----

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| Florida                  |  22-2671269          |
|--------------------------|---------------------------|
| (State of incorporation) | (IRS employer Ident. No.) |

| 5307 NW 35th Terrace, Fort Lauderdale, FL. | 33309      |
|--------------------------------------------|------------|
| (address of principal office)              | (Zip Code) |

| ¨  Large accelerated filer | ¨  Accelerated filer    |
|-------------------------------------------|----------------------------------------|
| ¨  Non Accelerated filer   | x  Smaller reporting company |

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IMAG

| PART I     |                                                                                              | Page No                                  |
|------------|---------------------------------------------------------------------------------------------------|------------------------------------------|
|       |                                                                                              |                                     |
| ITEM 1.    | Our Business                                                                                      | 3                                        |
| ITEM 1A    | Risk Factors                                                                                      | 34                                       |
| ITEM 1B    | Unresolved Staff Comments                                                                         | 55                                       |
| ITEM 2.    | Description of Our Property                                                                       | 55                                       |
| ITEM 3.    | Legal Proceedings                                                                                 | 55                                       |
| ITEM 4.    | Submission of Matters to a Vote of Security Holders                                               | 56                                       |
|       |                                                                                              |                                     |
|       |                                                                                              |                                     |
| PART II    |                                                                                              |                                     |
|       |                                                                                              |                                     |
| ITEM 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and                      | 58                                       |
|       |     Issuer Purchasers of Equity Securities                                    |                                     |
| ITEM 6.    | Selected Financial Data                                                                           | 74                                       |
| ITEM 7.    | Management’s Discussion and Analysis of Financial Conditions and Results of Operations |        75  |
| ITEM 7A.   | Quantitative and Qualitative Disclosures About Market Risk                                        | 89                                       |
| ITEM 8.    | Financial Statements and Supplementary Data                                                       | 90                                       |
| ITEM 9.    | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure              |        167 |
| ITEM 9A    | Controls and Procedures                                                                           | 167                                      |
| ITEM 9B    | Other Information                                                                                 | 169                                      |
|       |                                                                                              |                                     |
|       |                                                                                              |                                     |
| PART III   |                                                                                              |                                     |
|       |                                                                                              |                                     |
| ITEM 10.   | Directors, Executive Officers and Corporate Governance                                            | 170                                      |
| ITEM 11.   | Executive Compensation                                                                            | 174                                      |
| ITEM 12.   | Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters    | 183                                      |
| ITEM 13.   | Certain Relationships and Related Transactions, and Director Independence                         | 184                                      |
| ITEM 14.   | Principal Accounting Fees and Services                                                            | 184                                      |
|       |                                                                                              |                                     |
|       |                                                                                              |                                     |
| PART IV    |                                                                                              |                                     |
|       |                                                                                              |                                     |
| ITEM 15.   | Exhibits and Financial Statement Schedules                                                        | 185                                      |
|       |                                                                                              |                                     |
| SIGNATURES |                                                                                              | 188                                      |

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Item 1.  Our Business

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|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has the same technological characteristics as the predicate; or |
|--------|--------|-----------------------------------------------------------------|

|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has different technological characteristics when compared to the predicate, and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | does not raise new questions of safety and effectiveness; and |
|--------|--------|---------------------------------------------------------------|

|   | · | demonstrates that the device is at least as safe and effective as the legally marketed device. |
|--------|--------|------------------------------------------------------------------------------------------------|

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|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has the same technological characteristics as the predicate; or |
|--------|--------|-----------------------------------------------------------------|

|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has different technological characteristics when compared to the predicate, and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | does not raise new questions of safety and effectiveness; and |
|--------|--------|---------------------------------------------------------------|

|   | · | demonstrates that the device is at least as safe and effective as the legally marketed device. |
|--------|--------|------------------------------------------------------------------------------------------------|

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|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has the same technological characteristics as the predicate; or |
|--------|--------|-----------------------------------------------------------------|

|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has different technological characteristics when compared to the predicate, and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | does not raise new questions of safety and effectiveness; and |
|--------|--------|---------------------------------------------------------------|

|   | · | demonstrates that the device is at least as safe and effective as the legally marketed device. |
|--------|--------|------------------------------------------------------------------------------------------------|

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|   | · | Designing a new clinical study protocol and a modified intended use, |
|--------|--------|----------------------------------------------------------------------|

|   | · | Identifying qualified clinical sites and retaining them to proceed with our clinical study, |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Obtaining the necessary approvals from the Institutional Review Boards (“IRB”), |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Updating the CTLM® system to its most current design level, |
|--------|--------|------------------------------------------------------------------|

|   | · | Our research and development team finalizing the improvements regarding the reconstruction algorithm by enhancing the CTLM® images by reducing the number of artifacts which would enable the physician to interpret the images more easily, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Low patient volume following the inclusion criteria of our clinical protocol, |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Lack of cancer cases required for the PMA statistical analysis, and |
|--------|--------|---------------------------------------------------------------------|

|   | · | Lack of sufficient financing to support the clinical sites, initiate the reading phase, the statistical analysis study and the preparation and submission of the PMA application to the FDA. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1) | Humboldt University of Berlin, Charité Hospital, Berlin, Germany            |
|----|----------------------------------------------------------------------------------|
| 2) | The Comprehensive Cancer Centre, Gliwice, Poland                                 |
| 3) | Catholic University Hospital, Rome, Italy                                        |
| 4) | MeDoc HealthCare Center, Budapest, Hungary                                       |
| 5) | Tianjin Medical University’s Cancer Institute and Hospital, Tianjin, China |

|   | Domestic Sales and Marketing |
|--------|------------------------------|

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|   | International Sales |
|--------|---------------------|

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| Country              | Sold | Marketed | Regulatory Requirement               | Regulatory Status        |
|----------------------|------|----------|--------------------------------------|--------------------------|
| United States        | No   | No       | Food & Drug Administration       | 510(k) Pending           |
| Argentina            | Yes  | Yes      | ANVISA                               | Expired(1)               |
| Australia            | No   | Yes      | TGA Approval                         | Pending(8)               |
| Austria              | No   | Yes      | CE Mark                              | Approved                 |
| Brazil               | No   | Yes      | ANVISA                               | Expired(2)               |
| Canada               | No   | Yes      | Health Canada Approval               | Approved                 |
| China                | Yes  | Yes      | SFDA Approval                        | Approved                 |
| Croatia              | No   | Yes      | CIHI(4)                              | Not Submitted Yet        |
| Colombia             | No   | Yes      | Register with MOH(3)                 | Not Submitted Yet        |
| Curacao              | No   | Yes      | MOH                                  | Submitted by distributor |
| Czech Republic       | Yes  | Yes      | CE Mark                              | Approved                 |
| Egypt                | No   | Yes      | CE Mark & Egypt MOH              | Not Submitted Yet        |
| Germany              | No   | Yes      | CE Mark                              | Approved                 |
| Hong Kong            | No   | Yes      | CE/SFDA                              | Not Submitted Yet        |
| Hungary              | Yes  | Yes      | CE Mark                              | Approved                 |
| India                | Yes  | Yes      | CE Mark & BIS Certification      | Not Required(9)          |
| Indonesia            | Yes  | Yes      | DirJen POM                           | Pending(12)              |
| Israel               | No   | Yes      | Import License                       | Approved                 |
| Italy                | Yes  | Yes      | CE Mark                              | Approved                 |
| Jordan               | No   | Yes      | JFDA(6)                              | Not Submitted Yet        |
| Kazakhstan           | No   | Yes      | Registration Cert. & GOSTR Cert. | Not Submitted Yet        |
| Macedonia            | No   | Yes      | CE Mark                              | Not Submitted Yet        |
| Malaysia             | Yes  | Yes      | BPFK                                 | Not Required(10)         |
| Mexico               | No   | Yes      | MOH - COFERPRIS                      | Pending(11)              |
| Montenegro           | No   | Yes      | MOH                                  | Not Submitted Yet        |
| New Zealand          | No   | Yes      | CE Mark                              | Not Submitted Yet        |
| Oman                 | No   | Yes      | MOH                                  | Not Submitted Yet        |
| Philippines          | No   | Yes      | BHDT(7)                              | Not Submitted Yet        |
| Poland               | Yes  | Yes      | CE Mark                              | Approved                 |
| Romania              | No   | Yes      | CE Mark                              | Approved                 |
| Russia               | No   | Yes      | ROSZDRAVNADZOR                       | Pending(13)              |
| Saudi Arabia         | No   | Yes      | CE Mark & MOH                    | Not Submitted Yet        |
| Serbia               | No   | Yes      | CE Mark                              | Approved                 |
| Slovenia             | No   | Yes      | CE Mark                              | Approved                 |
| South Africa         | No   | Yes      | CE Mark & DOH(4)                 | Not Submitted Yet        |
| Turkey               | Yes  | Yes      | CE Mark                              | Approved                 |
| Ukraine              | No   | Yes      | CE Mark                              | Not Submitted Yet        |
| United Arab Emirates | Yes  | Yes      | UAE/MOH                              | Approved                 |
| Vietnam              | No   | Yes      | MOH                                  | Not Submitted Yet        |

