) Represents executive bonus earned in fiscal year 2001 which was paid in
    fiscal year 2002.
(f) Represents executive bonus earned in fiscal year 2000 which was paid in
    fiscal year 2001.
(g) Represents the Company's matching contributions, of 3% to its IRS plan.
(h) Represents vested options granted by the Company, vested stock options as of
    March 31, 2004 or exercisable within 60 days thereafter.

</FN>
</TABLE>


STOCK OPTION PLAN

     In 1998,  the  Company  approved a Stock  Option Plan that  authorized  the
issuance of options for up to 1,600,000 shares of the Company's common stock. On
December 23, 1999, the Board authorized another 500,000 available for grant. The
shareholders approved the plan at the Company's annual meeting on June 29, 2000.
On September  15, 2001,  the Board  authorized an  additional  2,000,000  shares
available for grant and the shareholders approved the amendment at the Company's
annual  meeting  held on March 6,  2002.  Under  this  plan,  no  option  may be
exercised  after the expiration  date of ten years from the date of grant and no
option may be  exercised  as to less than one  hundred  (100)  shares at any one
time.  There are two  categories of options:  Incentive  Stock Options (ISO) and
Non-Qualified Stock Options (NSO).

     ISOs are granted to employees and the purchase price shall not be less than
the Fair Market  Value of the common stock share at the date of grant and no ISO
shall be exercisable  more than ten (10) years from date of grant except that in
the case of any person who owns more than 10% of the voting power of all classes
of stock,  no ISO  shall be  exercisable  more than five (5) years  from date of
grant.

     NSOs may be granted to any eligible  participant.  The purchase price shall
not be less than 85% of the Fair  Market  Value of the shares at the time except
that when the grantee  owns more than 10% of the voting  power of all classes of
stock at the time of grant, the price is be 110% of the Fair Market Value of the
shares at the time of the grant. No NSO shall be exercisable  more than ten (10)
years from the date of grant.


OPTION GRANTS AND EXERCISES IN 2003

     No stock option grants were made to Mr. Kaufman, Mr. Carbo or Ms. Powers in
fiscal year 2003. Each of these executives  resigned during fiscal year 2003 and
none of these  executives  exercised any options in fiscal year 2003. All of the
stock options held by such executives expired prior to September 30, 2003.

EMPLOYMENT AGREEMENT WITH DR. FALIKS

     Dr. Faliks and the Company entered into an Employment  Agreement  effective
January 1, 2004, when Dr. Faliks became Chief Executive  Officer of the Company.
The  agreement  is for a term of one year and  specifies  a salary  of $1.00 per
year.  Under  the  agreement,  Dr.  Faliks is  eligible  to  participate  in the
Company's  benefit and medical plans on the same terms as other key  executives.
If his  employment is terminated at any time for any reason other than cause (as
defined),  Dr. Faliks would receive group health  coverage for an additional two
month period and any options that  otherwise  would have vested  during such two
month period will vest as of the date of termination.

CONSULTING AGREEMENT WITH MR. VALLEJO

     Mr.  Vallejo and the Company  entered into a  Counsulting  Agreement  dated
January 1, 2004, when Mr. Vallejo became Chief Operating Officer of the Company.
The agreement is for a term of twenty four months and specifies  compensation fo
$10,500 per month.  Mr. Vallejo is also eligible to receive up to two bonuses of
up to $25,000 each based on the Company  achieving  certain  revenue  levels set
forth in the  agreement.  Mr.  Vallejo is also  eligible for stock option awards
determined by the Board of Directors. If his employment is terminated other than
for cause all stock  options  previously  granted to Mr.  Vallejo,  will  become
immediately vested.


                                       9


<PAGE>


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Since  March 5,  2004,  Dr.  Faliks  has been a member of the  Compensation
Committee.  Dr.  Faliks is an employee of the Company and receives  compensation
pursuant to his employment agreement.


