COMPUTERIZED THERMAL IMAGING INC, POS AM, 2000-10-16

COMPUTERIZED THERMAL IMAGING INC
POS AM, 2000-10-16
SEARCH, DETECTION, NAVAGATION, GUIDANCE, AERONAUTICAL SYS

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As filed with the Securities and Exchange Commission on October 16, 2000

Registration No. 333-39654

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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POST-EFFECTIVE AMENDMENT NO. 1
ON
FORM S-3
TO
FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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COMPUTERIZED THERMAL IMAGING, INC.
(Exact name of Registrant as specified in its charter)

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NEVADA 87-0458721
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
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476 HERITAGE PARK BOULEVARD, SUITE 210, LAYTON, UTAH 84041,
(801) 776-4700
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

KEVIN PACKARD, CFO
476 HERITAGE PARK BOULEVARD, SUITE 210, LAYTON, UTAH 84041,
(801) 776-4700
(Name and address, including zip code, and telephone number,
including area code, of agent for service)

WITH A COPY TO:
ROBERT F. HOYT, ESQ. AND ROGER J. PATTERSON, ESQ., WILMER, CUTLER & PICKERING
2445 M STREET, N.W., WASHINGTON, D.C. 20037,
(202) 663-6000

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this amendment to this Registration Statement has been
declared effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

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PROPOSED
MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF REGISTRATION AMOUNT TO BE PER SHARE AGGREGATE OFFERING
SECURITIES TO BE REGISTERED REGISTERED (1)(2) PRICE (1)(2) AMOUNT OF FEE
-------------------------------------- ------------------- ------------------- ------------------- -------------------
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Common Stock to be Resold (3):
Shares Outstanding.................... 16,129,153 $9.50 $153,226,954 $40,451.92
Shares Underlying Resale Warrants..... 6,381,963 $9.50 $ 60,628,649 $16,005.96
Shares Underlying Resale Options...... 916,222 $9.50 $ 8,704,109 $ 2,297.88
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Total................................. 23,427,338 $222,559,712 $58,755.76
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).(1)

(2) Based upon the average of the bid and ask prices of the Common Stock
reported on the OTC Bulletin Board on June 15, 2000 for shares registered
pursuant to our Registration Statement on Form SB-2, Registration
No. 333-39654.

(3) Common Stock to be Resold includes shares of the Common Stock underlying
outstanding securities which are exercisable for or convertible into the
Common Stock which have not yet been exercised or converted.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

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1 The Prospectus herein is a combined Prospectus that includes the Prospectus
for our previous Registration Statement on Form SB-2, Registration No.
333-47237, and carries forward 5,975,615 shares for which we previously paid
a fee of $1,455.39.

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The information in this Prospectus is not complete and may be changed. The
selling security holders may not sell these securities until an amendment
relating to the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.

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SUBJECT TO COMPLETION, DATED OCTOBER 16, 2000.

COMPUTERIZED THERMAL IMAGING, INC.
27,667,289 SHARES OF COMMON STOCK

This Prospectus relates to the resale of our Common Stock by selling
stockholders listed on Page 23.

Our common stock trades on the over-the-counter Bulletin Board of the NASD,
also called the OTC.BB, under the trading symbol: COII. On October 10, 2000, the
closing bid for our common stock as reported on the OTC.BB was $4.28125 per
share.

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RISK FACTORS. OUR COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY READ AND CONSIDER OUR RISK FACTORS SECTION BEGINNING
ON PAGE 8 BEFORE MAKING AN INVESTMENT DECISION.

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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the Prospectus. Any representation to the contrary is a
criminal offense.

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THE DATE OF THIS PROSPECTUS IS OCTOBER , 2000

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CAUTIONARY STATEMENT

You should rely only on the information contained in this Prospectus. We
have not authorized anyone to provide you with information different from that
contained in this Prospectus. The selling security holders are offering to sell,
and seeking offers to buy, shares of Common Stock only in jurisdictions where
offers and sales are permitted. The information contained in this Prospectus is
accurate only as of the date of this Prospectus, regardless of the time of
delivery of this Prospectus or of any sale of Common Stock.

TABLE OF CONTENTS

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Available Information....................................... 3
Summary of Information in the Prospectus.................... 4
Risk Factors................................................ 7
Use of Proceeds............................................. 14
Price Range of Our Common Stock............................. 14
Description of Securities................................... 14
Plan of Distribution........................................ 19
Selling Stockholders........................................ 20
Legal Matters............................................... 27
Experts..................................................... 27
Material Changes............................................ 27
Information Incorporated into this Prospectus............... 28
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AVAILABLE INFORMATION

We are subject to the reporting requirements of the Securities and Exchange
Commission (the "Commission"). We file periodic reports, proxy statements and
other information with the Commission under the Securities Exchange Act of 1934.
We will provide, without charge, to each person who receives a copy of this
filing, upon written or oral request, a copy of any information that is
incorporated by reference herein (not including exhibits to the information that
are incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Requests should be directed to: Computerized Thermal
Imaging, Inc., Attn: Kevin L. Packard, CFO, 476 Heritage Park Boulevard, Suite
210, Layton, Utah 84041, voice: (801) 776-4700, fax: (801) 776-6440. Our
Internet address is www.cti-net.com. However, the information contained on our
web site is not part of this document.

We have filed a Registration Statement on Form SB-2 under the Securities Act
of 1933 with the Commission in connection with the securities offered by this
Prospectus. This Prospectus does not contain all of the information that is in
the Registration Statement. For further information with respect to us and the
Registration Statement, you may inspect without charge, and copy our filings, at
the public reference room maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of this material may also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Information about the public
reference room is available from the Commission by calling 1-800-SEC-0330.

The Commission maintains a web site on the Internet that contains reports,
proxy statements and other information regarding issuers that file
electronically with the Commission. The Internet address of the site is
www.sec.gov. Visitors to the site may access such information by searching the
EDGAR archives on this web site.

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SUMMARY OF INFORMATION IN THE PROSPECTUS

This Summary highlights selected information about us. To understand this
offering fully, you should read the entire Prospectus carefully, including the
Risk Factors beginning on Page 8 and the Financial Statements filed as part of
our Annual Reports on Form 10-KSB for the years ended June 30, 1999 and
June 30, 2000.

We were incorporated on June 10, 1987 in the State of Nevada. In 1988 we
acquired substantially all of the assets of Thermal Imaging, Inc. that consisted
of certain intellectual property regarding thermal imaging technology. We are
presently a development stage company and have not yet had revenues from
operations or sales of any magnitude related to our medical imaging equipment.
Our Breast Imaging System is presently undergoing clinical trial testing that is
required for FDA approval. In April 2000, we acquired Bales Scientific, Inc., a
medical and industrial imaging equipment company, that had revenues of $893,247
for the 12-month period ended January 31, 2000 and $329,283 for the period
beginning April 18, 2000 and ending June 30, 2000.

References to us in this Prospectus include our wholly-owned subsidiary
Bales Scientific, Inc. ("Bales") and our 97.9%-owned subsidiary, Computerized
Thermal Imaging Company. ("CTICO").

OUR PRODUCTS AND SERVICES

We integrate computer hardware, proprietary software, and sophisticated heat
sensing cameras to create systems that produce, interpret, and catalogue
computerized thermal images for medical applications. Unlike most other imaging
modalities, our computerized thermal imaging systems photograph how the body
functions, in contrast to how it is structured, allowing painless, noninvasive
detection of physiology-based disorders. Through Bales, we design, manufacture
and sell high resolution, dynamic, digital infrared Imaging Workstations and
related products for both medical and industrial applications. Specialized
cameras developed as part of these workstations are integral components of our
Breast Imaging and General Use Systems ("Medical Imaging Systems"). Our Breast
Imaging System will initially serve as a non-invasive, painless adjunct to
mammography. Our General Use System will function as a general diagnostic tool
to help healthcare payers identify and reduce fraudulent workers' compensation
claims. Our recently introduced Photonic Stimulators are used to increase blood
flow and circulation in the treatment of chronic pain. Industrial application of
our imaging systems include non-destructive inspection of aging aircraft,
electronics, composites, metals and other advanced materials, as well as
breakthroughs in the inspection of turbine blades of large power-generation
equipment.

Our revenue model offers our Medical Imaging Systems on a fee-per-use,
maintenance-included, basis to create strong adoption incentives for healthcare
providers burdened with large, often unexpected, maintenance costs and capital
budgets. Due to the recent occurrence of our acquisition of Bales, we have not
yet established a revenue model for our Photonic Stimulators and Imaging
Workstations or assessed the marketability of these products for industrial and
medical application. Such models and assessments are part of our plans for the
coming fiscal year.

TRW, Inc. ("TRW") is our primary systems development vendor, Battelle
Memorial Institute ("BATTELLE") is our principal systems engineer and Informix
Corporation ("INFORMIX") is our primary software database provider.

OUR MEDICAL IMAGING SYSTEMS

To date, we have developed the following significant technologies: (1) our
proprietary climate-controlled examination unit designed to enhance patient
comfort and facilitate reproducible tests; (2) our controlled, dynamic imaging
protocol that produces consistent results; (3) our patent-pending statistical
model (algorithms) that detects physiological irregularities; and (4) our
infrared imaging and analysis hardware, including our sophisticated heat-sensing
camera, designed and manufactured by Bales. These

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developments can be generally segregated into our two principal products, our
Breast Imaging and General Use Systems (jointly referred to herein as "Medical
Imaging Systems"). These systems are configured to address the premier
healthcare issue for women and the growing workers' compensation market,
respectively. Our Breast Imaging System serves as a non-invasive, painless
adjunct to mammography, whereas, our General Use System functions as a general
diagnostic tool to assist in the diagnosis and treatment of musculo-skeletal
disorders and help healthcare payers identify and reduce fraudulent workers'
compensation claims. Each system integrates computer hardware, proprietary
software, and sophisticated heat-sensing cameras to create systems that produce,
interpret, and catalogue computerized thermal images for medical applications.

Established medical imaging modalities, such as mammography, create
anatomical snapshots, but do not expose dynamic, functional disorders.
Mammography may detect the presence of a breast tumor, but whether it functions
as a cancer remains the task of a biopsy. We believe that our computerized
thermal imaging technology can complement other diagnostic modalities to reduce
the number of benign biopsies.

Our Medical Imaging Systems operate on the premise that every externally or
internally triggered physiological event causes an associated, measurable
caloric heat-releasing response. Medical science has sufficiently established
the body's thermatome or "temperature map" as a source for reliable
physiological clues. Abnormal caloric activity stimulates the body's temperature
and thermal regulating systems and creates a physiological response detectable
by sophisticated heat-sensing equipment. However, unlike most other imaging
modalities, our Medical Imaging Systems record indications of how the body
functions, in contrast to how it is structured, thereby, allowing quantitative
observation and interpretation of irregularities in the body's thermal
regulatory systems. In a controlled environment, we believe our Medical Imaging
Systems can dynamically record the skin's response over time, compare it to a
statistically valid model of "normal" and "abnormal" responses, and reliably
infer a problem with the performance (not the structure) of an organ or body
part. Our Medical Imaging Systems complement standard structural images with
functional images in order to generate new insights into breast cancer activity
and the progression of pain in the body.

In the end, we believe data generated by our Medical Imaging Systems will
allow physicians to find and monitor the progress of many diseases, disorders,
and injuries that may go undetected through conventional dense tissue/skeletal
imaging modalities such as X-ray, Computed Tomography, Magnetic Resonance, and
Ultrasound technologies.