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|   | (1) | Will be renewed upon appointment of new distributor. |
|--------|-----|------------------------------------------------------|

|   | (2) | Distributor will renew ANVISA. |
|--------|-----|--------------------------------|

|   | (3) | MOH - Ministry of Health |
|--------|-----|--------------------------|

|   | (4) | DOH - Department of Health |
|--------|-----|----------------------------|

|   | (5) | CICI - The Croatian Institute for Health Insurance |
|--------|-----|----------------------------------------------------|

|   | (6) | JFDA – Jordan Food and Drug Administration |
|--------|-----|--------------------------------------------------|

|   | (7) | BHDT - Bureau of Health Devices and Technology |
|--------|-----|------------------------------------------------|

|   | (8) | TGA has requested additional documentation which we are providing. |
|--------|-----|--------------------------------------------------------------------|

|        (10) | BPFK – Malaysia National Pharmaceutical Control Bureau, Registration is voluntary |
|-------------------------------------------|-----------------------------------------------------------------------------------------|

|        (11) | COFEPRIS – Mexico Ministry of Health |
|-------------------------------------------|--------------------------------------------|

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| U.S. Patents |
|--------------|
|         |   |   |   |   |   |
|         |   |   |   |   | Patent |
| Patent #     | For | Case # | Patent # | Patent Date | Exp. Date |
| 1            | Diagnostic Tomographic Laser Imaging Apparatus (Electronics & Imaging) | 6356 | 5,692,511 | 12/2/1997 | 6/7/2015 |
| 2            | Diagnostic Tomographic Laser Imaging Apparatus (Patient Support Structure) in addition to above | 6356-US | 6,195,580 | 2/27/2001 | 7/31/2018 |
| 3            | Diagnostic Tomographic Laser Imaging Apparatus | 6356-US-1 | 6,662,042 | 12/9/2003 | 8/22/2020 |
| 4            | Device for Determining the Contour of the Surface of an Object Being Scanned | 6558-1 | 6,044,288 | 3/28/2000 | 11/6/2017 |
| 5            | Device for Determining the Perimeter of the Surface of an Object Being Scanned and for Limiting Reflection from the Object Surface | 6559-1 | 6,029,077 | 2/22/2000 | 11/6/2017 |
| 6            | Detector Array with Variable Amplifiers for Use in a Laser Imaging Device | 6572-1 | 6,150,649 | 11/21/2000 | 11/26/2017 |
| 7            | Detector Array with Variable Amplifiers for Use in a Laser Imaging Device | 6572-2 | 6,331,700 | 12/18/2001 | 11/15/2020 |
| 8            | Detector Array for Use in a Laser Imaging Apparatus (Single Row of Detectors) | 6573-1 | 6,100,520 | 8/8/2000 | 11/4/2017 |
| 9            | Detector Array for Use in a Laser Imaging Apparatus (WideEye-2 or more rows of Detectors) | 6573-2 | 6,211,512 | 4/3/2001 | 7/27/2020 |
| 10           | Detector Array for Use in a Laser Imaging Apparatus (FleetEye) | 6573-3 | 7,977,619 | 7/12/2011 | 3/26/2021 |
| 11           | Method for Reconstructing the Image of an Object Scanned with a Laser Imaging Apparatus | 6574-1 | 6,130,958 | 10/10/2000 | 11/28/2017 |
| 12           | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647 | 5,952,664 | 9/14/1999 | 1/16/2018 |
| 13           | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-US | 6,693,287 | 1/17/2004 | 10/1/2021 |
| 14           | Time-Resolved Breast Imaging Device | 6707 | 6,339,216 | 2/5/2002 | 11/25/2018 |
| 15           | Multiple Wavelength Simultaneous Data Acquisition Device For Breast Imaging | 6997 | 6,571,116 | 5/27/2003 | 5/9/2021 |
| 16           | Multiple Wavelength Simultaneous Data Acquisition Device For Breast Imaging | 6997-1 | 6,738,658 | 5/18/2004 | 4/16/2023 |
| 17           | Method for Improving the Accuracy of Data Obtained in a Laser Imaging Apparatus | 7205 | 6,681,130 | 1/20/2004 | 3/14/2022 |
| 18           | Breast Positioning in a Laser | 7258 | 7,254,851 | 7/14/2007 | 11/13/2022 |
| 19           | Optical Computed Tomography Scanner for Small Laboratory Animals | 7325 | 7,155,274 | 12/26/2006 | 11/21/2023 |
| 20           | Optical Computed Tomography Scanner for Small Laboratory Animals | 7325-1 | 7,212,848 | 5/1/2007 | 5/25/2024 |
| 21           | Apparatus and Method for Acquiring Time-Resolved Measurements Utilizing Direct Digitalization of the Temporal Point Spread Function of the Detected Light | 7368 | 7,446,875 | 11/4/2008 | 11/10/2025 |

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| International Patents |
|-----------------------|
|                  |   |   |   |   |   |   |
|                  |   |   |   |   |   | Patent |
| Patent #              | For | Case # | Country/Region | Patent # | Patent Date | Exp. Date |
| 1                     | Diagnostic Tomographic Laser Imaging Apparatus | 6356-AU | Australia | 712849 | 11/18/1999 | 7/10/2015 |
| 2                     | Diagnostic Tomographic Laser Imaging Apparatus | 6356-CA | Canada | 2223606 | 10/7/2003 | 7/10/2015 |
| 3                     | Diagnostic Tomographic Laser Imaging Apparatus | 6356-CN | China | ZL95197940 | 5/19/2004 | 7/10/2015 |
| 4                     | Diagnostic Tomographic Laser Imaging Apparatus | 6356-EP | Europe | 0837649 | 12/10/2003 | 7/10/2015 |
| 5                     | Diagnostic Tomographic Laser Imaging Apparatus | 6356-EP-1 | Europe | 1389441 | 5/10/2006 | 10/31/2023 |
| 6                     | Device for Determining the Contour of the Surface of an Object Being Scanned | 6558-EP | Europe | 1003419 | 7/4/2004 | 11/7/2017 |
| 7                     | Device for Determining the Contour of the Surface of an Object Being Scanned | 6558-HK | Hong Kong | HK 1029506 | 12/17/2004 | 11/28/2020 |
| 8                     | Method for Reconstructing the Image of an Object Scanned with a Laser Imaging Apparatus | 6574-EP | Europe | 1005286 | 7/28/2004 | 11/28/2017 |
| 9                     | Method for Reconstructing the Image of an Object Scanned with a Laser Imaging Apparatus | 6574-HK | Hong Kong | HK 1029508 | 12/31/2004 | 11/28/2020 |
| 10                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-AU | Australia | 775069 | 7/15/2004 | 4/1/2019 |
| 11                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-CA | Canada | 2,373,299 | 3/30/2004 | 11/6/2021 |
| 12                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-CN | China | ZL 99 8 16608.1 | 7/11/2007 | 10/31/2021 |
| 13                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-EP | Europe | 1181511 | 6/15/2005 | 4/1/2019 |
| 14                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-EP | Germany | DE69925869T2 | 5/4/2006 | 4/1/2019 |
| 15                    | Laser Imaging Apparatus Using Biomedical Markers That Bind to Cancer Cells | 6647-HK | Hong Kong | HK1043480B | 1/27/2006 | 7/6/2022 |
| 16                    | Time-Resolved Breast Imaging Device | 6707-CA | Canada | 2309214 |   | 11/15/2018 |
| 17                    | Multiple Wavelength Simultaneous Data Acquisition Device For Breast Imaging | 6997-CN | China | 2L01809326.4 | 11/30/2005 | 11/11/2022 |