                          COMPENSATION COMMITTEE REPORT

     This  report is  provided  by the  Compensation  Committee  of the Board of
Directors  (the  "Committee")  to  assist   stockholders  in  understanding  the
Committee's  objectives and procedures in establishing  the  compensation of the
Company's Chief Executive Officer and other executive  officers.  The Committee,
is  responsible  for  establishing  and  administering  the Company's  executive
compensation program.

     The  Company's  executive  compensation  program is designed  to  motivate,
reward,  and  retain  the  management  talent  needed to  achieve  its  business
objectives and maintain its competitiveness in the medical imaging industry.  It
does this by utilizing  competitive base salaries that recognize a philosophy of
career continuity and by rewarding  exceptional  performance and accomplishments
that contribute to the Company's success.


                     KEY ELEMENTS OF EXECUTIVE COMPENSATION

     The Company's  executive  compensation  program consists of three elements:
Base Salary, Bonus, and Equity Based Compensation.

     BASE SALARY. A competitive base salary is crucial to support the philosophy
of management  development  and career  orientation of executives.  Salaries are
targeted to pay levels of the Company's competitors and companies having similar
capitalization  and revenues,  among other  attributes.  Executive  salaries are
reviewed annually.

     BONUS.   Bonus   awards  are  made  in  cash  and  in  stock  to  recognize
contributions  to the  Company's  business  during the past  year.  The bonus an
executive  receives  is  dependent  on  individual   performance  and  level  of
responsibility.  Assessment  of an  individual's  relative  performance  is made
annually  based  on a number  of  factors  which  include  initiative,  business
judgment,  technical  expertise,  and  management  skills.  Quarterly and annual
revenue  targets  with  associated  bonuses  are an  effective  way to  motivate
executives to develop the Company's revenues  consistently,  while annual profit
bonuses incentivize executives to maintain the Company in a profitable state.

     EQUITY  BASED  COMPENSATION.  Long-term  incentive  awards are  designed to
develop and maintain strong management through share ownership.  The purposes of
the Plan are to induce persons of outstanding  ability and potential to join and
remain with the Company; to provide an incentive for such employees,  as well as
for non-employee  consultants,  to expand and improve the profits and prosperity
of the Company by enabling such persons to acquire proprietary  interests in the
Company; and to attract and retain key personnel through the grant of options to
purchase  shares  of the  Company's  Common  Stock.  During  fiscal  year  ended
September 30, 2003, the Board of Directors awarded no stock options to its Chief
Executive Officer and other executive officers.

                    2003 CHIEF EXECUTIVE OFFICER COMPENSATION

     Effective February 1, 2001, the Board appointed Leon Kaufman,  Ph.D. as the
Chief Executive Officer.  Pursuant to his Employment Agreement,  Dr. Kaufman was
entitled to a base salary  equivalent to $220,000,  and he was granted an option
to purchase  300,000 shares of the Company's  Common Stock. He received no stock
option  grants in fiscal  years  2003 and 2001 and  received  75,000  options in
fiscal year 2002.  Additionally,  he was entitled to an incentive bonus based on
various milestones  including the Company's  quarterly and annual gross revenues
and net  profit,  and number of patents  filed.  He  received no bonus in fiscal
years  2003 and 2002 and a $60,000  bonus in fiscal  year  2001.  The  Committee
believes that the base salary and other terms and  conditions  of Dr.  Kaufman's
employment  were  consistent  with the foregoing  philosophy  and objectives and
reflected the scope and level of his responsibilities.


                                       10


<PAGE>


MEMBERS OF THE COMPENSATION COMMITTEE FOR FISCAL YEAR 2003

John C. Klock, M.D., Chair
Louis J. Kearn, Ph.D.


        FILINGS BY DIRECTORS, EXECUTIVE OFFICERS AND TEN PERCENT HOLDERS

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's directors,  executive officers,  and persons who own more than ten
percent  of a  registered  class of the  Company's  equity  securities,  to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.   Executive  officers,  directors,  and  greater  than  ten  percent
shareholders  are required by SEC  regulation to furnish the Company with copies
of all Section 16(a) forms they file.