Neither of our Medical Imaging Systems involves harmful radiation,
uncomfortable breast compression, electrical shocks, or any other discomfort.
Furthermore, our Medical Imaging Systems have no contraindications, making them
uniquely suited to post-surgical and post-therapeutic monitoring to track
recovery or potential tumor recurrence.

In addition to our Medical Imaging Systems, and as a consequence of our
acquisition of Bales, we design, manufacture and sell high resolution, dynamic,
digital infrared imaging workstations and related products for both medical and
industrial applications. Specialized cameras developed as part of these
workstations are integral components of our Medical Imaging Systems. Our
recently introduced Photonic Stimulators are used to improve vascularity and
increase blood flow circulation in the treatment of pain. Industrial application
of our imaging systems include non-destructive inspection of aging aircraft,
electronics, composites, metals and other advanced materials, as well as
breakthroughs in the inspection of turbine blades of large power-generation
equipment.

FDA APPROVAL

Our Breast Imaging and General Use Systems qualify as medical devices under
21 U.S.C. 321(h) because they are intended for use in the diagnosis, cure,
mitigation, treatment or prevention of disease and do not interact chemically
with the body. Typically, low risk, Class I or Class II devices that are
substantially similar to approved products already on the market can obtain FDA
clearance by the agency's pre-market

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notification known as a 510(k) filing. Sophisticated instruments that entail
significant risk are generally classified as Class III devices and require
manufacturers to submit a Pre-Market Application ("PMA") to the FDA. A PMA is
much more complex and time-consuming to prepare than a 510(k) filing. A PMA
typically contains a significant quantity of clinical testing, manufacturing and
other data, all of which are carefully scrutinized by the FDA to demonstrate the
product's safety, reliability and effectiveness.

We do not believe that either of our Medical Imaging Systems requires us to
submit a PMA to the FDA for approval. Notwithstanding, we have chosen to pursue
FDA approval via the PMA process to gain market acceptance of our Breast Imaging
System. We believe that FDA approval of our Breast Imaging System will
1) enable us to reference medical efficacy claims in connection with the
marketing of our Breast Imaging System, 2) lend credibility to all of our
imaging systems, 3) ease the task of introducing our General Use System to the
market, 4) enhance physician acceptance of our systems, and 5) permit us to
obtain designation of insurance payment codes for particular medical procedures.

The FDA is permitting us to submit our PMA in five modules, thereby,
accelerating the data submittal process. To date, we have submitted Modules 1
through 4 and anticipate submitting our final module (Module 5) prior to
December 31, 2000. Recruiting patients as part of our clinical trials and
obtaining reliable data there from are important elements to our submission of
Module 5 to the FDA for review in accordance with our plan. Although we
anticipate that we will be able to obtain and assemble the data necessary to
timely submit Module 5, any delay or difficulties experienced in the recruitment
of patients or the assembly and verification of patient data could delay our
submission of Module 5 beyond December 31, 2000. On September 15, 1999, we
submitted Module 1 and received FDA acceptance thereon on December 17, 1999. On
February 9, 2000, we submitted Module 2 and received FDA acceptance thereon on
June 27, 2000. On May 2, 2000, we submitted Module 3 and received FDA acceptance
thereon on September 21, 2000. On September 5, 2000, we submitted Module 4 for
which we are awaiting FDA review and acceptance. We cannot determine if, or
when, we will ultimately obtain FDA approval of our Pre-Market Approval
application.

CONTACTING US

Our web site is www.cti-net.com. However, the information contained on our
web site is not part of this Prospectus. Our principal executive offices are
located at: Computerized Thermal Imaging, Inc., 476 Heritage Park Boulevard,
Suite 210, Layton, Utah 84041, voice: (801) 776-4700, fax: (801) 776-6440.

THE OFFERING

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Common stock outstanding............................... 80,471,834 shares. (1)
Common Stock to be offered
by our Selling Stockholders.......................... 27,667,289 shares. (2)
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(1) Includes shares of our common stock outstanding as of September 30, 2000,
but does not include 15,795,018 shares underlying any of our fully vested
and outstanding options and warrants.

(2) Includes: (i) 16,662,259 shares issued and outstanding, (ii) 8,194,467
shares underlying the Resale Warrants, and (iii) 2,810,563 shares underlying
the Resale Options.

THE MARKET FOR OUR COMMON STOCK

Our common stock trades on the Over-the-Counter Bulletin Board of the NASD
(the "OTC.BB") under the trading symbol "COII". The market for our common stock
is highly volatile. We can provide no assurance that there will be a market in
the future for our common stock.

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RISK FACTORS

The following risk factors relate to our business, the development and
future marketing of our products, and the governmental environment and financial
markets in which we operate. Any investment in shares of our common stock
involves a high degree of risk. You should carefully consider the following
information about these risks, together with the other information contained
herein, before you decide to buy our common stock. If any of the following risks
actually occur, our business would likely suffer, the market price of our common
stock could decline and you may lose all or part of the money you paid to buy
our common stock.

WE ARE A DEVELOPMENT STAGE COMPANY. WE HAVE HAD ONLY LIMITED REVENUES FROM
OPERATIONS. WE HAVE A LIMITED OPERATING HISTORY. WE MAY NEVER HAVE
SUBSTANTIAL REVENUE FROM OPERATIONS. WE MAY NEVER BE PROFITABLE.

Since inception in 1987, we have been engaged primarily in research and
development activities. We have only recently begun product commercialization.
The likelihood of our success must be considered in view of all of the risks
related to the commercialization of our imaging systems, including whether or
not there will be medical market acceptance of our Medical Imaging Systems. With
limited exception, our products have not been used in commercial applications,
other than clinical testing. Our ability to achieve profitability will depend,
in part, on our ability to successfully develop clinical applications, obtain
regulatory approvals for our Medical Imaging Systems and develop the capacity to
manufacture and market our products. There is no assurance that we will achieve
commercialization of our products.

WE HAVE HAD, AND COULD HAVE, LOSSES, DEFICITS, AND DEFICIENCIES IN LIQUIDITY
THAT COULD IMPAIR OUR ABILITY TO GROW.

Our ability to achieve profitability depends on our ability to successfully
develop and market our Medical Imaging Systems. There is no assurance that we
will be able to accomplish this in a profitable manner. We are subject to all of
the risks inherent in a growing venture, including the need to develop marketing
expertise and produce significant revenue. We may incur losses, deficits and
deficiencies in liquidity for the foreseeable future due to the significant
costs associated with research and development and the commercialization of our
Medical Imaging Systems.

For fiscal year 2000, we had a net loss of $(8,893,155), a deficit of
$(34,601,965) and stockholders' equity of $48,284,845. For our fiscal year 1999,
we had a net loss of $(5,025,841), a deficit of $(25,708,810) and stockholders'
deficit of $(159,709). Our increase in stockholders' equity for our fiscal year
ended June 30, 2000 was primarily due to the sale of our equity securities in
private transactions and the purchase of Bales Scientific, Inc. ("Bales") using
our equity securities.

WE WILL NEED MORE FINANCING FOR GROWTH.

We have limited internal financial resources. Until our operating results
improve, we must obtain outside financing to fund the expansion of our business
and to meet our obligations as they become due. Any additional debt or equity
financing may be dilutive to our shareholders. Financing must be provided from
future operations, the sale of equity securities, borrowing, or other sources of
third-party financing. The sale of equity securities could dilute our existing
stockholders' interest, and borrowings from third parties could result in our
assets being pledged as collateral and loan terms that would increase our debt
service requirements and, thereby, could restrict our operations. There is no
assurance that capital will be available from any of these sources, or, if
available, upon terms and conditions acceptable to us.

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IN THE PAST, OUR INDEPENDENT ACCOUNTANTS HAVE EXPRESSED DOUBTS ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

The reports of our independent accountants for the fiscal years ended
June 30, 1999 and 1998 included an explanatory paragraph that describes
substantial doubt concerning our ability to continue as a going concern without
additional capital. Although we have since raised additional capital through
private placements of our equity securities, we may continue to incur losses in
the foreseeable future due to the significant costs associated with the research
and development and commercialization of our products. The report of our
independent accountants for our fiscal year ended June 30, 2000 contains no
going-concern opinion.

WE HAVE NEVER PAID A CASH DIVIDEND AND IT IS LIKELY THAT THE ONLY WAY YOU
WILL REALIZE A RETURN ON YOUR INVESTMENT IS BY SELLING YOUR SHARES.

We have never paid cash dividends on any of our securities. Our Board of
Directors does not anticipate paying cash dividends in the foreseeable future.
We currently intend to retain future earnings, if any, to finance our growth. As
a result, your return on investment in our stock will likely depend on your
ability to sell our stock at a profit.

THERE IS LIMITED MARKET LIQUIDITY FOR OUR SECURITIES AND THERE ARE PENNY
STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR ABILITY TO SELL
YOUR SHARES.

On October 10, 2000, the closing price of our common stock was $4.28125 per
share. If our closing stock price falls below $5.00, our stock could be
considered "penny stock" and the sale of our stock would be subject to the
"penny stock rules" of the Securities and Exchange Commission. These rules
require broker-dealers to take steps before making any penny stock trades in
customer accounts including the requirement to advise a customer about the
lowest offer and highest bid for our stock, to state the broker dealer's
compensation on the trade, and to make a special written suitability
determination for the customer and receive the customer's prior written
agreement. Generally, a company's stock is EXEMPT from the penny stock rules if,
among other things, the: (i) company has net tangible assets in excess of
$2 million demonstrated by an audited balance sheet that is less than 15 months
old from the date of the stock broker's transaction; (ii) stock broker
personally reviews the audited balance sheet; and (iii) stock broker has a
reasonable basis to believe that at the time of any given stock transaction in a
customer account, the company still has at least $2 million in net tangible
assets. If we were to become subject to the penny stock rules, there could be
delays in the trading of our stock and the market liquidity of our stock could
be adversely affected.

WE HAVE APPLIED TO HAVE OUR COMMON STOCK LISTED ON NASDAQ'S LARGE-CAP
NATIONAL MARKET. THERE IS NO ASSURANCE THAT OUR COMMON STOCK WILL BE LISTED
ON NASDAQ OR, IF LISTED, THAT WE WILL CONTINUE TO MEET THE QUALIFICATIONS
FOR LISTING.

On March 30, 2000, we applied to have our common stock listed on the
Large-Cap National Market of the Nasdaq Stock Exchange. On June 26, 2000, Nasdaq
approved the listing of our common stock to be effective June 29, 2000. On
June 28, 2000, Nasdaq informed us that our listing was "on hold" and requested
additional information from us. We are continuing to work with Nasdaq staff to
complete the application process. Our stock is currently trading near the $5
minimum bid price required to obtain Nasdaq listing of our stock. There can be
no assurance that our common stock will be listed on Nasdaq or, if listed, that
we will continue to meet the qualifications for listing.

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THE MARKET PRICE OF YOUR SHARES MAY BE VOLATILE.

The stock market price of medical equipment companies like us has been
volatile. Securities markets may experience price and volume volatility. The
market price of our stock may experience wide fluctuations, as it has in the
recent past, which could be unrelated to our financial and operating results.

WE COULD ISSUE PREFERRED STOCK AND THIS COULD HARM YOUR INTERESTS.

We presently have authorized 3,000,000 shares of preferred stock, par value
$.001 per share, none of which are outstanding. The shares of preferred stock,
when and if issued, could adversely affect the rights of the holders of common
stock and could prevent holders of common stock from receiving a premium for
their common stock. An issuance of preferred stock could result in a class of
securities outstanding that would have preferences with respect to voting rights
and dividends and in liquidation over the common stock, and could (upon
conversion or otherwise) enjoy all of the rights of holders of common stock. Our
Board's authority to issue preferred stock could discourage potential takeover
attempts and could delay or prevent a change in control through merger, tender
offer, proxy contest or otherwise by making such attempts more difficult to
achieve and more costly.