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| ANNUAL ADJUSTED SALES    | PERCENTAGE |
|--------------------------|------------|
| $0 to $1,999,999         | 10%        |
| $2,000,000 to $3,999,999 | 9%         |
| $4,000,000 to $6,999,999 | 8%         |
| $7,000,000 to $9,999,99  | 7%         |
| Greater than $10,000,000 | 6%         |

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Item 1A.  Risk factors

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| · | demonstrator sites |
|--------|--------------------|

| · | clinical collaboration sites |
|--------|------------------------------|

| · | FDA Pre-Market Notification 510(k) approval process, |
|--------|------------------------------------------------------|

| · | anticipated commercialization of the CTLM®, and |
|--------|------------------------------------------------------|

| · | other research and development programs |
|--------|-----------------------------------------|

| · | research, engineering and development programs, |
|--------|-------------------------------------------------|

| · | pre-clinical and clinical testing of the family of products, |
|--------|--------------------------------------------------------------|

| · | regulatory processes, |
|--------|-----------------------|

| · | inventory, |
|--------|------------|

| · | marketing programs, and |
|--------|-------------------------|

| · | operating expenses (including general and administrative expenses). |
|--------|---------------------------------------------------------------------|

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| · | the progress of our research and development projects, |
|--------|--------------------------------------------------------|

| · | the progress of pre-clinical and clinical testing on other proposed products, |
|--------|-------------------------------------------------------------------------------|

| · | the time and cost involved in obtaining regulatory approvals, |
|--------|---------------------------------------------------------------|

| · | the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; competing technological and market developments; changes and developments in our existing collaborative, licensing and other relationships and the terms of any new collaborative, licensing and other arrangements that we may establish, and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the development of commercialization activities and arrangements. |
|--------|-------------------------------------------------------------------|

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| · | the number of common shares authorized and outstanding,                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------|
| · | the market price of the common stock at the time of each preferred stock or debenture sale, and                    |
| · | number of common shares the preferred stock or debentures would have been convertible into at the time of the sale |

|   | · | draw on our Southridge Private Equity Agreement pursuant to S-1 Registration Statement once it has been declared effective |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | seek capital through debt or equity financing which may include the issuance of convertible debentures or convertible preferred stock whose rights and preferences are superior to those of the common stockholders, and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | attempt to negotiate the best transactions possible taking into account the impact on our shareholders, dilution, loss of voting power and the possibility of a change-in-control. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue Southridge a total of 51,800,127 shares to redeem short-term notes totaling $518,001 of which $394,944 is principal, $108,300 is premium and $14,757 is interest.  Southridge may elect at an Event of Default to convert any part or all of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue Southridge a total of 29,860,555 shares to redeem short-term notes totaling $298,606 of which $257,500 is principal, $38,625 is premium and $2,481 is interest.  Southridge may elect at an Event of Default to convert any part or all of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.01 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue Southridge a total of 15,359,635 shares to redeem a short-term note totaling $115,197 of which $100,000 is principal, $15,000 is premium and $197 is interest.  Southridge may elect at an Event of Default to convert any part or all of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.0075 or (b) 70% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue a private investor a total of 11,106,667 shares to redeem a short-term note totaling $166,600 of which $100,000 is principal and $66,600 is premium.  On the Maturity Date, the Holder, in lieu of cash repayment, shall have the option of converting the Redemption Amount into 7,000,000 restricted shares of the common stock of the Company pursuant to Rule 144.  However, the 7,000,000 restricted shares were based on the short-term redemption of the note with an amount due of $120,000 including $20,000 premium.  Since we did not have sufficient funds to pay back the note before the maturity date, the note was extended numerous times and an additional $46,600 of premium has accrued as of the date of this report.  In order to redeemthe $166,600 short-term note, we may redeem the note on terms similar to other debt obligations whereby we would negotiate a redemption price at the lesser of (a) $0.015 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | We may be obligated to issue private investors a total of 34,386,667 shares to redeem three short-term notes totaling $515,800 of which $300,000 is principal and $215,800 is premium.  These three notes do not have any redemption provisions but, based on our discussions with the investors, we believe that we will be able to redeem these notes for shares of our common stock in the future.  We believe that these short-term notes would be redeemable at a redemption price of the lesser of (a) $0.015 or (b) 90% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the redemption notice. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue to a private investor a total of 16,618,800 new shares to redeem a short-term note totaling $302,699 of which $175,000 is principal and $127,699 is premium.  The total number of shares required to redeem the note as of September 20, 2011, is 20,179,933 shares; however, since the investor is currently holding 3,561,133 shares as collateral the new share issuance would only be 16,618,800 shares.  The terms of the note provide that (i) the conversion price for the Note shall be the lower of (a) $0.022 per share or (b) 80% of the average of the two lowest closing bid prices of our Common Stock for the 10 trading days prior to the conversion date. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue OTC Global Partners (“OTC”) a total of 4,124,364 shares to redeem short-term notes totaling $57,741 of which $50,000 is principal, $7,500 is premium and $241 is interest.  OTC may elect at an Event of Default to convert any part or all of the Notes plus accrued interest into shares of our common stock at a conversion price equal to the lesser of (a) $0.014 or (b) 65% of the average of the three lowest closing bid prices during the 10 trading days immediately prior to the date of the conversion notice. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may be obligated to issue JMJ Financial a total of 26,810,911 shares to redeem two long-term notes totaling $371,228 of which $285,228 is principal, $50,000 is consideration on the principal and $36,000 is interest.  JMJ may convert both principal and interest into our common stock at 75% of the average of the three lowest closing prices in the 20 days previous to the conversion.  We have the right to enforce a conversion floor of $0.015 per share; however, if we receive a conversion notice in which the Conversion Price is less than $0.015 per share, JMJ will incur a conversion loss [(Conversion Loss = $0.015 – Conversion Price) x number of shares being converted] which we must make whole by either of the following options: pay the conversion loss in cash or addthe conversion loss to the balance of principal due.  Prepayment of the Note is not permitted. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the percentage of shares outstanding that will be held by these holders upon conversion will increase accordingly, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | the lower the market price the greater the number of shares to be issued to these holders upon conversion, thus increasing the potential profits to the holder when the price per share later increases and the holder sells the common shares, |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the preferred stockholders' and debenture holders’ potential for increased share issuance and profit, including profits derived from short sales of our common stock, in addition to a stock overhang of an indeterminable amount, may depress the price of our common stock, |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the sale of a substantial amount of preferred stock or debentures to relatively few holders could effectuate a possible change-in-control, and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | in the event of our voluntary or involuntary liquidation while the preferred stock or debentures are outstanding, the holders of those securities will be entitled to a preference in distribution of our property. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We may need to record a derivative liability. |
|--------|--------|-----------------------------------------------|

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|   | · | 1,117,410,714 shares for complete utilization of the Southridge Private Equity Credit Agreement |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | 36,047,254 shares required for the exercise of all outstanding options, of which a total of 30,377,000 shares are subject to options granted to our three executive officers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | 13,333,333 shares required for the conversion of the 20 shares of Series L Convertible Preferred Stock. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | 130,000,000 shares required to be registered for conversion of a $1.8 million convertible promissory note held by JMJ Financial. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | 120,000,000 shares to be reserved for conversion of a potential $1.6 million of additional funding which JMJ may provide, subject to our approval. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If we choose to redeem all of our outstanding short and long-terms debts with shares of our common stock, we will have to issue approximately 190,067,726 of which 26,810,911 shares are already covered by the $400,000 advanced thus far by JMJ Financial. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | 1,117,410,714 shares for complete utilization of the Southridge Private Equity Credit Agreement |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | 36,047,254 shares required for the exercise of all outstanding options, of which a total of 30,377,000 shares are subject to options granted to our three executive officers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 13,333,333 shares required for the conversion of the 20 shares of Series L Convertible Preferred Stock. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | 130,000,000 shares required to be registered for conversion of a $1.8 million convertible promissory note held by JMJ Financial. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | 120,000,000 shares to be reserved for conversion of a potential $1.6 million of additional funding which JMJ may provide, subject to our approval. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If we choose to redeem all of our outstanding short and long-terms debts with shares of our common stock, we will have to issue approximately 190,067,726 of which 26,810,911 shares are already covered by the $400,000 advanced thus far by JMJ Financial. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | the timing and results of our clinical trials or those of our competitors, |
|--------|----------------------------------------------------------------------------|