     Based  solely on its review of the copies of such forms  received by it, or
written  representations  from  certain  reporting  persons that no Forms 5 were
required for those persons,  the Company  believes that during fiscal year ended
September 30, 2003, all forms have been filed on a timely basis.


                                  PROPOSAL TWO

AMENDMENTS TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION TO AUTHORIZE AN
                      ADDITIONAL 25 MILLION OF COMMON STOCK

     The  Company's  Amended  and  Restated   Articles  of  Incorporation   (the
"Articles") currently authorizes the Company to issue up to 50,000,000 shares of
common stock and 10,000,000 shares of preferred stock. This proposal would amend
the Articles to authorize the Company to issue an additional  25,000,000 shares,
for a total of  75,000,000  shares of  common  stock  and  10,000,000  shares of
preferred stock.

     Once the  amendment is approved at the Annual  Meeting,  Article III of the
Company's  Amended and Restated  Articles of  Incorporation  would be amended to
read as follows:

                                   ARTICLE III

         The  corporation  is  authorized  to issue two classes of shares  which
         shall be designated Common Stock and Preferred Stock, respectively. The
         total number of shares of Common Stock the corporation is authorized to
         issue  is  Seventy  Five  Million  shares,  whose  par  value  shall be
         one-tenth cent each. The total number of shares of Preferred  Stock the
         corporation  is  authorized to issue is Ten Million  shares,  whose par
         value shall also be one-tenth cent each.  Preferred Stock may be issued
         from time to time in one or more series,  and the board of directors of
         the  corporation is hereby  authorized to determine the  designation of
         any such series, to fix the number of shares of any such series, and to
         determine   and  alter  the   rights,   preferences,   privileges   and
         restrictions  granted to or imposed upon any wholly  unissued series of
         Preferred Stock. The board of directors is also authorized,  within the
         limits and restrictions  stated in any resolution or resolutions of the
         board originally fixing the number of shares constituting any series of
         Preferred  Stock,  to increase or decrease (but not below the number of
         shares of such  series then  outstanding)  the number of shares of such
         series subsequent to the issuance of shares of that series.

         The holders of the Common  Stock  shall  always be entitled to one vote
         per share of Common Stock in the  election of  directors  and upon each
         other matter coming before any vote of shareholders.


     The larger number of authorized shares of common stock provided for in this
proposal  will  provide  the  Company  with the  certainty  and  flexibility  to
undertake  various types of transactions,  including stock splits in the form of
stock dividends, financings, increases in the shares reserved for issuance under
stock incentive plans or other corporate transactions not yet determined.


                                       11


<PAGE>


     In  order  for  the  Company's  Board  to be  able  to  respond  to  future
circumstances  with a reasonable degree of flexibility,  the Company must have a
sufficient  number  of  authorized  shares  to cover  any  stock  grants,  stock
dividends or other  transactions.  There are  50,000,000  shares of common stock
authorized  and  as  of  June  28,  2004.  As  of  the  same  date,  there  were
approximately  48,336,295 issued and outstanding  shares of the Company's common
stock.  Under the proposed  amendment to the Articles,  the additional shares of
common stock would be available for issuance without further shareholder action,
unless  shareholder  action is otherwise  required by Nevada law or the rules of
any stock exchange or automated  quotation  system on which the common stock may
then be  listed  or  quoted.  The  Company  has no  current  plans to issue  the
remainder of the additional authorized shares.

     The  additional  shares of the  Company's  common  stock that would  become
available for issuance if the proposed amendment were adopted could also be used
by the Company to oppose a hostile  takeover attempt or delay or prevent changes
of control of the Company or changes in or removal of management of the Company.
For example, without further shareholder approval, the Board could strategically
sell shares of common stock in a private  transaction  to  purchasers  who would
oppose a takeover or favor the current Board. Although this proposal to increase
the number of  authorized  shares of common stock has been  prompted by business
and  financial  considerations,  not by the threat of any attempt to  accumulate
shares or  otherwise  gain  control of the  Company,  shareholders  nevertheless
should be aware that approval of the proposal could facilitate future efforts by
the  Company to deter or prevent  changes of control of the  Company,  including
transactions  that are favored by a majority of the independent  shareholders or
in which the  shareholders  might  otherwise  receive a premium for their shares
over then-current market prices or benefit in some other manner.