WE MAY SEEK BUSINESS COMBINATIONS WITH OTHER FIRMS AND ISSUE MORE SECURITIES
THAT COULD DILUTE YOUR INTERESTS AND PLACE MORE OF OUR SHARES INTO THE
MARKET.

We may enter into business combinations with other firms by exchanging our
stock. Doing so would enable us to acquire additional assets without spending
cash. However, it may result in dilution in per-share net tangible book value to
existing shareholders, and put more of our shares into the market.

WE RELY ON OTHERS TO HELP DEVELOP AND MANUFACTURE OUR PRODUCTS. IF THESE
THIRD PARTIES FAIL TO PERFORM IN ACCORDANCE WITH THE CONTRACTS WE HAVE IN
PLACE WITH THEM, THE FDA APPROVAL, DEVELOPMENT, AND/OR PRODUCTION OF OUR
PRODUCTS COULD BE SUBSTANTIALLY DELAYED.

We have a material dependence upon various vendors and hospitals to assist
in the FDA clinical studies of our Breast Imaging System and the development and
manufacturing of our products. Our products are highly specialized and require
that many component parts be developed and manufactured according to unique
specifications. Although there may be more than one developer or manufacturer
for our component parts, failure to develop or manufacture our component parts
in a timely manner could result in a loss of business for us and further result
in substantial delays in the FDA approval and/or commercialization of our
products.

WE CURRENTLY DO NOT HAVE MANY CUSTOMERS FOR OUR PRODUCTS. IN ORDER TO BE
SUCCESSFUL, WE ANTICIPATE THAT OUR PRODUCTS WILL NEED TO BE DISTRIBUTED TO A
BROAD CUSTOMER BASE. IF WE ARE UNABLE TO IDENTIFY AND ADEQUATELY MARKET OUR
PRODUCTS TO A BROAD CUSTOMER BASE, OUR PRODUCTS MAY NEVER REACH THE MARKETS
AND OUR BUSINESS COULD FAIL.

We have sold one General Use System to a hospital in Bangkok, Thailand. In
the United States, we expect that if, and when, we are able to obtain FDA
approval on our Breast Imaging System, we will need to market and sell our
products to more than just a few major customers.

IF WE WERE UNSUCCESSFUL IN PREVENTING OTHERS FROM USING OUR INTELLECTUAL
PROPERTY, WE WOULD LOSE A COMPETITIVE ADVANTAGE.

We have common law rights to our intellectual property. We also currently
hold a patent (No. 5,999,842) dated December 7, 1999 on our bed apparatus. We
also hold provisional applications on

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our algorithm (Serial No. 60/105,147 dated October 21, 1998) and Photonic
Stimulator (Serial No. 09/229,689 dated January 13, 1999). However, there can be
no assurance that the steps we have taken to protect our property will be
adequate to deter misappropriation. Any attempts that we make to defend our
intellectual property would be expensive and time consuming.

WE ARE SUBJECT TO GOVERNMENT REGULATION.

FDA APPROVAL. Our Breast Imaging System is presently undergoing clinical
trial testing for FDA approval pursuant to PMA No. M990018. There is no
assurance that we will ever receive FDA approval. Failure to secure FDA approval
would reduce or eliminate the market for our products.

MEDICAL CARE PAYMENT SYSTEMS. Third party payers, such as Medicare or
Medicaid, could reduce the reimbursement rate for usage of equipment such as
ours. This could reduce the market for our products.

WE ARE DEPENDENT ON OUR PRESENT MANAGERS AND OUR ABILITY TO GROW COULD BE
IMPAIRED IF WE LOST THEIR SERVICES.

Our success is substantially dependent upon the time, talent, and experience
of Richard V. Secord and David A. Packer, two of our officers and directors. The
loss of the services of either of these individuals could have a material
adverse impact on us. No assurance can be given that a replacement for either of
them could be located. In order for us to expand, we must continue to improve
and expand the level of expertise of our personnel and we must attract, train
and manage qualified managers and employees to oversee and manage our expanding
operations. Demand for medical technology personnel is high. There is no
assurance that we will be in a position to offer competitive compensation to
attract or retain such personnel. You should not invest in us unless you are
willing to entrust all aspects of our management to our directors and officers.

WE MAY NOT BE ABLE TO MANAGE GROWTH AND THIS COULD RESULT IN A WEAKENING OF
OUR FINANCIAL AND COMPETITIVE POSITION.

Our intention is to expand business operations by acquiring companies and
commercializing our imaging systems and related products. This expansion will
subject us to a variety of risks associated with rapidly growing companies. In
particular, our plans may place a significant strain on our day-to-day
operations. There can be no assurance that our plans, controls or personnel will
be sufficient to meet these demands. Inadequacies in these areas could have a
material adverse effect on our business, financial condition and results of
operations.

WE DO NOT HAVE PRODUCT LIABILITY INSURANCE.

The manufacture and sale of medical imaging information systems entail
significant risk of product liability claims. We do not believe that we need
product liability insurance now because our imaging systems are either in
development or operated by our subsidiary, which carries insurance for our
clinical trials. There can be no assurance that we can obtain insurance coverage
with limits adequate to protect us from any liability that might arise in
connection with the sale of our products. We anticipate obtaining product
liability coverage as our products are commercialized. However, this type of
insurance is expensive and may not be available at all.

YOU HAVE A RISK OF DILUTION.

As of September 30, 2000, we had outstanding a total of 7,460,550
immediately exercisable options to purchase our common stock at exercise prices
ranging from $.60 to $9.0625 per share. As of September 30, 2000, we also had
1,890,417 options to purchase our common stock at exercise prices ranging from
$.76 to $9.0625 that vest or may be granted at future dates pursuant to various
agreements. As of September 30,

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<PAGE>

2000, we had outstanding immediately exercisable warrants to purchase 8,334,468
shares of our common stock at prices ranging from $.72 to $7.25 per share.

Of the immediately exercisable options and warrants noted above, 2,211,083
expire at various times through the year 2000, 3,115,000 expire at various times
through the year 2002, 10,134,352 expire at various times through the year 2005
and 334,583 expire after 2005. If the exercises of warrants or options occur at
below market prices, you will be subject to an immediate dilution in your
per-share net tangible book value.

We have a financing arrangement whereby Beach Boulevard, L.L.C. ("Beach") is
currently required to provide us with up to $4,000,000 in financing from time to
time under certain conditions and then only if we desire to obtain financing
from Beach from time to time. This financing arrangement is in the form of a
Securities Purchase Agreement whereby Beach purchases shares of our common stock
at a 15% discount to the market price of our common stock at the time of the
funding. The issuance of shares to Beach may have a severe dilutive effect on
the existing holders of our common stock.

If fundings with Beach occur, the actual number of shares of our common
stock that will be issuable to Beach is based upon fluctuations in the market
price of our common stock and cannot be determined until the time of the
transactions with Beach and is calculated by a formula in the Securities
Purchase Agreement. There is no limit on the number of shares that could be
issued to Beach upon further transactions pursuant to the Securities Purchase
Agreement. The actual number of shares of our common stock that may be issuable
and beneficially owned by Beach in connection with the transactions cannot be
determined at this time.

THE SALE OF OUR OUTSTANDING SHARES COULD RESULT IN A LOW MARKET PRICE FOR
YOUR COMMON STOCK. THERE IS A LIMITED PUBLIC FLOAT FOR OUR COMMON STOCK AND
YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT THE PRICE, OR IN THE VOLUME, YOU
DESIRE.

As of September 30, 2000, we had outstanding 80,471,834 shares of common
stock, out of which approximately 30.1 million shares are restricted securities.
Approximately 12.7 million shares of our restricted common stock (none of which
are held by affiliates) have been held for less than one year and cannot be
traded without an effective registration statement or acceptable opinion that
such shares can be sold. Approximately 9.9 million shares of our restricted
common stock (6.8 million of which are held by affiliates) have been held by our
shareholders for more than one year and less than two years and could be sold
into the market immediately with volume limits pursuant to Rule 144.
Approximately 7.5 million shares of our restricted common stock (less
6.49 million of which are held by affiliates and are subject to volume limits
pursuant to Rule 144) have been held by our shareholders for more than two years
and can be sold immediately without restriction. In addition, if shares are
issued in the future to Beach and those shares are sold, the price of our common
stock may decrease due to these additional shares being sold into the market.

On June 6, 2000, we filed an amended registration statement on Form SB-2,
Amendment #9, File #333-47237, with the Securities and Exchange Commission to
register 7,443,948 shares of our common stock issued in connection with
transactions prior to the fiscal year ended June 30, 1999. Such registration
statement was declare effective on June 15, 2000, and on June 15, 2000, we filed
a Prospectus pursuant to Rule 424(b)(4). On June 20, 2000, we filed an initial
registration statement on Form SB-2, File #333-39654, with the Securities and
Exchange Commission to register 23,427,338 shares of our common stock including
common stock underlying each of the transactions occurring July 1, 1999 through
June 17, 2000. On June 30, 2000, the Securities and Exchange Commission declared
the registration statement effective and on July 3, 2000, we filed a Prospectus
pursuant to Rule 424(b)(4).

All of our common stock outstanding as of September 30, 2000 consists of
unrestricted or restricted shares that can be sold, traded or otherwise
transferred pursuant to the terms of our currently effective

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<PAGE>

registration statements. Such registration statements cannot be used for
transactions occurring after October 31, 2000 unless and until we file an
amended registration statement containing our June 30, 2000 audited financial
statements and that amendment is declared effective.

On October 16, 2000, we filed this amended combined registration statement.
However, there can be no assurance that the Securities and Exchange Commission
will declare such registration statement effective prior to October 31, 2000. If
the amendment is not declared effective by that date, holders of restricted
shares will not be able to sell such shares unless we receive a legal opinion to
our satisfaction that such underlying shares can be sold without an effective
registration, or the requisite holding periods for such securities ends.

WE INDEMNIFY OUR DIRECTORS AND OFFICERS AND THIS REDUCES THE LIKELIHOOD OF
SHAREHOLDER LITIGATION.

Our Bylaws provide that we indemnify our directors and officers if any are a
party to a matter by reason of being a director or officer. These provisions may
discourage stockholders from bringing suit against a director for breach of
fiduciary duty and may reduce the likelihood of derivative litigation brought by
our stockholders on our behalf against a director.

WE MAY NOT BE ABLE TO COMPETE FOR BUSINESS AND THIS WOULD SUBSTANTIALLY
IMPAIR OUR GROWTH.

There are many other firms that compete in the medical imaging and
diagnostic marketplace. We will have to compete with these firms when we
commercialize our products and services. Most of our competitors are more
established companies with substantially greater capital resources and marketing
capabilities. We anticipate that the number of competitors will increase in the
future. No assurance can be given that we will be able to successfully compete
with these companies.

ANTI-TAKEOVER PROVISIONS

Our Articles of Incorporation and Bylaws contain provisions that may have
the effect of discouraging certain transactions involving a change of control.
Our Board of Directors has the authority to issue up to 3,000,000 shares of
preferred stock. Our ability to issue shares of preferred stock could have the
effect of discouraging unsolicited acquisition proposals or making it more
difficult for a third party to gain control of us, or otherwise could adversely
affect the market price of our common stock.

INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

This Prospectus contains numerous forward-looking statements about our
business and future. The United States Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for certain forward-looking statements. Our
forward-looking statements are expressed in good faith and we believe that there
is a reasonable basis for us to make them. However, readers are cautioned not to
place undue reliance on such statements. Forward-looking statements include, but
are not limited to, statements about our:

- plans;

- objectives;

- goals;

- strategies;

- expectations for the future;

- future performance and events;

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<PAGE>

- underlying assumptions for all of the above; and

- other statements that are not statements of historical fact.