| · | governmental regulation, |
|--------|--------------------------|

| · | healthcare legislation, |
|--------|-------------------------|

| · | geopolitical events, |
|--------|----------------------|

| · | equity or debt financing, and |
|--------|-------------------------------|

| · | developments in patent or other proprietary rights pertaining to our competitors or us, including litigation, fluctuations in our operating results, and market conditions for medical device company stocks and life science stocks in general. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | 1,117,410,714 shares for complete utilization of the Southridge Private Equity Credit Agreement |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | 36,047,254 shares required for the exercise of all outstanding options, of which a total of 30,377,000 shares are subject to options granted to our three executive officers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 13,333,333 shares required for the conversion of the 20 shares of Series L Convertible Preferred Stock. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | 130,000,000 shares required to be registered for conversion of a $1.8 million convertible promissory note held by JMJ Financial. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | 120,000,000 shares to be reserved for conversion of a potential $1.6 million of additional funding which JMJ may provide, subject to our approval. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If we choose to redeem all of our outstanding short and long-terms debts with shares of our common stock, we will have to issue approximately 190,067,726 of which 26,810,911 shares are already covered by the $400,000 advanced thus far by JMJ Financial. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ANNUAL ADJUSTED SALES    | PERCENTAGE |
|--------------------------|------------|
| $0 to $1,999,999         | 10%        |
| $2,000,000 to $3,999,999 | 9%         |
| $4,000,000 to $6,999,999 | 8%         |
| $7,000,000 to $9,999,99  | 7%         |
| Greater than $10,000,000 | 6%         |

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|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has the same technological characteristics as the predicate; or |
|--------|--------|-----------------------------------------------------------------|

|   | · | has the same intended use as the predicate; and |
|--------|--------|-------------------------------------------------|

|   | · | has different technological characteristics when compared to the predicate, and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | does not raise new questions of safety and effectiveness; and |
|--------|--------|---------------------------------------------------------------|

|   | · | demonstrates that the device is at least as safe and effective as the legally marketed device. |
|--------|--------|------------------------------------------------------------------------------------------------|

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| · | FDA marketing clearance for the CTLM®, |
|--------|---------------------------------------------|

| · | foreign marketing clearances for the CTLM® or regulatory approvals or clearances for other products that we may develop, on a timely basis, or at all, |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | timely receipt of approvals or clearances, |
|--------|--------------------------------------------|

| · | continued approval or clearance of previously obtained approvals and clearances, and |
|--------|--------------------------------------------------------------------------------------|

| · | compliance with existing or future regulatory requirements. |
|--------|-------------------------------------------------------------|

| · | be found to be safe and effective, |
|--------|------------------------------------|

| · | meet applicable regulatory standards or receive necessary regulatory clearance, |
|--------|---------------------------------------------------------------------------------|

| · | be safe and effective, developed into commercial products, manufactured on a large scale or be economical to market, or |
|--------|-------------------------------------------------------------------------------------------------------------------------|

| · | achieve or sustain market acceptance. |
|--------|---------------------------------------|

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| · | economic and political instability, |
|--------|-------------------------------------|

| · | shipping delays, |
|--------|------------------|

| · | fluctuation of foreign currency exchange rates, |
|--------|-------------------------------------------------|

| · | foreign regulatory requirements, |
|--------|----------------------------------|

| · | various trade restrictions, all of which could have a significant impact on our ability to deliver products on a timely basis, and |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

| · | inability to collect outstanding receivables to the extent that irrevocable letters of credit are not used. |
|--------|-------------------------------------------------------------------------------------------------------------|

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Item 1B.  
Unresolved Staff 

Item 2.  
Description 

Item 3.  
Legal 

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Item 4.  
Submission 

| 2. | To approve a proposal to amend our Articles of Incorporation to increase the number of authorized shares of our common stock, no par value, from 950,000,000 to 2,000,000,000; |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | To consider and act upon a proposal to adopt our 2010 Non-Statutory Stock Option Plan; |
|----|----------------------------------------------------------------------------------------|

| 4. | To ratify the appointment by the Board of Directors of Sherb & Co., LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2011; |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | To hold an advisory vote on the compensation of our named executive officers as described in our proxy statement; |
|----|-------------------------------------------------------------------------------------------------------------------|

| 6. | To hold an advisory vote on how frequently (every one, two or three years) shareholders prefer that we conduct an advisory vote of stockholders on the compensation of our named executive officers; and |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | To conduct any other business properly brought before the meeting. |
|----|--------------------------------------------------------------------|

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| Linda B. Grable   | FOR     93,997,847 | WITHHELD     12,912,365 |
|-------------------|---------------------------------------------|--------------------------------------------------|
| Allan L. Schwartz | FOR     92,811,350 | WITHHELD     14,098,862 |

| FOR   598,801,481 | AGAINST   115,527,185 | ABSTAIN     2,097,143 |
|----------------------------------|--------------------------------------|------------------------------------------------|

| FOR   80,416,167 | AGAINST    24,548,748 | ABSTAIN   1,945,297 |
|---------------------------------|-------------------------------------------|------------------------------------|

| FOR   687,596,229 | AGAINST    22,485,887 | ABSTAIN   6,343,693 |
|----------------------------------|-------------------------------------------|------------------------------------|

| FOR   91,350,893 | AGAINST    13,161,967 | ABSTAIN   2,397,352 |
|---------------------------------|-------------------------------------------|------------------------------------|

| 1 YEAR   94,587,673 | 2 YEARS    4,998,424 | 3 YEARS   5,582,930 | ABSTAIN 1,741,185 |
|------------------------------------|------------------------------------------|------------------------------------|-------------------|

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Item 5.  
Market for 

| QUARTER ENDING                           | High Bid | Low Bid |
|------------------------------------------|----------|---------|
|                                     |     |    |
| FISCAL YEAR 2009                         |     |    |
| First Quarter                            | $0.055   | $0.012  |
| Second Quarter                           | $0.048   | $0.02   |
| Third Quarter                            | $0.023   | $0.007  |
| Fourth Quarter                           | $0.009   | $0.005  |
|                                     |     |    |
| FISCAL YEAR 2010                         |     |    |
| First Quarter                            | $0.011   | $0.004  |
| Second Quarter                           | $0.029   | $0.007  |
| Third Quarter                            | $0.068   | $0.018  |
| Fourth Quarter                           | $0.063   | $0.02   |
|                                     |     |    |
| FISCAL YEAR 2011                         |     |    |
| First Quarter                            | $0.034   | $0.02   |
| Second Quarter                           | $0.041   | $0.0132 |
| Third Quarter                            | $0.04    | $0.023  |
| Fourth Quarter                           | $0.025   | $0.013  |
|                                     |     |    |
| FISCAL YEAR 2012                         |     |    |
| First Quarter (until September 20, 2011) | $0.022   | $0.012  |
|                                     |     |    |

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| §   | $300,000 paid to Borrower within 2 business days of execution and closing of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of Definitive Proxy to increase authorized shares to 2,000,000,000 or more. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of effective increase in authorized shares to 2,000,000,000 or more. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of registration statement, and that registration statement must be filed no later than 10 days from the effective increase of authorized shares. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $400,000 paid to Borrower within 5 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $300,000 paid to Borrower within 90 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $300,000 paid to Borrower within 150 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the Conversion Price calculation on Borrower’s common stock must yield a Conversion Price equal to or greater than $0.015 per share (based on the Conversion Price calculation, regardless of whether a conversion is actually completed or not). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the total dollar trading volume of Borrower’s common stock for the previous 23 trading days must be equal to or greater than $1,000,000.  The total dollar volume will be calculated by removing the three highest dollar volume days and summing the dollar volume for the remaining 20 trading days. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, there shall not exist an event of default as described within any of the agreements between Borrower and Holder. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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| First Installment  |   8/02/2007 | $1,100,000.00                            |
|--------------------|-----------------------|------------------------------------------|
| Second Installment |   9/21/2007 | $1,100,000.00                            |
| Third Installment  | 12/14/2007            |    $550,000.00            |
| Fourth Installment |   1/04/2008 |    $550,000.00            |
| Fifth Installment  |   1/18/2008 | $1,056,000.00                            |
| Final Payment      |   3/26/2008 |      $44,027.00 |