VOTES REQUIRED


     Approval of the amendment to the Articles  requires the affirmative vote of
a majority of the shares of the Company's common stock  represented in person or
by proxy at the meeting and entitled to vote on the proposal.  Abstentions  will
be treated as votes against the  amendment of the Articles and broker  non-votes
will have no effect on the voting results.

           THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO


                                 PROPOSAL THREE

                      RATIFICATION OF INDEPENDENT AUDITORS

     Action  is  to  be  taken  at  the  Annual  Meeting  with  respect  to  the
ratification of independent auditors, who were nominated by the Audit Committee,
to examine  the  financial  statements  of the  Company  for fiscal  year ending
September 30, 2004. Unless otherwise directed therein, proxies received pursuant
to this  solicitation  will be voted for the ratification of Odenberg,  Ullakko,
Muranishi & Company LLP, who served as the Company's auditors since November 25,
2002.  Although the  ratification of independent  auditors is not required to be
submitted to a vote of the  shareholders,  the Board of Directors  believes that
such  ratification  is a matter on which the  shareholders  should express their
opinion.  If the  shareholders  do not ratify  Odenberg,  Ullakko,  Muranishi  &
Company LLP, the selection of independent  auditors will be  reconsidered by the
Audit  Committee  of the Board of  Directors.  Odenberg,  Ullakko,  Muranishi  &
Company LLP has advised the Company that no member of its firm has any direct or
indirect  material  financial  interest  in  the  Company.   Representatives  of
Odenberg,  Ullakko,  Muranishi & Company  LLP are  expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions from the shareholders.

     FISCAL 2003 AUDIT FIRM FEE SUMMARY. During the fiscal year ending September
30, 2003, we retained our principal  independent  public  accountants to provide
services in the following categories and amounts:

          Audit Fees                                       $  21,500
          All Other Fees                                   $      --


                                       12


<PAGE>


     The audit  committee of the Board of Directors has  considered  whether the
provision of non-audit services by our principal  independent public accountants
is compatible  with  maintaining the  independence of our principal  independent
public accountants.


VOTES REQUIRED

     The  affirmative  vote of a majority of the shares of the Company's  common
stock  represented  in person or by proxy at the meeting and entitled to vote on
the proposal  will be required to approve the  ratification  of our  independent
public  accountants for the year ending September 30, 2004.  Abstentions will be
treated as votes against the ratification of our independent  public accountants
and broker non-votes will have no effect on the voting results.

          THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL THREE


                         REPORT OF THE AUDIT COMMITTEE*

         *This  section  shall not be deemed  incorporated  by  reference by any
         general statement  incorporating by reference this proxy statement into
         any filing under the Securities  Act of 1933, as amended,  or under the
         Exchange   Act,   except  to  the  extent  the   Company   specifically
         incorporates this information by reference,  and shall not otherwise be
         deemed "soliciting material" or filed under such Acts.

     Management is responsible for the  preparation,  presentation and integrity
of the  Company's  financial  statements  and  the  integrity  of the  Company's
accounting  and financial  reporting  process,  including its system of internal
controls,  the audit process and the process for monitoring compliance with laws
and regulations and the Company's policies.  The Company's independent certified
public  accountants are  responsible for performing an independent  audit of the
Company's   consolidated  financial  statements  in  accordance  with  generally
accepted  auditing  standards  and for issuance of a report  thereon.  The Audit
Committee's  responsibility is to monitor and oversee these processes and report
its findings to the Board of Directors.