We make these forward-looking statements based on our analysis of internal
and external historical trends and future expectations. However, such statements
involve risks and uncertainties that could cause our actual results to
materially differ from our forward-looking statements and there can be no
assurance that we will achieve the results set forth in these forward-looking
statements. In addition to other factors, the following are important factors
that could cause our actual results to materially differ from our
forward-looking statements:

- the results of our pre-clinical and clinical testing;

- the time and costs involved in obtaining regulatory approvals for our
systems and products;

- our ability to respond to changes in the medical technology marketplace
including our ability to develop or acquire new technologies;

- competitive factors;

- the availability of financing on terms and conditions acceptable to us;

- the availability of personnel with requisite skills; and

- the terms of any new collaborative, licensing and other arrangements that
we may establish.

We have no obligation, or intent, to update or revise these forward-looking
statements to reflect future events, new information or otherwise.

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<PAGE>

USE OF PROCEEDS

We will not receive any proceeds upon the sale of the Common Stock in this
offering. If all the warrants and options in this offering are exercised, the
net proceeds to us from the exercise of such, after the deduction of offering
expenses, will be approximately $38.67 million. We intend to use any proceeds
derived from the exercise of warrants and options for working capital and
general corporate purposes. We will pay for the cost of registering the shares
of Common Stock in this offering.

PRICE RANGE OF OUR COMMON STOCK

Our common stock trades on the OTC.BB under the trading symbol COII. The
following table summarizes the quarterly low and high bid prices per share for
our common stock. The bid prices reflect inter-dealer prices, without retail
markup, markdown, or commission and may not represent actual transactions.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1999 LOW BID HIGH BID
------------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... $0.75 $ 2.13
Second Quarter.............................................. $0.51 $ 0.76
Third Quarter............................................... $0.58 $ 1.75
Fourth Quarter.............................................. $0.64 $ 1.06

FISCAL YEAR ENDED JUNE 30, 2000
------------------------------------------------------------
First Quarter............................................... $0.63 $ 1.45
Second Quarter.............................................. $1.40 $ 5.03
Third Quarter............................................... $3.00 $19.97
Fourth Quarter.............................................. $5.38 $13.75

FISCAL YEAR ENDED JUNE 30, 2001
------------------------------------------------------------
First Quarter............................................... $3.00 $ 9.44
Second Quarter, through October 10, 2000.................... $4.16 $ 5.00
</TABLE>

On October 10, 2000, the closing price of our common stock as reported on
the OTC.BB was $4.28125 per share. On October 10, 2000, we had approximately
23,000 beneficial stockholders of our common stock and 80,471,834 shares of our
common stock outstanding.

DESCRIPTION OF SECURITIES

Under our Articles of Incorporation ("Articles"), the authorized capital
stock of the Company consists of 203,000,000 shares, of which 200,000,000 are
shares of common stock, par value $0.001 per share (the "Common Stock") and
3,000,000 are shares of preferred stock (the "Preferred Stock"). As of
September 30, 2000, there were 80,471,834 shares of the Common Stock issued and
outstanding. No shares of the Preferred Stock are issued or outstanding.

The following description of certain matters relating to the Common Stock,
the Preferred Stock, the Warrants and the Options is a summary and is qualified
in its entirety by the provisions of our Articles of Incorporation and Bylaws.

COMMON STOCK

The holders of the Common Stock are entitled to one vote per share on all
matters submitted to a vote of our stockholders. The holders of the Common Stock
have the sole right to vote, except as otherwise provided by law or by our
Articles of Incorporation, including provisions governing any shares of the
Preferred Stock. In addition, such holders are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to the

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<PAGE>

payment of preferential dividends with respect to any shares of the Preferred
Stock that from time to time may be outstanding. In the event of our
dissolution, liquidation or winding up, the holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of all our
liabilities, subject to the prior distribution rights of the holders of any
shares of the Preferred Stock that may be outstanding at that time.

CUMULATIVE VOTING RIGHTS

The holders of the Common Stock do not have cumulative voting rights.
Accordingly, the holders of more than 50 percent of the issued and outstanding
shares of the Common Stock voting for the election of directors can elect all of
the directors if they choose to do so, and in such event, the holders of the
remaining shares of the Common Stock voting for the election of the directors
will be unable to elect any person or persons to the Board of Directors.

PREEMPTIVE RIGHTS

Pursuant to Title 7, Chapter 79 of the Nevada Revised Statutes, stockholders
of corporations organized before October 1, 1991, with certain limited
exceptions set out in the statute, have preemptive rights to acquire pro rata
unissued shares, treasury shares or securities convertible into such shares,
being offered for sale, except to the extent limited or denied by the
corporation's Articles of Incorporation. Prior to October 1, 1991, among other
circumstances, preemptive rights did not exist with respect to (i) shares issued
to our directors, officers or employees pursuant to a vote of the stockholders,
or pursuant to a plan authorized by the stockholders, (ii) shares sold for a
consideration other than cash, and (iii) shares issued at the same time that the
stockholder who claims a preemptive right acquired his shares. We were
incorporated on June 10, 1987, and prior to March 16, 1998, our Articles of
Incorporation did not provide for any limitation with respect to preemptive
rights. In the various offerings of our securities, we did not offer to our
existing stockholders preemptive rights to acquire any of the securities so
offered other than to persons in exchange for services rendered. The applicable
remedy, if any, for our failure offer to our stockholders the preemptive rights
is not certain after the passage of time and Common Stock price fluctuations.
Under Nevada law, the preemptive right is only an opportunity to acquire shares
upon such terms as the Board of Directors fixes for the purpose of providing a
fair and reasonable opportunity for the exercise of such right. If a stockholder
were to timely demand preemptive rights for a particular non-excepted prior
sale, we might be required in equity to sell additional shares of the Common
Stock to the complaining stockholder at previously offered prices to enable a
stockholder exercising such rights to maintain his ownership percentage for
prior sales that would effect preemptive rights. To the extent that any
stockholders were entitled to the right to purchase shares of the Common Stock
upon the exercise of any such preemptive rights, we plan to allow any such
requesting stockholder the right to purchase his pro rata amount of such shares
at the same price per share to which he would have been entitled if such
preemptive rights had been offered in conformity with Nevada law. Any such
offering of preemptive rights will be in conformity with the Securities Act and
the various states where any such stockholders may be located. If any
stockholders were to exercise their preemptive rights within the applicable
statute of limitations for any sale of securities which carried a preemptive
right prior to March 16, 1998, the percentage interests of investors may be
diluted by any such sales of additional securities and the contributions to us
from such sales, if required to be offered at the price of previous issuances
and if such price is below the current market value, could result in
contributions to us at a per share contribution less than the current market
value. We cannot speculate whether any stockholders would elect such preemptive
rights, if the statute of limitations has not barred such rights, or how much
additional capital would be raised or how many shares would be issued or whether
other remedies would be available. As of the date of this Prospectus, we are not
aware of any stockholder who intends to make any claim with respect to our
failure to offer any such preemptive rights. On February 4, 1998, a majority of
our stockholders voted to amend the Articles of Incorporation to deny preemptive
rights with respect to each new issuance of shares of the Common Stock. However,
the amendment to the Articles of Incorporation will have no effect with

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<PAGE>

respect to preemptive rights that may have existed for certain sales of the
Common Stock prior to such amendment.

PREFERRED STOCK

The Board of Directors is authorized, without action by the holders of the
Common Stock, to provide for the issuance of the Preferred Stock in one or more
series, to establish the number of shares to be included in each series and to
fix the designations, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof. This
includes, among other things, voting rights, conversion privileges, dividend
rates, redemption rights, sinking fund provisions and liquidation rights which
shall be superior to the Common Stock. The issuance of one or more series of the
Preferred Stock could adversely affect the voting power of the holders of the
Common Stock and could have the effect of discouraging or making more difficult
any attempt by a person or group to attain control of us. As of the date of this
Prospectus, there are no shares of the Preferred Stock issued and outstanding.

WARRANTS

1996 PRIVATE PLACEMENT WARRANTS. In connection with a private placement in
1996 of approximately 2 million shares of our common stock, we granted warrants
to Subscribers to acquire an equal number of common shares at $5.00 per share
for a two-year period. Warrants for an additional 203,150 shares of our common
stock were issued to Subscribers in September 1996 due to our failure to timely
file a registration statement covering shares issued in the private placement.
These additional warrants were likewise exercisable at $5.00 per share. In early
1997, we effected a further settlement with Subscribers regarding our obligation
to register shares offered in the private placement. In brief, we revised the
terms and increased the number of shares covered by warrants issued in
connection with the placement. The revised warrants included a 50 percent
increase in shares, a reduction in the exercise price (from $5.00 to $2.50 per
share) and an extension of the expiration date to December 31, 1999. In
December 1999, the expiration date was further extended to December 31, 2000.
Warrants representing 2,071,083 shares of common stock remain unexercised as of
the date hereof.

2000 PRIVATE PLACEMENT WARRANTS. On March 31, 2000, we concluded a private
placement (the "Offering") of our securities pursuant to Regulation D,
Rule 506, of the Securities Act of 1933. As a consequence, we raised, net of
offering costs, approximately $39,543,103. Total common stock subscribed to as a
result of subscriptions accepted equaled 11,148,766 shares. Warrants of equal
quantity were issued and give participating shareholders the right to acquire
5,574,316 shares of our common shares at $5.00 per share (subject to specified
anti-dilution provisions). To date, warrants representing 26,247 shares of
common stock have been exercised.

PIKE WARRANTS. As compensation for services rendered in connection with his
employment with us, we issued James Pike 170,000 warrants on May 2, 2000. Each
warrant, exercisable through May 2, 2005, entitles the holder thereof, upon
exercise, to one share of our common stock at $1.5625 per share.

SITRICK WARRANTS. As compensation for financial consulting services, we
issued Sitrick & Company 37,648 warrants during the first calendar quarter of
2000. Each warrant entitles the holder thereof, upon exercise, to one share of
our common stock at $0.9375 per share. To date, warrants representing 32,333
shares of common stock have been exercised.

BRISTOL WARRANTS. In connection with our settlement of two alleged claims
filed in March 2000 against us, we issued 400,000 warrants to Bristol Asset
Management on June 16, 2000. Each warrant entitles the holder thereof, upon
exercise, to one share of common at an exercise price of $7.25 per share.

The resale of 2,071,083 share of the Common Stock underling the 1996 Private
Placement Warrants, 5,548,069 shares of the Common Stock underlying the 2000
Private Placement Warrants, 170,000 shares of the Common Stock underlying the
Pike Warrants, 5,315 shares of the Common Stock underlying the

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<PAGE>

Sitrick Warrants, and 400,000 shares of the Common Stock underlying the Bristol
Warrants (collectively, the "Resale Warrants") are being registered hereby
pursuant to registration rights granted to the holders thereof.

OPTIONS

MANHATTAN FINANCIAL GROUP OPTIONS. On January 1, 1997, we executed a
Consulting Agreement with Manhattan Financial Group ("MFG"). As consideration
for the Agreement, we issued 100,000 shares of the Common Stock and an option to
purchase 2,000,000 shares of the Common Stock at a purchase price of $0.60 per
share. As of the date hereof, all of the options are vested and immediately
exercisable. At our cost, MFG has "piggyback" registration rights with respect
to the shares underlying the options. The resale of 2,000,000 shares of the
Common Stock underlying the options granted pursuant to the Consulting Agreement
(the "Resale Options") are being registered hereby pursuant to registration
rights granted to the holders thereof.