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Item 6.                      
Selected 

|                                              |   | Year Ended    |         |   | Year Ended    |   |         | Year Ended    |   |   | Year Ended    |   |   | Year Ended    |         |
|---------------------------------------------------|--------|---------------|--------------|--------|---------------|--------|--------------|---------------|--------|--------|---------------|--------|--------|---------------|--------------|
|                                              |   | June 30, 2011 |         |   | June 30, 2010 |   |         | June 30, 2009 |   |   | June 30, 2008 |   |   | June 30, 2007 |         |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |
| Sales                                             |   | $             | 55,118       |   |          | $      | 181,172      |          |   | $      | 70,617        |   |   | $             | 39,647       |   |   | $ | 65,136 |   |
| Gain (Loss) on sale of fixed assets               |   |          | -            |   |          |   | -            |          |   |   | 1,181,894     |   |   |          | 1,609,525    |   |   |   | - |   |
| Cost of Sales                                     |   |          | 15,265       |   |          |   | 22,512       |          |   |   | 20,546        |   |   |          | 20,944       |   |   |   | 17,870 |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Gross Profit                                      |   |          | 39,853       |   |          |   | 158,660      |          |   |   | 1,231,965     |   |   |          | 1,628,228    |   |   |   | 47,266 |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Operating Expenses                                |   |          | 4,638,901    |   |          |   | 4,872,107    |          |   |   | 4,505,908     |   |   |          | 6,232,663    |   |   |   | 7,123,347 |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Operating Loss                                    |   |          | (4,599,049   | )      |          |   | (4,713,447   | )             |   |   | (3,273,943    | )      |   |          | (4,604,435   | ) |   |   | (7,076,081 | ) |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Interest income                                   |   |          | 1,438        |   |          |   | 995          |          |   |   | 636           |   |   |          | 13,377       |   |   |   | 11,455 |   |
| Other income                                      |   |          | 110,858      |   |          |   | 118,796      |          |   |   | 5,909         |   |   |          | 7,827        |   |   |   | 250,001 |   |
| Derivative (expense) income                       |   |          | -            |   |          |   | (64,524      | )             |   |   | -             |   |   |          | -            |   |   |   | - |   |
| Change in fair value of derivative liability      |   |          | 273,037      |   |          |   | (137,631     | )             |   |   | -             |   |   |          | -            |   |   |   | - |   |
| Interest expense                                  |   |          | (1,663,809   | )      |          |   | (175,904     | )             |   |   | (677,031      | )      |   |          | (40,447      | ) |   |   | (387,697 | ) |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Net Loss                                          |   |          | (5,877,525   | )      |          |   | (4,971,715   | )             |   |   | (3,944,429    | )      |   |          | (4,623,678   | ) |   |   | (7,202,322 | ) |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Dividends on cumulative Pfd. stock:               |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| From discount at issuance                         |   |          | -            |   |          |   | -            |          |   |   | -             |   |   |          | -            |   |   |   | - |   |
| Earned                                            |   |          | -            |   |          |   | -            |          |   |   | -             |   |   |          | -            |   |   |   | - |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Net loss applicable to                            |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|      common shareholders |   | $             | (5,877,525   | )      |          | $      | (4,971,715   | )             |   | $      | (3,944,429    | )      |   | $             | (4,623,678   | ) |   | $ | (7,202,322 | ) |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Net Loss per common share                         |   | $             | (0.01        | )      |          | $      | (0.01        | )             |   | $      | (0.01         | )      |   | $             | (0.01        | ) |   | $ | (0.03 | ) |
| Weighted avg. no. of common shares,               |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|     Basic & Diluted       |   |          | 885,074,029  |   |          |   | 758,622,934  |          |   |   | 424,330,162   |   |   |          | 318,673,749  |   |   |   | 271,667,256 |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|                                              |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
| Cash and Cash Equivalents                         |   | $             | 189,135      |   |          | $      | 73,844       |          |   | $      | 12,535        |   |   | $             | 49,433       |   |   | $ | 477,812 |   |
| Total Assets                                      |   |          | 870,653      |   |          |   | 980,360      |          |   |   | 1,134,580     |   |   |          | 1,583,356    |   |   |   | 4,365,427 |   |
| Deficit accumulated during                        |   |          |         |   |          |   |         |          |   |   |          |   |   |          |         |   |   |   |   |   |
|     the development stage     |   |          | (117,758,407 | )      |          |   | (111,880,882 | )             |   |   | (106,909,167  | )      |   |          | (102,964,738 | ) |   |   | (98,341,059 | ) |
| Stockholders' Equity                              |   |          | (4,729,168   | )      |          |   | (2,715,156   | )             |   |   | (1,129,222    | )      |   |          | (468,761     | ) |   |   | 3,441,322 |   |

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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

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| §   | $300,000 paid to Borrower within 2 business days of execution and closing of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of Definitive Proxy to increase authorized shares to 2,000,000,000 or more. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of effective increase in authorized shares to 2,000,000,000 or more. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of registration statement, and that registration statement must be filed no later than 10 days from the effective increase of authorized shares. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $400,000 paid to Borrower within 5 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $300,000 paid to Borrower within 90 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| §   | $300,000 paid to Borrower within 150 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the Conversion Price calculation on Borrower’s common stock must yield a Conversion Price equal to or greater than $0.015 per share (based on the Conversion Price calculation, regardless of whether a conversion is actually completed or not). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the total dollar trading volume of Borrower’s common stock for the previous 23 trading days must be equal to or greater than $1,000,000.  The total dollar volume will be calculated by removing the three highest dollar volume days and summing the dollar volume for the remaining 20 trading days. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, there shall not exist an event of default as described within any of the agreements between Borrower and Holder. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 7A.  
Quantitative 

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Item 8.  
Financial 

| Index to Financial Statements                           |                                      |
|---------------------------------------------------------|-------------------------------------------|
|                                                    |                                      |   |
|                                                    |                                      | Page |
|                                                    |                                      |   |
| Report of Independent Registered Public Accounting Firm | 91                                        |
|                                                    |                                      |   |
| Financial Statements                                    |                                      |   |
|                                                    |                                      |   |
|                                                    | Balance Sheets                            | 92 |
|                                                    |                                      |   |
|                                                    | Statements of Operations                  | 93 |
|                                                    |                                      |   |
|                                                    | Statements of Stockholders’ Deficit | 94 |
|                                                    |                                      |   |
|                                                    | Statements of Cash Flows                  | 107 |
|                                                    |                                      |   |
|                                                    | Notes to Financial Statements             | 109 |