     The  Committee  has  reviewed  and  discussed  the  consolidated  financial
statements  of the  Company  for  the  period  ended  September  30,  2003  with
representatives of management,  who represented that the Company's  consolidated
financial  statements  for the period ended  September 30, 2003 were prepared in
accordance with generally accepted accounting principles.  It had also discussed
with  Odenberg,  Ullakko,  Muranishi & Company,  LLP, the Company's  independent
auditors,  those  matters  required to be  reviewed  pursuant  to  Statement  of
Accounting Standards No. 61 ("Communications  with Audit Committees" as modified
or  supplemented).  The  Committee  has also  received  from  Odenberg,  Ullako,
Muranishi  &  Company,  LLP  written  independence  disclosures  and the  letter
required  by  Independence   Standards  Board  Standard  No.  1   ("Independence
Discussions with Audit  Committees" as modified or  supplemented)  and has had a
discussion with them regarding the auditor's independence.

     Based on the review and  discussions  with  management and the  independent
accountants,  the Audit Committee recommended to the Board of Directors that the
financial  statements  of the Company for the year ended  September  30, 2003 be
included in the Company's Annual Report on Form 10-KSB for filing with the SEC.


MEMBERS OF THE AUDIT COMMITTEE FOR FISCAL YEAR 2003

Louis J. Kearn, Ph.D.
Chris R. Shepherd


                                       13


<PAGE>


                                 OTHER BUSINESS

     The Board of Directors  knows of no other  business  that will be presented
for  consideration at the Annual Meeting.  If other matters are properly brought
before the meeting,  however,  it is the  intention of the persons  named in the
accompanying  proxy to vote the shares  represented  thereby on such  matters in
accordance with their best judgment.


                                        By Order of the Board of Directors,


                                        /s/ AVIEL FALIKS
                                        ___________________________
                                            Aviel Faliks
                                            Chairman, President and
                                            Chief Executive Officer
July 6, 2004









                                       14


<PAGE>


                                      PROXY

     This  Proxy  is  solicited  on  behalf  of  the  Board  of  Directors.  The
undersigned  hereby  appoints  Aviel Faliks and Ray Vallejo,  or either of them,
with full power of  substitution,  as Proxies of the  undersigned  to attend the
Annual  Meeting of  Shareholders  of AccuImage  Diagnostics  Corp. to be held on
August 6, 2004 and any adjournment thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present as indicated below.

1.  Election  of seven  directors  to serve  until the 2005  Annual  Meeting  of
Shareholders or until their respective successors are elected and qualified.

         [ ] FOR all nominees listed below       [ ] WITHHOLD AUTHORITY
             (except as marked to the                (to vote for all nominees
             contrary below)                         listed below)

(Instructions: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.)

     Aviel Faliks, Joel L. Blank, Hirsch Handmaker, David Goldbrenner,
     Sourav Goswami, Ron Schilling, Chung Lew

2. To approve an amendment  to the  AccuImage  Amended and Restated  Articles of
Incorporation to authorize an additional 25 million shares of common stock.

         [ ] FOR the proposal                    [ ] AGAINST the proposal

3. To ratify the appointment of Odenberg, Ullako, Muranishi & Co., L.L.P. as the
Company's independent accountants.

         [ ] FOR the proposal                    [ ] AGAINST the proposal

4. In their  discretion,  the  Proxies  are  authorized  to vote upon such other
business as may properly come before the meeting.

The undersigned  hereby  acknowledge  receipt of (a) Notice of Annual Meeting of
Shareholders to be held on August 6, 2004, (b) the accompanying Proxy Statement,
(c) the Annual  Report on Form  10-KSB of the  Company for the fiscal year ended
September  30, 2003 and (d) the  Quarterly  Report on Form 10-QSB of the Company
for the quarter ended March 31, 2004.

This Proxy, when properly executed,  will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, the Proxy will be voted
FOR proposals one, two and three.

Please  sign  exactly  as  signature  appears  on this  proxy  card.  Executors,
administrators,  traders, guardians,  attorneys-in-fact,  etc. should give their
full titles.  If signer is a  corporation,  please give full  corporate name and
have a duly authorized  officer sign,  stating title.  If a partnership,  please
sign in  partnership  name by authorized  person.  If stock is registered in two
names, both should sign.

Dated:             , 2004    ________________________________
                             Signature


                             ________________________________
                             Signature

</TEXT>
</DOCUMENT>
</SUBMISSION>