2000 PRIVATE PLACEMENT OPTIONS. In connection with the 2000 Private
Placement, we entered into commission agreements with various individuals and
entities (jointly referred herein to as "Advisors") to assist in the private
placement of our common stock and warrants in connection with the Placement.
Such agreements stipulated that we would compensate Advisors cash consideration
equal to seven percent of the final gross proceeds derived by the Advisors in
connection with the Offering, plus additional consideration in the form of stock
options, the number of which would be equal to ten percent of the final gross
proceeds derived by the Advisors in connection with the Offering divided by the
closing price of our common shares on February 29, 2000 as quoted on the OTC
Bulletin Board of the NASD. Options granted pursuant to the agreements are
exercisable at any time during the three-year period from February 29, 2000
through February 28, 2003 at a strike price of $1.70 per share. In consequence
of the foregoing, we granted options to acquire 380,508 shares of our common
stock to the Advisors. As of the date hereof, options representing 105,659
shares of common stock have been exercised.

BALES OPTIONS. On April 17, 2000, in connection with his employment
agreement and our acquisition of Bales Scientific, Inc., we issued 100,000
options (exercisable through April 17, 2003) to Maurice Bales. Each option
entitles the holder thereof, upon exercise, to one share of common stock at an
exercise price $9.0625 per share.

DIRECTOR AND OFFICER OPTIONS. Mr. Richard V. Secord and David A. Packer are
two of our officers and directors. Each have been granted options pursuant to
our 1995 and/or 1997 Stock Option and Restricted Stock Plans. Although the
shares underlying such options have been registered pursuant to an effective
Form S-8 registration of our Stock Option and Restricted Stock Plans,
Mr. Secord and Mr. Packer may assign up to 435,714 options, and/or shares
underlying such options, for charitable purposes.

The resale of 2,000,000 shares of the Common Stock underlying the Manhattan
Financial Group Options, 274,849 shares of the Common Stock underlying the 2000
Private Placement Options, 100,000 shares of the Common Stock underlying the
Bales Options, and 435,714 shares of the Common Stock underlying the Director
and Officer Options (collectively, the "Resale Options") are being registered
hereby pursuant to registration rights granted to the holders thereof.

CERTAIN PROVISION OF THE ARTICLES OF INCORPORATION AND BYLAWS

GENERAL

A number of provisions of our Articles of Incorporation ("Articles") and
Bylaws ("Bylaws") concern matters of corporate governance and the rights of
stockholders. Certain of these provisions, as well as the ability of the Board
of Directors to issue shares of the Preferred Stock and to set the voting
rights, preferences and other terms thereof, may be deemed to have an
anti-takeover effect and may discourage takeover attempts not first approved by
the Board of Directors (including takeovers which certain

17
<PAGE>

stockholders may deem to be in their best interests). To the extent takeover
attempts are discouraged, temporary fluctuations in the market price of the
Common Stock, which may result from actual or rumored takeover attempts, may be
inhibited. These provisions, together with the ability of the Board of Directors
to issue the Preferred Stock without further stockholder action, also could
delay or frustrate the removal of incumbent directors or the assumption of
control by the stockholders, even if such removal or assumption would be
beneficial to our stockholders. These provisions also could discourage or make
more difficult a merger, tender offer or proxy contest, even if they could be
favorable to the interests of the stockholders, and could potentially depress
the market price of the Common Stock. The Board of Directors believes that these
provisions are appropriate to protect our interests and those of our
stockholders.

MEETINGS OF STOCKHOLDERS

Our Bylaws provide that a special meeting of the stockholders may be called
by the Chairman of the Board, the President, the Board of Directors, or the
holders of not less than 10 percent of the outstanding shares of our capital
stock entitled to vote at such a meeting unless otherwise required by law. Our
Bylaws provide that only those matters set forth in the notice of the special
meeting may be considered or acted upon at the special meeting.

AMENDMENT OF BYLAWS

The Bylaws provide that the Bylaws may be altered, amended or repealed by
the Board of Directors or our stockholders. Such action by the Board of
Directors requires the affirmative vote of a majority of the directors present
at such meeting.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

One effect of having authorized but unissued capital stock may be to enable
the Board of Directors to render more difficult, or to discourage, an attempt to
obtain control of us by means of a tender offer, proxy contest or otherwise, and
thereby protect the continuity of the our management. If in the due exercise of
its fiduciary obligations, for example, the Board of Directors were to determine
that a takeover proposal was not in our best interests, such shares could be
issued by the Board of Directors without stockholder approval in one or more
private or public offerings or other transactions that might prevent or render
more difficult or costly the completion of the proposed takeover transaction by
diluting the voting or other rights of the proposed acquirer or insurgent
stockholder or stockholder group, by creating a substantial voting block of
institutional or other investors that might undertake to support the position of
the incumbent Board of Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise. In this regard, our Articles
grant the Board of Directors broad power to establish the rights and preferences
of the authorized, but unissued Preferred Stock, one or more series of which
would be issued entitling holders to vote separately as a class on any proposed
merger or consolidation, to convert Preferred Stock into a larger number of
shares of the Common Stock or other securities, to demand redemption at a
specified price under prescribed circumstances related to a change in control,
or to exercise other rights designed to impede a takeover.

The issuance of shares of the Preferred Stock pursuant to the Board's
authority described above could decrease the amount of earnings and assets
available for distribution to holders of the Common Stock, and adversely affect
the rights and powers, including voting rights, of such holders and may have the
effect of delaying, deferring or preventing a change in control. The Board of
Directors does not currently intend to seek stockholder approval prior to any
issuance of authorized, but unissued stock, unless otherwise required by law.

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<PAGE>

PLAN OF DISTRIBUTION

This Prospectus relates to the aggregate resale of 27,667,289 shares of the
Common Stock that may be sold by the Selling Stockholders. The shares of the
Common Stock to be resold include (i) 16,662,259 shares issued and outstanding;
(ii) 8,194,467 shares underlying outstanding warrants (the "Resale Warrants");
and (iii) 2,810,563 shares underlying outstanding options (the "Resale
Options").

The selling stockholders and any of their pledgees, assignees, and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market, or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. There is no assurance that the selling stockholders will sell
any or all of the Common Stock in this offering. The selling stockholders may
use any one or more of the following methods when selling shares:

- Ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers.

- Block trades in which the broker-dealer will attempt to sell the shares as
an agent but may position and resell a portion of the block as principal
to facilitate the transaction.

- Purchases by a broker-dealer as principal and resale by the broker-dealer
for its own account.

- An exchange distribution following the rules of the applicable exchange

- Privately negotiated transactions.

- Short sales or sales of shares not previously owned by the seller.

- Broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share.

- A combination of any such methods of sale.

- Any other lawful method.

The selling stockholders may also engage in:

- Short selling against the box, which is making a short sale when the
seller already owns the shares.

- Buying puts, which is a contract whereby the person buying the contract
may sell shares at a specified price by a specified date.

- Selling calls, which is a contract giving the person buying the contract
the right to buy shares at a specified price by a specified date.

- Selling under Rule 144 under the Securities Act, if available, rather than
under this Prospectus.

- Other transactions in our securities, or in derivatives of our securities,
and the subsequent sale or delivery of shares by the stockholder.

- Pledging shares to their brokers under the margin provisions of customer
agreements. If a selling stockholder defaults on a margin loan, the broker
may, from time to time, offer and sell the pledged shares.

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders in amounts to be negotiated.

If any broker-dealer acts as agent for the purchaser of shares, the
broker-dealer may receive commission from the purchaser in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

19
<PAGE>

The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be considered to be "underwriters" within the meaning
of the Securities Act for such sales. An underwriter is a person who has
purchased shares from an issuer with a view towards distributing the shares to
the public. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
considered to be underwriting commissions or discounts under the Securities Act.

We pay all fees and expenses incident to the registration of the shares in
this offering. However, we will not pay any commissions or any other fees in
connection with the resale of the Common Stock in this offering.

If we are notified by a selling stockholder that they have a material
arrangement with a broker-dealer for the resale of the Common Stock, then we
would be required to amend the registration statement of which this Prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling stockholder and the broker-dealer.

SELLING STOCKHOLDERS

The following tables set forth certain information with respect to the
resale of the Common Stock by the Selling Stockholders as described in this
Prospectus. We will not receive any proceeds from the resale of the Common Stock
by the Selling Stockholders. However, we will receive proceeds, if any, upon the
exercise of the Resale Warrants and the Resale Options.

RESALE BY SELLING STOCKHOLDERS OF SHARES CURRENTLY OUTSTANDING ("S") AND
SHARES UNDERLYING RESALE WARRANTS ("W") AND RESALE OPTIONS ("O")