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REPORT 

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| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                  |                                                               |
|-----------------------------------------------------------------------------------|--------------------------------------------------------------------|
| (A Development Stage Company)                                                     |                                                               |
| Balance Sheets                                                                    |                                                               |
|                                                                              |                                                               |   |   |   |   |   |   |
| Assets                                                                            |                                                               |
|                                                                              |                                                               |   |   |   |   |   |   |
|                                                                              |                                                               |   | June 30, 2011 |   |   | June 30, 2010 |   |
| Current assets:                                                                   |                                                               |   |   |   |   |   |
|                                                                              | Cash                                                               |   | $ | 189,135 |   |   | $ | 73,844 |   |
|                                                                              | Accounts receivable, net of allowances for doubtful accounts       |   |   |   |   |   |   |   |   |
|                                                                              |     of $23,500 and $57,982, respectively       |   |   | 11,198 |   |   |   | 12,850 |   |
|                                                                              | Loans receivable, net of reserve of $0                             |   |   |   |   |   |   |   |   |
|                                                                              |     and $57,000, respectively                  |   |   | - |   |   |   | 3,796 |   |
|                                                                              | Inventories, net of reserve of $399,000 and $399,000, respectively |   |   | 322,562 |   |   |   | 436,110 |   |
|                                                                              | Prepaid expenses                                                   |   |   | 49,339 |   |   |   | 61,115 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total current assets                                               |   |   | 572,234 |   |   |   | 587,715 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| Property and equipment, net                                                       |                                                               |   | 161,713 |   |   |   | 221,763 |   |
| Intangible assets, net                                                            |                                                               |   | 136,706 |   |   |   | 170,882 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total assets                                                       |   | $ | 870,653 |   |   | $ | 980,360 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' (Deficit)                                           |                                                               |
| Current liabilities:                                                              |                                                               |   |   |   |   |   |   |   |
|                                                                              | Accounts payable and accrued expenses                              |   | $ | 1,344,168 |   |   | $ | 1,538,748 |   |
|                                                                              | Accrued payroll taxes and penalties                                |   |   | 1,141,967 |   |   |   | - |   |
|                                                                              | Customer deposits                                                  |   |   | 112,563 |   |   |   | 98,114 |   |
|                                                                              | Short-term derivative liability                                    |   |   | 691,663 |   |   |   | - |   |
|                                                                              | Short-term debt, net of debt discount of $78,925 and $0            |   |   | 1,706,018 |   |   |   | 1,506,500 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total current liabilities                                          |   |   | 4,996,379 |   |   |   | 3,143,362 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| Long-Term liabilities:                                                            |                                                               |   |   |   |   |   |   |   |
|                                                                              | Long-term debt, net of debt discount of $184,967 and $0            |   |   | 301,033 |   |   |   | - |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total long-term liabilities                                        |   |   | 301,033 |   |   |   | - |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| Convertible preferred stock (Series L), 9% cumulative annual dividend,            |                                                               |   |   |   |   |   |   |   |
|      no par value, 20 and 35 shares issued, respectively |                                                               |   | 200,000 |   |   |   | 350,000 |   |
|                                                                              | Long-term derivative liability                                     |   |   | 102,409 |   |   |   | 202,155 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| Stockholders' (Deficit):                                                          |                                                               |   |   |   |   |   |   |   |
|                                                                              | Common stock, no par value; authorized 950,000,000 shares,         |   |   |   |   |   |   |   |   |
|                                                                              |  issued 942,196,924 and 837,087,622 shares, respectively      |   |   | 107,476,957 |   |   |   | 105,927,719 |   |
|                                                                              | Common stock - Debt Collateral                                     |   |   | (73,970 | ) |   |   | (1,150,000 | ) |
|                                                                              | Additional paid-in capital                                         |   |   | 5,626,252 |   |   |   | 4,388,006 |   |
|                                                                              | Deficit accumulated during development stage                       |   |   | (117,758,407 | ) |   |   | (111,880,882 | ) |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total stockholders' (Deficit)                                      |   |   | (4,729,168 | ) |   |   | (2,715,157 | ) |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              | Total liabilities and stockholders' (Deficit)                      |   | $ | 870,653 |   |   | $ | 980,360 |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
|                                                                              |                                                               |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                               |                                                               |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
| Statements of Operations                                                                                        |   |
|                                                                                                            |   |   |   |   |   |   |   | From Inception |   |
|                                                                                                            |   |   |   |   |   |   |   | (December 10, |   |
|                                                                                                            |   | Year Ended |   |   | Year Ended |   |   | 1993) to |   |
|                                                                                                            |   | June 30, 2011 |   |   | June 30, 2010 |   |   | June 30, 2011 |   |
|                                                                                                            |   |   |   |   |   |   |   |   | * |   |
| Net Sales                                                                                                       |   | $ | 55,118 |   |   | $ | 181,172 |   |   | $ | 2,379,782 |   |
| Gain on sale of fixed assets                                                                                    |   |   | - |   |   |   | - |   |   |   | 2,794,565 |   |
| Cost of Sales                                                                                                   |   |   | 15,265 |   |   |   | 22,512 |   |   |   | 943,882 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                                                                    |   |   | 39,853 |   |   |   | 158,660 |   |   |   | 4,230,465 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|      General and administrative                                                             |   |   | 3,096,209 |   |   |   | 3,584,608 |   |   |   | 61,670,231 |   |
|      Research and development                                                               |   |   | 893,879 |   |   |   | 734,943 |   |   |   | 23,322,837 |   |
|      Sales and marketing                                                                    |   |   | 452,967 |   |   |   | 340,433 |   |   |   | 9,566,221 |   |
|      Inventory valuation adjustments                                                        |   |   | 95,096 |   |   |   | 67,678 |   |   |   | 4,915,445 |   |
|      Depreciation and amortization                                                          |   |   | 100,751 |   |   |   | 144,445 |   |   |   | 3,402,425 |   |
|      Amortization of deferred compensation                                                  |   |   | - |   |   |   | - |   |   |   | 4,064,250 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses                                                                                        |   |   | 4,638,902 |   |   |   | 4,872,107 |   |   |   | 106,941,409 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Loss                                                                                                  |   |   | (4,599,049 | ) |   |   | (4,713,447 | ) |   |   | (102,710,944 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                                 |   |   | 1,438 |   |   |   | 995 |   |   |   | 310,834 |   |
| Other income                                                                                                    |   |   | 110,858 |   |   |   | 118,796 |   |   |   | 994,046 |   |
| Other income - LILA Inventory                                                                                   |   |   | - |   |   |   | - |   |   |   | (69,193 | ) |
| Derivative (expense) income                                                                                     |   |   | - |   |   |   | (64,524 | ) |   |   | (64,524 | )  |
| Change in fair value of derivative liability                                                                    |   |   | 273,037 |   |   |   | (137,631 | ) |   |   | 135,406 |   |
| Interest expense                                                                                                |   |   | (1,663,809 | ) |   |   | (175,904 | ) |   |   | (9,506,272 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                                                                        |   |   | (5,877,525 | ) |   |   | (4,971,715 | ) |   |   | (110,910,647 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on cumulative preferred stock:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|      From discount at issuance                                                              |   |   | - |   |   |   | - |   |   |   | (5,402,713 | ) |
|      Earned                                                                                 |   |   | - |   |   |   | - |   |   |   | (1,445,047 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss applicable to                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|      common shareholders                                                               |   | $ | (5,877,525 | ) |   | $ | (4,971,715 | ) |   | $ | (117,758,407 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss per common share:                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|      Basic and diluted                                                                      |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.54 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|    common shares outstanding:                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|      Basic and diluted                                                                      |   |   | 885,074,029 |   |   |   | 758,622,934 |   |   |   | 218,151,949 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                             |   |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                               |   |
|----------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                  |   |
|                                                                                                           |   |
| Statements of Stockholders' (Deficit)                                                                     |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                                           |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                                                                           |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                                                                           |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 10, 1993 (date of inception)                                                               |   |   | - |   | $ | - |   |   | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock, restated for reverse                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock split                                                                                                    |   |   | - |   |   | - |   |   | 510,000 |   |   | 50,000 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 50,000 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisition of public shell                                                                                    |   |   | - |   |   | - |   |   | 178,752 |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net issuance of additional shares of stock                                                                     |   |   | - |   |   | - |   |   | 15,342,520 |   |   | 16,451 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | 16,451 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                              |   |   | - |   |   | - |   |   | 36,500 |   |   | 36,500 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | 36,500 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                       |   |   | - |   |   |   |   |   | - |   |   | - |   |   | - |   |   | (66,951 | ) |   |   |   |   | - |   |   | (66,951 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1994                                                                                       |   |   | - |   |   | - |   |   | 16,067,772 |   |   | 102,951 |   |   | - |   |   | (66,951 | ) |   | - |   |   | - |   |   | 36,000 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                              |   |   | - |   |   | - |   |   | 1,980,791 |   |   | 1,566,595 |   |   | - |   |   | - |   |   | (523,118 | ) |   | - |   |   | 1,043,477 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for services                                                                   |   |   | - |   |   | - |   |   | 115,650 |   |   | 102,942 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 102,942 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with employment agreements                                                                 |   |   | - |   |   | - |   |   | 75,000 |   |   | 78,750 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 78,750 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for compensation                                                                           |   |   | - |   |   | - |   |   | 377,500 |   |   | 151,000 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 151,000 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options granted                                                                                          |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 622,500 |   |   | - |   |   | - |   |   | (622,500 | ) |   | - |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compentsation                                                                         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 114,375 |   |   | 114,375 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forgiveness of officers' compensation                                                                          |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 50,333 |   |   | - |   |   | - |   |   | - |   |   | 50,333 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (1,086,436 | ) |   | - |   |   | - |   |   | (1,086,436 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1995                                                                                       |   |   | - |   |   | - |   |   | 18,616,713 |   |   | 2,002,238 |   |   | 672,833 |   |   | (1,153,387 | ) |   | (523,118 | ) |   | (508,125 | ) |   | 490,441 |   |
