Our product CE certificate expired in February this year, and we are in the process of renewing this certificate also. We cannot sell our products to customers where CE certificate is required before we receive the renewed certificate. We expect to receive our CE certificate in the second quarter of 2006. If these assumptions prove incorrect, the duration of the time period during which we could continue operations could be materially shorter.  We continue to face liquidity and capital resource issues relative to the timing of the successful completion of new sales compared to our ongoing payment obligations.  To continue our operations, we will need to generate increased revenues, collect them and reduce our expenditures relative to our recent history.  While we are working to achieve these improved results, we cannot assure you that we will be able to generate increased revenues and collections to offset required cash expenditures.  Our revenues from the China Group were approximately $183,000 in the three-months ended March 31, 2006. Accounts receivable due from the China Group as of March 31, 2006 totaled $993,651, which was virtually all of our accounts receivable balance at March 31, 2006. $810,591 of the China Group’s balance is over ninety days past due. As of May 12, 2006, $460,651 of the accounts receivable balance remains unpaid.  While we have verbal promises from the China Group to pay the accounts receivable balance and management continues to believe that we will fully realize the balance due, the ultimate realization thereof can not be assured. The loss of the China Group as a customer or the non-payment or slow payment of monies owed to us could have a significant adverse effect on our ability to continue as a going concern.

          The Company signed a three-year note with Heller Healthcare Finance, Inc (“Heller”) and GE Healthcare Financial Services, Inc., as successor-in-interest to Heller (collectively “GE”) on August 30, 2004. The note expires on June 30, 2007.  The note bears interest of 9%.  Covenants require the Company to maintain a minimum inventory balance of $1,500,000, minimum quarterly revenues of $1,000,000 and an annual net income provision.  For the year ended December 31, 2005 and any subsequent trailing twelve month periods, as measured on the last day of each calendar quarter, the Company’s earnings before interest, taxes, depreciation and amortization cannot fall below $550,000. As of May 12, 2006, we are not in compliance with all covenants of our loan agreement. The Company has not met minimum quarterly revenue targets of $1,000,000, a rolling twelve-month $550,000 of EBIDTA and has not presented a budget for 2006.

          There can be no assurance as to the correctness of the assumptions underlying our business plan or our expectations regarding our working capital requirements or our ability to continue operations. 

          Our ability to continue operations is based on factors including the success of our sales efforts in China and in other foreign countries where our efforts will initially be primarily focused, increases in accounts receivable and inventory purchases when sales increase, the uncertain impact of the market introduction of our AstraMax diagnostic workstations, and the absence of unanticipated product development and marketing costs.

          During the quarter ended March 31, 2006 operating cash flow was positive primarily due to collections of accounts receivable. But our change in cash was negative due to payments on notes payable.  Our expectations regarding future working capital requirements and our ability to continue operations are based on various factors and assumptions that are subject to substantial uncertainty and risks beyond our control, and no assurances can be given that these expectations will prove correct.  The occurrence of adverse developments related to these risks and uncertainties or others could result in our incurring unforeseen expenses, being unable to generate additional sales, to collect new and outstanding accounts receivable, to control expected expenses and overhead, or to negotiate payment terms with creditors, and we would likely be unable to continue operations. 

Item 3. Controls and Procedures.

          We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Page 16