20
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
BEFORE AMOUNT OWNED AFTER
STOCKHOLDER RESALE (1) OFFERED (2) RESALE PERCENT (3)
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Benjamin W. & Nancy L. Anderson (S)(W)............ 655,750 610,750 55,000 *
Jeremy B. Andrus (S)(W)........................... 216,715 216,715 0 *
Vaughn Andrus (W)................................. 6,561 6,561 0 *
John Argoitia (S)(W).............................. 32,384 19,684 12,700 *
Mary Ellen Ashby (S)(W)........................... 45,375 45,375 0 *
Maurice J. Bales (0).............................. 100,000 100,000 0 *
Maurice J. & Marianne J. Bales as Trustees of the
Maurice J. & Marianne J. Bales Trust (S)........ 606,452 606,452 0 *
Omar S. Banagatah (S)(W).......................... 39,370 39,370 0 *
Geoffrey D. Barnet (S)(W)......................... 59,055 59,055 0 *
Harold A. Barnett (S)(W).......................... 78,720 78,720 0 *
David A. & Cheryl K. Bartel as community
property (S)(W)................................. 19,684 19,684 0 *
Mark & Angela Bazalgette (S)(W)................... 19,684 19,684 0 *
Hillard & Marlene Bear (S)(W)..................... 69,058 59,058 10,000 *
Lynn Beckman (W).................................. 41,250 41,250 0 *
Randall S. Benson (W)............................. 20,625 20,625 0 *
Joanne L. Bingo (S)(W)............................ 94,875 94,875 0 *
Ronald D. Bishop (S).............................. 50,000 50,000 0 *
Eric & Susanne Bledsoe -- husband & wife and Lee &
Josette Bledsoe -- husband & wife (S)(W)........ 19,684 19,684 0 *
Barton J. Blinder (S)............................. 5,000 5,000 0 *
Michael J. Bodell (S)(W).......................... 25,591 25,591 0 *
Douglas Boucher (S)(W)............................ 511,810 511,810 0 *
Julie Boucher Trust dtd 4/4/92 (S)(W)............. 85,955 59,055 26,900 *
Justin Boucher Trust dtd 4/4/92 (S)(W)............ 91,115 59,055 32,060 *
Ted & Shirley Boucher Revocable Trust
dtd 4/19/91 (S)(W).............................. 739,886 728,346 11,540 *
Charles W. Brinkman (S)........................... 292,250 41,250 251,000 *
Bristol Asset Management (W)...................... 400,000 400,000 0 *
John Kimmel Bristol (S)(W)........................ 19,684 19,684 0 *
Joseph Brodsky (S)(W)............................. 39,370 39,370 0 *
James E. & Lindsay D. Brown, as community property
with rights of survivorship (S)(W).............. 19,684 19,684 0 *
Gene & Carol Bunnell (S)(W)....................... 42,522 23,622 18,900 *
Busch Provo, L.C. (S)(W).......................... 49,312 49,212 100 *
Jeffrey J. Butler (S)(W).......................... 20,684 19,684 1,000 *
MJ & Pat Camberlango (S)(W)....................... 85,880 39,370 46,510 *
Burch Cambers/Stacy Cambers (W)................... 7,061 6,561 500 *
William M. Campbell III (S)(W).................... 59,055 59,055 0 *
Cameron Capital, Ltd. (S)......................... 150,000 150,000 0 *
Robert J. Cappelloni (S)(W)....................... 44,320 39,370 4,950 *
William S. Carpenter, Trustee under Trust
dtd 4/20/94 (S)(W).............................. 147,000 21,000 126,000 *
Robert Castellanos (W)............................ 13,123 13,123 0 *
Robert & Maria Castellanos (W).................... 26,246 26,246 0 *
Abe Chitayat (S)(W)............................... 98,413 98,413 0 *
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
BEFORE AMOUNT OWNED AFTER
STOCKHOLDER RESALE (1) OFFERED (2) RESALE PERCENT (3)
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Anwar Chitayat (S)(W)............................. 157,480 157,480 0 *
Blayne Christensen (S)(W)......................... 39,370 39,370 0 *
Gary H. Clunas (W)................................ 6,561 6,561 0 *
Christopher D. Cochrane (S)(W).................... 19,684 19,684 0 *
Computerized Thermal Imaging, Inc. 401K Profit
Sharing Plan (S)................................ 11,348 11,348 0 *
Susan W. Coon (W)................................. 10,403 6,561 3,842 *
Brent L. Cox (W).................................. 41,250 41,250 0 *
Thor Culverhouse (W).............................. 6,561 6,561 0 *
Lloyd & Susan Cymrot (S)(W)....................... 78,739 78,739 0 *
Crown Development, Inc. (S)....................... 82,500 82,500 0 *
Cherie S. Darrohn (S)(W).......................... 21,684 19,684 2,000 *
Bruce G. Dayton (S)(W)............................ 27,400 27,000 400 *
Drew C. Dayton/Seleste S. Dayton (S)(W)........... 81,051 36,501 44,550 *
James E. & Jean Deitz (S)(W)...................... 19,684 19,684 0 *
Cheryl Demler (W)................................. 43,650 7,150 36,500 *
Daron C. Dillia (W)(6)............................ 891,275 700,000 191,275 1.096%
Daron C. Dillia dba Manhattan Financial
Group (O)(S)(6)................................. 4,861,178 4,367,903 493,275 5.894%
Nilesh & Sonai Desai (S)(W)....................... 78,481 39,370 39,111 *
Determined Productions, Inc. (S)(W)............... 354,331 354,331 0 *
Clifford Dobson Family Limited Partnership
(S)(W).......................................... 80,630 39,370 41,260 *
Gerald J. Dobson & Kathryn H. Dobson
Loving Trust (S)(W)............................. 25,245 25,245 0 *
Misty Dorman (S).................................. 25,410 25,410 0 *
Suresh J. Doshi (W)............................... 13,123 13,123 0 *
Donna L. Doxey (W)................................ 82,500 82,500 0 *
The Drucker Family Trust (S)(W)................... 119,089 53,766 65,323 *
Lisa Eccles (S)(W)................................ 19,684 19,684 0 *
EG Investments, LLC (S)(W)........................ 19,684 19,684 0 *
John G. Egbert (S)(W)............................. 101,270 39,370 61,900 *
IRA FBO Eric D. Emanuel (W)....................... 19,685 19,685 0 *
Enterprise Events Group, Inc. (S)(W).............. 19,684 19,684 0 *
The Epstein Family Trust (S)(W)................... 19,684 19,684 0 *
E.S.K. Enterprises, LLC/Jill Berlinger/Richard
Berlinger (W)................................... 6,561 6,561 0 *
Timothy J. & Joy L. Feller (S)(W)................. 27,559 27,559 0 *
Dennis W. Ferchland (S)........................... 20,625 20,625 0 *
Financial Services Group, Inc (S)(W).............. 1,955,758 1,955,758 0 2.407%
Carla A. Fisher (W)............................... 13,123 13,123 0 *
Hyman Jack Foreman (S)(W)......................... 25,684 19,684 6,000 *
Ronald D. Foreman (S)(W).......................... 94,589 78,739 15,850 *
Stuart Gary Friedman (S)(W)....................... 29,627 29,527 100 *
Galaxy Global Investments Int'l., LLC (S)(W)...... 19,684 19,684 0 *
Gardner Growth Fund, LP (S)(W).................... 19,684 19,684 0 *
David L. Garrett (S)(W)........................... 13,322 13,122 200 *
C. Robert & Patricia M. Gates (S)(W).............. 19,684 19,684 0 *
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
BEFORE AMOUNT OWNED AFTER
STOCKHOLDER RESALE (1) OFFERED (2) RESALE PERCENT (3)
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Fran Golden (S)(W)................................ 19,684 19,684 0 *
Don Golden (S)(W)................................. 59,055 59,055 0 *
Amanda Golden with Fran & Don Golden as Custodians
under the Uniform Gifts to Minors Act (S)(W).... 19,684 19,684 0 *
Lyndsay Golden with Fran & Don Golden as
Custodians under the Uniform Gifts to Minors
Act (S)(W)...................................... 19,684 19,684 0 *
Charles Goodman, Trustee of the C&B Goodman Rev.
Trust (S)(W).................................... 83,054 59,054 24,000 *
Michael E. Gottlieb 1992 Trust (S)(W)............. 8,684 8,684 0 *
Michael E. Gottlieb 1992 Trust (S)(W)............. 19,684 19,684 0 *
Robert M. & Joyce S. Graham (JTWROS) (S)(W)....... 19,684 19,684 0 *
Joseph K. Grote (S)............................... 41,250 41,250 0 *
Hachma International, S.A. (S)(W)................. 118,110 118,110 0 *
Bruce B. Hall (S)................................. 41,250 41,250 0 *
Michael J. Hardesty, (S)(W)....................... 48,364 39,369 8,995 *
Willard Harpster, Jr. (O)......................... 81,476 79,276 2,200 *
The Harris Family Trust, Neal & SueAnn Harris,
Trustees (S)(W)................................. 40,055 39,055 1,000 *
George D. Harris/Barbara F. Harris (S)(W)......... 39,370 39,370 0 *
Todd and/or Mary Jo Harris (S)(W)................. 39,720 39,370 350 *
Gerald Lynn Hayward (S)........................... 41,250 41,250 0 *
Andrew M. Heiner (W).............................. 50,000 50,000 0 *
Craig Heiner/Debby Heiner (W)..................... 8,267 8,267 0 *
D. Craig Heiner Profit Sharing Plan (W)........... 6,561 6,561 0 *
Jeffrey A. Heyser (S)(W).......................... 12,562 12,562 0 *
Ingrid Von Mangoldt Hills (S)(W).................. 59,055 59,055 0 *
Darrell J. Horne (W).............................. 82,500 82,500 0 *
Jerry J. Hudson (S)(W)............................ 54,186 54,186 0 *
Carl L. Humphreys Inc. Profit Sharing Plan, Carl
L. Humphreys, TTEE (S)(W)....................... 20,699 19,684 1,015 *
Ron S. Hurwin/James Russell (S)(W)................ 19,684 19,684 0 *
Ron S. Hurwin, TTEE of Ron & Duffy Hurwin Rev.
Trust (S)(W).................................... 19,684 19,684 0 *
H. A. Husain (S)(W)............................... 19,671 19,671 0 *
Informix Corporation (S).......................... 510,204 510,204 0 *
Lawrence L. Jacobs (S)............................ 15,000 15,000 0 *
Amna S. Jamhour (S)(W)............................ 23,250 23,250 0 *
JenDav Investments (S)(W)......................... 39,370 39,370 0 *
Rick L. Jensen (S)(W)............................. 39,370 39,370 0 *
Sterling K. Jenson (S)(W)......................... 115,383 75,750 39,633 *
Soon-Yon Jin (W).................................. 41,250 41,250 0 *
Michael Kain (S)(W)............................... 79,339 78,739 600 *
Bonnie L. Kaye (S)(W)............................. 40,631 29,631 11,000 *
Billie R. and M. Virgina Keeler (S)(W)............ 24,184 19,684 4,500 *
Steven Keller (S)(W).............................. 76,001 74,376 1,625 *
</TABLE>