|                                                                                                           |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. |
| **See note 17 for a detailed breakdown by Series.                                                              |
|                                                                                                           |
|  See accompanying notes to the financial statements.                                                      |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                        |   |
|                                                                                                                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                               |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                         |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                                                 |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                                                                                 |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                                                                                 |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1995                                                                                             |   |   | - |   |   | - |   |   | 18,616,713 |   |   | 2,002,238 |   |   | 672,833 |   |   | (1,153,387 | ) |   | (523,118 | ) |   | (508,125 | ) |   | 490,441 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock sold, including dividends                                                                            |   |   | 4,000 |   |   | 3,600,000 |   |   | - |   |   | - |   |   | 1,335,474 |   |   | (1,335,474 | ) |   | - |   |   | - |   |   | 3,600,000 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                                    |   |   | - |   |   | - |   |   | 700,471 |   |   | 1,561,110 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,561,110 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cancellation of stock subscription                                                                                   |   |   | - |   |   | - |   |   | (410,500 | ) |   | (405,130 | ) |   | - |   |   | - |   |   | 405,130 |   |   | - |   |   | - |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for services                                                                         |   |   | - |   |   | - |   |   | 2,503,789 |   |   | 4,257,320 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 4,257,320 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                   |   |   | - |   |   | - |   |   | 191,500 |   |   | 104,375 |   |   | - |   |   | - |   |   | (4,375 | ) |   | - |   |   | 100,000 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of options                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for compensation                                                                                                     |   |   | - |   |   | - |   |   | 996,400 |   |   | 567,164 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 567,164 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common stock                                                                        |   |   | (1,600 | ) |   | (1,440,000 | ) |   | 420,662 |   |   | 1,974,190 |   |   | (534,190 | ) |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued as payment of preferred                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock dividends                                                                                                      |   |   | - |   |   | - |   |   | 4,754 |   |   | 14,629 |   |   | - |   |   | (14,629 | ) |   | - |   |   | - |   |   | - |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued on preferred stock not                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| yet converted                                                                                                        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (33,216 | ) |   | - |   |   | - |   |   | (33,216 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collection of stock subscriptions                                                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 103,679 |   |   | - |   |   | 103,679 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compentsation                                                                               |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 232,500 |   |   | 232,500 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forgiveness of officers' compensation                                                                                |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 100,667 |   |   | - |   |   | - |   |   | - |   |   | 100,667 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                  |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (6,933,310 | ) |   | - |   |   | - |   |   | (6,933,310 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1996 (restated)                                                                                  |   |   | 2,400 |   |   | 2,160,000 |   |   | 23,023,789 |   |   | 10,075,896 |   |   | 1,574,784 |   |   | (9,470,016 | ) |   | (18,684 | ) |   | (275,625 | ) |   | 4,046,355 |   |
|                                                                                                                 |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.  |
| **See note 17 for a detailed breakdown by Series.                                                               |
|                                                                                                                 |
|  See accompanying notes to the financial statements.                                                            |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                           |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                              |   |
|                                                                                                                       |   |
| Statements of Stockholders' (Deficit) (Continued)                                                                     |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                               |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                                                       |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                                                                                       |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                                                                                       |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1996 (restated)                                                                                        |   |   | 2,400 |   |   | 2,160,000 |   |   | 23,023,789 |   |   | 10,075,896 |   |   | 1,574,784 |   |   | (9,470,016 | ) |   | (18,684 | ) |   | (275,625 | ) |   | 4,046,355 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock sold, including dividends                                                                                  |   |   | 450 |   |   | 4,500,000 |   |   | - |   |   | - |   |   | 998,120 |   |   | (998,120 | ) |   | - |   |   | - |   |   | 4,500,000 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common stock                                                                              |   |   | (2,400 | ) |   | (2,160,000 | ) |   | 1,061,202 |   |   | 2,961,284 |   |   | (801,284 | ) |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for services                                                                               |   |   | - |   |   | - |   |   | 234,200 |   |   | 650,129 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 650,129 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for compensation                                                                                       |   |   | - |   |   | - |   |   | 353,200 |   |   | 918,364 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 918,364 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                         |   |   | - |   |   | - |   |   | 361,933 |   |   | 1,136,953 |   |   | - |   |   | - |   |   | (33,750 | ) |   | - |   |   | 1,103,203 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued to employee                                                                                            |   |   | - |   |   | - |   |   | (150,000 | ) |   | (52,500 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (52,500 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued as payment of preferred                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock dividends                                                                                                            |   |   | - |   |   | - |   |   | 20,760 |   |   | 49,603 |   |   | - |   |   | (16,387 | ) |   | - |   |   | - |   |   | 33,216 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued on preferred stock not                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| yet converted                                                                                                              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (168,288 | ) |   | - |   |   | - |   |   | (168,288 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options granted                                                                                                      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,891,500 |   |   | - |   |   | - |   |   | (1,891,500 | ) |   | - |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collection of stock subscriptions                                                                                          |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 16,875 |   |   | - |   |   | 16,875 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compentsation                                                                                     |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 788,000 |   |   | 788,000 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (7,646,119 | ) |   | - |   |   | - |   |   | (7,646,119 | ) |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1997 (restated)                                                                                        |   |   | 450 |   |   | 4,500,000 |   |   | 24,905,084 |   |   | 15,739,729 |   |   | 3,663,120 |   |   | (18,298,930 | ) |   | (35,559 | ) |   | (1,379,125 | ) |   | 4,189,235 |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.   |
| **See note 17 for a detailed breakdown by Series.                                                                     |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                        |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                     |   |
|----------------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                        |   |
|                                                                                                                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                               |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                         |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Number of |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |
|                                                                                                                 |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1997 (restated)                                                                                  |   |   | 450 |   |   | 4,500,000 |   |   | 24,905,084 |   |   | 15,739,729 |   |   | 3,663,120 |   |   | (18,298,930 | ) |   |   |   |   | (35,559 | ) |   | (1,379,125 | ) |   | 4,189,235 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock sold, including dividends                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and placement fees                                                                                                   |   |   | 501 |   |   | 5,010,000 |   |   | - |   |   | - |   |   | 1,290,515 |   |   | (1,741,015 | ) |   |   |   |   | - |   |   | - |   |   | 4,559,500 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common stock                                                                        |   |   | (340 | ) |   | (3,400,000 | ) |   | 6,502,448 |   |   | 4,644,307 |   |   | (1,210,414 | ) |   | - |   |   |   |   |   | - |   |   | - |   |   | 33,893 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                                    |   |   | - |   |   | - |   |   | 500,000 |   |   | 200,000 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 200,000 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for services                                                                         |   |   | - |   |   | - |   |   | 956,000 |   |   | 1,419,130 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 1,419,130 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for compensation                                                                                 |   |   | - |   |   | - |   |   | 64,300 |   |   | 54,408 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 54,408 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                   |   |   | - |   |   | - |   |   | 65,712 |   |   | 22,999 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 22,999 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| licensing agreement                                                                                                  |   |   | - |   |   | - |   |   | 3,500,000 |   |   | 1,890,000 |   |   | (3,199,000 | ) |   | - |   |   |   |   |   | - |   |   | - |   |   | (1,309,000 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued on preferred stock not                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| yet converted                                                                                                        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (315,000 | ) |   |   |   |   | - |   |   | - |   |   | (315,000 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options granted                                                                                                |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 1,340,625 |   |   | - |   |   |   |   |   | - |   |   | (1,340,625 | ) |   | - |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collection of stock subscriptions                                                                                    |   |   | - |   |   | - |   |   | - |   |   | 12,500 |   |   | - |   |   | - |   |   |   |   |   | 21,250 |   |   | - |   |   | 33,750 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compentsation                                                                               |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | 1,418,938 |   |   | 1,418,938 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                  |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (6,715,732 | ) |   |   |   |   | - |   |   | - |   |   | (6,715,732 | ) |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1998 (restated)                                                                                  |   |   | 611 |   |   | 6,110,000 |   |   | 36,493,544 |   |   | 23,983,073 |   |   | 1,884,846 |   |   | (27,070,677 | ) |   |   |   |   | (14,309 | ) |   | (1,300,812 | ) |   | 3,592,121 |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.  |   |