23
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
BEFORE AMOUNT OWNED AFTER
STOCKHOLDER RESALE (1) OFFERED (2) RESALE PERCENT (3)
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Paul Kessler (S)(W)............................... 100,130 98,430 1,700 *
Norman G. Kosco/Barbara L. Kosco (S)(W)........... 59,055 59,055 0 *
Marlo J. & Elma N. Krogue, Trustees of the Mayo J.
Krogue Family Trust (S)(W)...................... 19,684 19,684 0 *
Kuwait Real Estate Company (S)(W)................. 196,851 196,851 0 *
Lance J. Larson (S)............................... 41,250 41,250 0 *
Robert Yin Chin Lee (S)(W)........................ 98,425 98,425 0 *
David W. Lewis (S)(W)............................. 39,370 39,370 0 *
Vilma & Ben-Zion Levy (S)(W)...................... 19,684 19,684 0 *
Luxor, L.L.C. (S)(W).............................. 47,550 47,550 0 *
Rick Majerus (S)(W)............................... 19,684 19,684 0 *
George & Lucero Marcoux (S)(W).................... 38,184 19,684 18,500 *
Bruce M. & Elaine Mark JT Tenants (S)(W).......... 10,584 10,584 0 *
David & Carol Marks (S)(W)........................ 27,300 27,300 0 *
Larry and/or Audree Martin (S)(W)................. 20,884 19,684 1,200 *
Masahisa Masuda (S)............................... 330,000 330,000 0 *
William L. Mazilly (S)............................ 113,510 100,000 13,510 *
MBH Associates FBO Mark B. Hansen (S)(W).......... 24,384 19,684 4,700 *
Brad Mefford (S).................................. 41,250 41,250 0 *
Gary N. Miller (S)(W)............................. 129,500 19,500 110,000 *
Larry W. Miller (S)(W)............................ 19,684 19,684 0 *
Larry W. & Lindi Miller (S)(W).................... 42,234 19,684 22,550 *
Gary N. Miller, D.C. Money Purchase Pension
(Trust) Plan (S)(W)............................. 110,055 98,055 12,000 *
The Joann Mitchell Family Trust (S)(W)............ 19,684 19,684 0 *
Doris M. Mohan Trust (S)(W)....................... 19,684 19,684 0 *
Todd Morgan (S)(W)................................ 27,559 27,559 0 *
Dee Moses (S)(W).................................. 19,684 19,684 0 *
Stephen Moses (S)(W).............................. 26,246 26,246 0 *
John P. & Tracy M. Murphy, JT Tenants (S)......... 2,000 2,000 0 *
Orlando Nickerson (W)............................. 41,250 41,250 0 *
David Novick (S)(W)............................... 21,000 21,000 0 *
Jerry E. Nutt (S)(W).............................. 20,684 19,684 1,000 *
Nuwave Limited (S)(W)............................. 1,023,622 1,023,622 0 1.267%
James O'Brien (S)................................. 36,800 36,800 0 *
Stephen A. Oliver Trust dtd 2/4/93 (S)(W)......... 40,309 40,309 0 *
Fredrick A. & Karilene B. Pack (S)(W)............. 19,684 19,684 0 *
David A. Packer or Assignee (O)(4)................ 943,939 7,143 936,796 1.162%
Barbara Claire Parmeter (S)(W).................... 19,684 19,684 0 *
PDH, LTD. (S)..................................... 496,537 420,361 76,176 *
C. Matthew or Pauline B. Peterson (S)(W).......... 19,684 19,684 0 *
Glenn B. Pfeffer/Susan J. Friedland (W)........... 6,561 6,561 0 *
Kenneth R. Phipps/Cherie K.C. Phipps (S)(W)....... 19,684 19,684 0 *
James D. Pike (O)(W)(5)........................... 281,076 281,076 0 *
Mitchell J. & Marilyn Pike (S)(W)................. 23,807 10,684 13,123 *
Kenneth H. Polk (W)............................... 6,561 6,561 0 *
Gary Post (S)..................................... 150,000 150,000 0 *
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
BEFORE AMOUNT OWNED AFTER
STOCKHOLDER RESALE (1) OFFERED (2) RESALE PERCENT (3)
----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Mark Preslar (W).................................. 6,600 6,600 0 *
Carol T. Racine (S)............................... 33,750 33,750 0 *
Amirali A. Rajwany (S)............................ 107,625 100,000 7,625 *
Robert M. & JoAnn C. Randolph (S)(W).............. 75,870 39,370 36,500 *
Norman Ravich (W)................................. 7,000 7,000 0 *
Max B. Reece (S).................................. 41,415 41,415 0 *
W. Earl Richards (S)(W)........................... 310,308 310,308 0 *
Janet W. Rigby (S)(W)............................. 46,247 46,247 0 *
Steven M. Rhodes (W).............................. 34,375 20,625 13,750 *
James P. Roake (S)................................ 123,750 123,750 0 *
Denise Salomon (S)(W)............................. 19,684 19,684 0 *
Sanam Investment Co., Ltd. (S)(W)................. 19,684 19,684 0 *
Susan D. Scott (W)................................ 34,375 20,625 13,750 *
Larry R. Sears (S)................................ 41,250 41,250 0 *
Richard V. Secord or Assignee (O)(4).............. 3,366,000 428,571 2,937,429 4.022%
Steven C. Segal/Rick Trono (S)(W)................. 19,684 19,684 0 *
Carmel Shashua (S)(W)............................. 39,370 39,370 0 *
Ronald J. & Violet A. Shivok (S)(W)............... 63,055 59,055 4,000 *
Sitrick & Company (W)(S).......................... 96,803 96,803 0 *
Peter P. Smith (W)................................ 68,750 41,250 27,500 *
Joseph Smyth (S)(W)............................... 119,750 114,750 5,000 *
Peter R. Sobelton (S)(W).......................... 19,684 19,684 0 *
Wayne B. Soldati (S)(W)........................... 19,684 19,684 0 *
Southgate Plaza, Inc. (S)(W)...................... 22,500 22,500 0 *
David R. Spangenberg (S)(W)....................... 110,039 78,739 31,300 *
Gerald N. Stanley (W)............................. 41,250 41,250 0 *
Lowell N. Steele/Deanne D. Steele (S)(W).......... 19,684 19,684 0 *
Jack M. & Geraldean Stevens (JTWROS) (W).......... 82,500 82,500 0 *
Richard M. & Carolyn Stevens (JTWROS) (W)......... 41,250 41,250 0 *
Constance Haber Stevenson (S)..................... 32,258 32,258 0 *
David Duane Stewart (S)(W)........................ 39,370 39,370 0 *
David D. Stewart (S).............................. 124,004 41,250 82,754 *
Ross D. Stokes (W)................................ 25,000 25,000 0 *
James W. Stone/Joan E. Stone (JTWROS) (S)(W)...... 21,684 19,684 2,000 *
Charles D. Strang, Jr. as Trustee under the
Charles D. Strang, Jr. Trust Agreement
dtd 10/29/85 (S)(W)............................. 29,550 29,550 0 *
Aubrey A. Swartz (S)(W)........................... 39,370 39,370 0 *
Heather Sweeney (W)............................... 23,622 23,622 0 *
Bee Bee Tan (W)................................... 41,250 41,250 0 *
TeKBanC (S)(W).................................... 1,968,504 1,968,504 0 *
Helge Theiss-Nyland (S)(W)........................ 19,684 19,684 0 *
Charles Howard Thomas (W)......................... 28,600 28,600 0 *
Daniel G. Thomas (W).............................. 27,500 27,500 0 *
David E. Thomas (S)(W)............................ 19,684 19,684 0 *
TQ Advisors, LLC (W).............................. 13,123 13,123 0 *
Trans-Union Group, Inc. (S)(W).................... 19,684 19,684 0 *
Harley A. & Joanne E. Tucker (S)(W)............... 19,684 19,684 0 *
</TABLE>

25
<PAGE>

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

* Less than one percent.

(1) Shares Beneficially Owned Before Resale include shares of the Common Stock
underlying outstanding Resale Warrants ("W") and Resale Options ("O"). For
purposes of this table, ownership of Shares Currently Outstanding ("S") is
calculated based on the record number of outstanding shares believed to be
held by such person as of September 18, 2000. For purposes of this table,
ownership of Resale Warrants ("W") and Resale Options ("O") is based on the
actual number of shares of the Common Stock underlying the referenced class
of securities owned by such person as of September 30, 2000.

(2) Shares offered include Shares Currently Outstanding ("S") subject to the
restrictions of the Securities Act and held by the Selling Stockholder less
than two years as of the date of this Prospectus, and shares of the Common
Stock underlying outstanding Resale Warrants ("W"), and Resale Options
("O").

(3) Percentage based on the number of shares of the Common Stock outstanding as
of September 30, 2000, without regard to beneficial ownership as may be
calculated under Rule 13d-3 of the Exchange Act.

(4) Denotes that Selling Shareholder is one of our officers and/or directors.

(5) Denotes that Selling Shareholder is one of our employees.

(6) Denotes that Selling Shareholders in an affiliate.

26
<PAGE>

A current prospectus must be in effect at the time of the sale of the Common
Stock to which this Prospectus relates. Any Selling Stockholder or dealer
effecting a transaction in the registered securities, whether or not
participating in a distribution, is required to deliver a Prospectus. Unless
otherwise exempted, the Selling Stockholders and their agents engaged in the
resale of the Common Stock may be deemed underwriters under the Securities Act.

LEGAL MATTERS

Axelrod, Smith & Kirshbaum have passed upon the validity of the shares
offered in this Prospectus.

EXPERTS

The Consolidated Financial Statements and schedules for the year ended
June 30, 2000 and 1999 included or incorporated by reference in this Prospectus
and in the Registration Statement to which this Prospectus relates have been
audited by HJ & Associates, LLC, independent certified public accountants, to
the extent and for the periods set forth in their reports appearing elsewhere
herein. All such Statements and Schedules are included in reliance upon such
reports given upon the authority of said firms as experts in auditing and
accounting.

MATERIAL CHANGES

CANCELLATION OF AGREEMENTS WITH CTII. In connection with Latin America
markets, in September 1999, we engaged William L. Mazilly and Amirali A.
Rajwany, independent consultants, to establish a consortium in Latin America to
market and deploy our Breast Imaging System throughout Central and South
America. For services rendered in connection therewith, each was paid 100,000
shares of our common stock valued at $1.20 per share. As a result of their
efforts, we entered into two Letter Agreements (collectively, the "Agreements")
on October 28, 1999 with Computerized Thermal Imaging International, Inc.
("CTII"), an entity in which we received a 15 percent interest, whereby CTII
received, among other things, 1) the exclusive right to represent the expansion
of our business into Central and South America, 2) the obligation to prepare and
implement a marketing strategy for deployment of our Breast Imaging System in
those areas of the world, 3) the right of first refusal on our Health Card
manufacturing worldwide, and 4) the obligation to sell a minimum of 100 of our
Breast Imaging Systems over a two-year period in the target territories. The
Agreements further provided that we would grant to CTII, as compensation,
options to purchase up to 5 million shares of our common stock in 50,000 share
increments contingent on their placement of each Breast Imaging System into
commercial use in the specified territories. Each 50,000 block of options
granted the holder thereof the right to purchase, for a period of two years,
50,000 shares of our common stock at a strike price equal to $1.6745, a
15 percent discount to the bid price of our common stock on October 28,1999.

Pursuant to the Agreements, on June 6, 2000, we sold 10 Breast Imaging
Systems to CTII for $5 million. In connection therewith, we received a down
payment of $1.75 million with the remaining $3.25 million to be received upon
delivery of the systems. The sales invoice obligated us to deliver the 10
systems to CTII on, or about, mid-October, 2000. In connection therewith, we
expected to issue 500,000 options upon the delivery and placement of such
systems into commercial use. As of the date hereof, we have not issued any
options to CTII.

In late September 2000, we advised CTII of our desire to renegotiate the
foregoing Agreements given the substantial change in market conditions, the
increased value of our common stock and unresolved issues concerning their
deployment of our systems in Mexico. On October 11, 2000, following attempts to
reach more favorable terms, we decided it was in the best interests of the
Company and our shareholders to mutually terminate the Agreements and the sale
of the 10 units. We accordingly have refunded by wire transfer the down payment
received from CTII on the initial sale of the 10 units. In connection with the
termination of the Agreements, our 15% ownership in CTII reverts back to the
remaining principals of

27
<PAGE>

CTII and each party to the Agreements will bear the respective costs of any
performance under the Agreements. In consideration of their efforts to expand
our business into Latin America, Mr. Mazilly and Mr. Rajwary will retain the
common stock granted to them.

TERMINATION OF AGREEMENT WITH MANHATTAN FINANCIAL GROUP. During January 1,
1997 through September 21, 2000, we were a party to a Consulting Agreement with
Manhattan Financial Group, a provider of financial advisory services. The
initial term of the Consulting Agreement was for one year and automatically
renewed for annual periods thereafter unless terminated upon proper
notification. Consideration paid in connection with the Consulting Agreement was
100,000 shares of our common stock and a five-year option to purchase an
additional 2 million shares at $.60 per share. The options, if not exercised
previously, automatically terminate on November 18, 2002. On September 21, 2000,
we terminated the Consulting Agreement with Manhattan Financial Group.

RETIREMENT OF DAVID B. JOHNSTON, CHAIRMAN & CEO. On September 21, 2000,
citing personal reasons, Mr. Johnston retired from his position as Chairman of
the Board, a Director and Chief Executive Officer. On September 22, 2000, our
Board of Directors elected General Richard V. Secord, age 67, as our Chairman
and Chief Executive Officer. General Secord has served as Vice Chairman from
July 1, 1997 through September 21, 2000, as a director since February 1996, as
our Secretary from July 1, 1997 to June 27, 2000, as our President from
February 1996 to April 1997 and as our Chief Operating Officer from June 1995 to
December 1999. He is also Chief Executive Officer and a director of CTICO.
General Secord served in numerous positions while performing military service.
He was the first military officer to be appointed Deputy Assistant Secretary of
Defense (Near East, Africa and South Asia). General Secord received a Bachelor
of Science degree from the United States Military Academy. He is also a graduate
of the United States Air Force Command and Staff College, and United States
Naval War College. In addition, he holds a Masters degree in International
Affairs from George Washington University.

General Secord's 3-year employment agreement with us expired on
September 18, 2000. We are currently renegotiating a new employment agreement
with General Secord.

DAVID A. PACKER EXECUTES EMPLOYMENT AGREEMENT. David A. Packer signed a new
employment agreement on September 29, 2000. The term of the agreement is for
three years beginning April 30, 2000 and calls for compensation of $200,000 per
year, plus statutory stock options covering 1,000,000 shares of Common Stock at
an exercise price of $3.625 per share. One-fourth (250,000) of the options vest
immediately and one-fourth of the options vest on each anniversary date of the
agreement. The options granted to Mr. Packer are governed by our 1997 Stock
Option and Restricted Stock Plan. If the employment agreement is terminated for
"cause" as defined in the agreement, or Mr. Packer voluntarily terminates the
agreement, all of the options granted to Mr. Packer thereunder, and which have
not vested, shall be forfeited. The agreement subjects Mr. Packer to a two-year
non-compete restriction, the obligation to give us the right to take advantage
of any business opportunity, and the duty not to reveal any confidential
information about the business of the Company.

INFORMATION INCORPORATED INTO THIS PROSPECTUS

The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference into this prospectus the following documents or information filed with
the SEC.

1. The Company's Annual Reports on Form 10-KSB for the fiscal years ended
June 30, 1999 and June 30, 2000, as amended.

2. The Company's Proxy Statement for the Annual Meeting of Stockholders
dated May 22, 2000.

28
<PAGE>

3. All future filings by the Company with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act until all securities offered under this
Prospectus have been either sold or deregistered.

You may request a copy of these filings at no cost by writing to us at:
Computerized Thermal Imaging, Inc., 476 Heritage Park Boulevard, Suite 210,
Layton, Utah 84041, or by calling us at (801) 776-4700. We will not provide
copies of exhibits to these filings unless the exhibits are specifically
incorporated by reference into the body of the filing.

29
<PAGE>

PART II

Information Not Required in Prospectus

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities being registered. The
expenses shall be paid by the Registrant. No expenses will be paid by the
security holders.

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 58,756*
Printing and Engraving Expenses............................. $ 5,000*
Legal Fees and Expenses..................................... $ 45,000*
Accounting Fees and Expenses................................ $ 5,000*
Blue Sky Fees and Expenses.................................. $ 5,000*
Transfer Agent Fees......................................... 500*
Miscellaneous............................................... 1,000*
--------
Total....................................................... $120,256*
========
</TABLE>

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

* Estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation do not specifically address indemnification of
our directors and officers, except to make a general reference that the
directors "may exercise all rights, powers, and privileges...conferred upon
similar corporations organized under and by virtue of the laws of the State of
Nevada". Sections 78.751 and 78.752 of the Nevada Revised Statutes permit a
corporation to indemnify, among others, any officer or director against certain
liabilities under specified circumstances, and to purchase and maintain
insurance on behalf of its officers and directors.

Consistent with the overall scope of Section 78.751 of the Nevada Revised
Statutes, Article VI of our Bylaws, included in Exhibit 3.2 hereto and
incorporated herein by reference, provides, in general, that any director or
officer who is the subject of or a participant in a threatened, pending or
completed legal action by reason of the fact that such individual is or was a
director or officer shall be indemnified and held harmless by our from and
against the consequences of such action if it is determined that he acted in
good faith and reasonably believed (i) his conduct was in our best interest,
(ii) in all other cases, that his conduct was not opposed to our best interests,
and (iii) with respect to criminal proceedings, that he had no reasonable cause
to believe his conduct was unlawful; provided that if it is determined that such
person is liable to us or is found liable on the basis that personal benefit was
improperly received by such person, the indemnification is limited to reasonable
expenses actually incurred by such person in connection with the legal action
and shall not be made in respect of any legal action in which such person shall
have been found liable for willful or intentional misconduct in the performance
of his duty to us. Any indemnification (unless ordered by a court of competent
jurisdiction) shall be made by us only upon a determination that indemnification
of such person is proper in the circumstances by virtue of the fact that it
shall have been determined that such person has met the applicable standard of
conduct.

Our Bylaws also provide that reasonable expenses, including court costs and
attorneys' fees, incurred by our officers and directors in connection with a
covered legal action shall be paid by us at reasonable intervals in advance of
the final disposition of such action, upon receipt by us of a written
affirmation by such person of his good faith belief that he has met the standard
of conduct necessary for indemnification, and a written undertaking by or on
behalf of such person to repay the amount paid or reimbursed by us if it is
ultimately determined that he is not entitled to be indemnified.

Our Board of Directors may also authorize us to indemnify our employees or
agents, and to advance the reasonable expenses of such persons, to the same
extent, following the same determinations and upon

<PAGE>

the same conditions as are required for the indemnification of and advancement
of expenses to our directors and officers. As of the date of this Registration
Statement, the Board of Directors has not extended indemnification rights to
persons other than directors and officers.

Our Bylaws also provide that we have the power and authority to purchase and
maintain insurance or another arrangements on behalf of any director, officer,
employee, or agent of our or any affiliate of the Company on similar terms as
those described in Section 78.752 of the Nevada Revised Statutes. Our Articles
of Incorporation relieve our directors from liability for monetary damages to
the full extent permitted by Nevada law. Sections 78.751 and 78.752 of the
General Corporation Law of the State of Nevada authorize a corporation to
indemnify, among others, any officer or director against certain liabilities
under specified circumstances, and to purchase and maintain insurance on behalf
of its officers and directors.

ITEM 16. EXHIBITS

EXHIBIT INDEX

The following exhibits are filed, or were previously filed, as part of this
Registration Statement:

<TABLE>
<S> <C>
* Incorporated herein by reference to Registration Statement
Form SB-2 filed March 3, 1998, as subsequently amended.
** Filed herewith.
*** Incorporated by reference as noted.
**** Previously filed.
</TABLE>

<TABLE>
<CAPTION>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
--------------------- -------------------------
<C> <S>
3(a)* Articles of Incorporation filed 6/10/87.

3(b)* Amendment to Articles of Incorporation filed 7/31/87.

3(c)* Amendment to Articles of Incorporation filed 9/12/89.

3(d)* Amendment to Articles of Incorporation filed 11/06/89.

3(e)* Amendment to Articles of Incorporation filed 4/22/92.

3(f)* Amendment to Articles of Incorporation dated 2/17/98.

3(h)* Bylaws, as Amended 01/15/98.

4(a)* Common Stock specimen.

5**** Legal Opinion of Axelrod, Smith & Kirshbaum.

10(a)* Consulting Agreement dated November 5, 1997 between the
Company and Daron Dillia doing business as Manhattan
Financial Group.

10(b)* Computerized Thermal Imaging, Inc. Employee Stock Option
Agreement dated January 15, 1998 between the Company and
Richard V. Secord.

10(c)* Computerized Thermal Imaging, Inc. Employee Stock Option
Agreement dated June 12, 1995 between the Company and
Richard V. Secord.

10(d)* Computerized Thermal Imaging, Inc. Employee Stock Option
Agreement dated June 12, 1995 between the Company and
Richard V. Secord.

10(e)* Amendment to Employee Stock Option Agreement dated
January 26, 1998 between the Company and David Packer.

10(f)* Amendment to Employee Stock Option Agreement dated
January 26, 1998 between the Company and Richard V. Secord.

10(g)* Computerized Thermal Imaging, Inc. Consultant Stock Option
Agreement dated November 18, 1997 between the Company and
Daron Dillia d/b/a Manhattan Financial Group.

10(h)* Computerized Thermal Imaging, Inc. 1995 Stock Option Plan.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
--------------------- -------------------------
<C> <S>
10(i)* Computerized Thermal Imaging, Inc. 1997 Stock Option and
Restricted Stock Plan.

10(k)* Contract between TRW Systems Integration Group and
Computerized Thermal Imaging, Inc. dated October 29, 1996.
[Articles VI, XXIV, XXXII, and Appendix A have been omitted
pursuant to a Request for Confidential Treatment.
Accordingly, the material has been filed separately with the
SEC.]

10(l)* Clinical Trial Agreement dated September 16, 1997 between
Thermal Medical Imaging, Inc. and Health Research
Association.

10(m)* Contract between TRW Systems Integration Group and Thermal
Medical Imaging, Inc. dated June 19, 1997. [Articles VI,
XXIV, XXXII, and Appendix A have been omitted pursuant to a
Request for Confidential Treatment. Accordingly, the
material has been filed separately with the SEC.]

10(n)* Clinical Trial Agreement dated November 7, 1997 between
Thermal Medical Imaging, Inc. and the University of Southern
California.

10(o)* Clinical Trial Agreement dated June 4, 1998 between Thermal
Medical Imaging, Inc. and Mt. Sinai Hospital.

10(p)* Clinical Trial Agreement dated February 14, 1998 between
Thermal Medical Imaging, Inc. and Providence Hospital.

10(q)* Clinical Study of Examination of Breast for Identification
of Suspicious Tissue Using Clinical Examination and
Mammography With and Without the TMI Thermal Imaging System
(Protocol for all clinical trial agreements).

10(r)* Beach Boulevard L.L.C. Securities Purchase Agreement.

10(s)*** Executive Severance Agreement attached as Exhibit 10(fff) to
Form SB-2, Amendment #9, filed June 6, 2000.

10(t)*** Bales Scientific, Inc Acquisition documents incorporated by
reference to Form 8-K dated April 18, 2000 and filed
April 27, 2000 and Form 8-K/A dated April 18, 2000 and filed
June 16, 2000.

10(u)*** Letter Agreements dated October 28, 1999 with Computerized
Thermal Imaging International incorporated by reference to
Form 10-QSB dated December 31, 1999 and filed February 18,
2000.

10(v)*** Lease Agreement dated May 31, 2000 between Computerized
Thermal Imaging, Inc. and St. Paul Properties, Inc.
attached as Exhibit 10(aa) to Form 10-KSB for the year ended
June 30, 2000.

16*** Letter from Ham, Langston & Brezina dated August 23, 1999
and included in Form 8-K/A dated August 17, 1999 and filed
August 25, 1999 consenting to the statements contained
herein.

23(a)**** Consent of Counsel.

23(b)** Consent of HJ & Associates, LLC.

24* Power of Attorney.

27* Financial Data Schedules.

99*** Audit Committee Charter attached as Exhibit 99 to Form SB-2,
Amendment #9, filed June 6, 2000.
</TABLE>

<PAGE>

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required in Section 10(a)(3) of the Securities
Act;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.

(4) That for purposes of determining any liability under the Securities Act,
(i) the information omitted from the Prospectus filed as part of this
Registration Statement, as permitted by Rule 430A of the Securities Act and
to be contained in the form of Prospectus to be filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act, shall
be deemed to be incorporated by reference into this Registration Statement
at the time it is declared effective, and (ii) each post-effective amendment
that contains a form of prospectus shall be deemed to be a new Registration
Statement relating to the securities offered therein and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

(5) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(6) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act
of 1934; and, where interim financial information required to be presented
by Article 3 of Regulation S-X are not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is
sent or given the latest quarterly report it is specifically incorporated by
reference in the prospectus to provide such interim financial information.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Layton, State of Utah, on October 16, 2000.

<TABLE>
<S> <C> <C>
COMPUTERIZED THERMAL IMAGING, INC.

By: /s/ DAVID A. PACKER
-----------------------------------------
David A. Packer, President
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<S> <C>
/s/ RICHARD V. SECORD October 16, 2000
--------------------------------------------
RICHARD V. SECORD
Chairman of the Board and Chief Executive
Officer

/s/ DAVID A. PACKER October 16, 2000
--------------------------------------------
DAVID A. PACKER
Director, President & Chief Operating Officer

/s/ BRENT M. PRATLEY, M.D. October 16, 2000
--------------------------------------------
BRENT M. PRATLEY, M.D.
Director

/s/ MILTON R. GEILMANN October 16, 2000
--------------------------------------------
MILTON R. GEILMANN
Director

/s/ HARRY C. ADERHOLT October 16, 2000
--------------------------------------------
HARRY C. ADERHOLT
Director

/s/ KEVIN L. PACKARD October 16, 2000
--------------------------------------------
KEVIN L. PACKARD
Chief Financial Officer, Secretary &
Treasurer

/s/ DAVID A. PACKER October 16, 2000
--------------------------------------------
David A. Packer
Attorney in Fact
</TABLE>