| **See note 17 for a detailed breakdown by Series.                                                               |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                  |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                           |   |                 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                                                                                              |   |                 |   |
|                                                                                                                       |   |                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                                     |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                               |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Number of            |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |   |   |
|                                                                                                                       |   | Shares               |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1998 (restated)                                                                                        |   |                 | 611    |   |   | 6,110,000 |   |   | 36,493,544 |   |   | 23,983,073 |   |   | 1,884,846 |   |   | (27,070,677 | ) |   |   |   |   | (14,309 | ) |   | (1,300,812 | ) |   | 3,592,121 |   |   | * |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock issued - satisfaction of debt                                                                              |   |                 | 138    |   |   | 1,380,000 |   |   | - |   |   | - |   |   | (161,348 | ) |   | (492,857 | ) |   |   |   |   | - |   |   | - |   |   | 725,795 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common stock                                                                              |   |                 | (153   | ) |   | (1,530,000 | ) |   | 4,865,034 |   |   | 1,972,296 |   |   | (442,296 | ) |   | - |   |   |   |   |   | - |   |   | - |   |   | - |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                                          |   |                 | -      |   |   | - |   |   | 200,000 |   |   | 60,000 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 60,000 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                                |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                           |   |                 | -      |   |   | - |   |   | 719,442 |   |   | 301,210 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 301,210 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - repayment of debt                                                                                    |   |                 | -      |   |   | - |   |   | 2,974,043 |   |   | 1,196,992 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 1,196,992 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for loan fees                                                                              |   |                 | -      |   |   | - |   |   | 480,000 |   |   | 292,694 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 292,694 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                         |   |                 | -      |   |   | - |   |   | 65,612 |   |   | 124,464 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 124,464 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in satisfaction of                                                                                     |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| licensing agreement payable                                                                                                |   |                 | -      |   |   | - |   |   | 3,500,000 |   |   | 1,890,000 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 1,890,000 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Redeemable preferred stock sold, deemed dividend                                                                           |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (127,117 | ) |   |   |   |   | - |   |   | - |   |   | (127,117 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued-preferred stock not yet converted                                                                        |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (329,176 | ) |   |   |   |   | - |   |   | - |   |   | (329,176 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options granted                                                                                                      |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | 209,625 |   |   | - |   |   |   |   |   | - |   |   | (209,625 | ) |   | - |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred compentsation                                                                                     |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |   | - |   |   | 1,510,437 |   |   | 1,510,437 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                        |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (6,543,292 | ) |   |   |   |   | - |   |   | - |   |   | (6,543,292 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1999 (restated)                                                                                        |   |                 | 596    |   |   | 5,960,000 |   |   | 49,297,675 |   |   | 29,820,729 |   |   | 1,490,827 |   |   | (34,563,119 | ) |   |   |   |   | (14,309 | ) |   | - |   |   | 2,694,128 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.   |
| **See note 17 for a detailed breakdown by Series.                                                                     |
|                                                                                                                       |
|  See accompanying notes to the financial statements.                                                                  |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                     |   |                 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                                                                                        |   |                 |   |
|                                                                                                                 |   |                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                               |   |                 |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                         |   |                 |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Number of            |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |   |   |
|                                                                                                                 |   | Shares               |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1999 (restated)                                                                                  |   |                 | 596    |   |   | 5,960,000 |   |   | 49,297,675 |   |   | 29,820,729 |   |   | 1,490,827 |   |   | (34,563,119 | ) |   |   |   |   | (14,309 | ) |   | - |   |   | 2,694,128 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of convertible debentures                                                                                 |   |                 | -      |   |   | - |   |   | 4,060,398 |   |   | 3,958,223 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 3,958,223 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common, net                                                                         |   |                 | (596   | ) |   | (5,960,000 | ) |   | 45,415,734 |   |   | 7,313,334 |   |   | (648,885 | ) |   | - |   |   |   |   |   | - |   |   | - |   |   | 704,449 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock sold                                                                                                    |   |                 | -      |   |   | - |   |   | 100,000 |   |   | 157,000 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 157,000 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation, net of cancelled shares                                                                            |   |                 | -      |   |   | - |   |   | 137,000 |   |   | (18,675 | ) |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | (18,675 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - repayment of debt                                                                              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and accrued interest                                                                                                 |   |                 | -      |   |   | - |   |   | 5,061,294 |   |   | 1,067,665 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 1,067,665 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in exchange for                                                                                  |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest and loan fees                                                                                               |   |                 | -      |   |   | - |   |   | 7,297 |   |   | 2,408 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 2,408 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                   |   |                 | -      |   |   | - |   |   | 1,281,628 |   |   | 395,810 |   |   | 157,988 |   |   | - |   |   |   |   |   | (13,599 | ) |   | - |   |   | 540,199 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of warrants                                                                        |   |                 | -      |   |   | - |   |   | 150,652 |   |   | 121,563 |   |   | 97,850 |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 219,413 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of note payable with warrants at a discount                                                                 |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | 500,000 |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 500,000 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued-preferred stock not yet converted                                                                  |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (145,950 | ) |   |   |   |   | - |   |   | - |   |   | (145,950 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                  |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (6,531,662 | ) |   |   |   |   | - |   |   | - |   |   | (6,531,662 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2000 (restated)                                                                                  |   |                 | -      |   |   | - |   |   | 105,511,678 |   |   | 42,818,057 |   |   | 1,597,780 |   |   | (41,240,731 | ) |   |   |   |   | (27,908 | ) |   | - |   |   | 3,147,198 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.  |
| **See note 17 for a detailed breakdown by Series.                                                               |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                  |   |                 |   |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                     |   |                 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                                                                                        |   |                 |   |
|                                                                                                                 |   |                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                               |   |                 |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                         |   |                 |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                 |   | Number of            |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |   |   |
|                                                                                                                 |   | Shares               |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2000 (restated)                                                                                  |   |                 | -      |   |   | - |   |   | 105,511,678 |   |   | 42,818,057 |   |   | 1,597,780 |   |   | (41,240,731 | ) |   |   |   |   | (27,908 | ) |   | - |   |   | 3,147,198 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock sold, including dividends                                                                            |   |                 | 500    |   |   | 5,000,000 |   |   | - |   |   | - |   |   | 708,130 |   |   | (708,130 | ) |   |   |   |   | - |   |   | - |   |   | 5,000,000 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock to common, net                                                                         |   |                 | (500   | ) |   | (5,000,000 | ) |   | 5,664,067 |   |   | 5,580,531 |   |   | (708,130 | ) |   | - |   |   |   |   |   | - |   |   | - |   |   | (127,599 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions                                                                    |   |                 | -      |   |   | - |   |   | 3,407,613 |   |   | 3,143,666 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 3,143,666 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                     |   |                 | -      |   |   | - |   |   | 153,500 |   |   | 227,855 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 227,855 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - repayment of debt                                                                              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and accrued interest                                                                                                 |   |                 | -      |   |   | - |   |   | 810,000 |   |   | 1,393,200 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 1,393,200 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of stock options                                                                   |   |                 | -      |   |   | - |   |   | 3,781,614 |   |   | 1,868,585 |   |   | - |   |   | - |   |   |   |   |   | 13,599 |   |   | - |   |   | 1,882,184 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued with exercise of warrants                                                                        |   |                 | -      |   |   | - |   |   | 99,375 |   |   | 119,887 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 119,887 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends accrued-preferred stock                                                                                    |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (422,401 | ) |   |   |   |   | - |   |   | - |   |   | (422,401 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                  |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (9,532,450 | ) |   |   |   |   | - |   |   | - |   |   | (9,532,450 | ) |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2001 (restated)                                                                                  |   |                 | -      |   |   | - |   |   | 119,427,847 |   |   | 55,151,781 |   |   | 1,597,780 |   |   | (51,903,712 | ) |   |   |   |   | (14,309 | ) |   | - |   |   | 4,831,540 |   |   |   |   |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.  |
| **See note 17 for a detailed breakdown by Series.                                                               |
|                                                                                                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                  |   |                 |   |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                           |   |                 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                                                                                              |   |                 |   |
|                                                                                                                       |   |                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                                     |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                               |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Number of            |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |   |   |
|                                                                                                                       |   | Shares               |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2001 (restated)                                                                                        |   |                 | -      |   |   | - |   |   | 119,427,847 |   |   | 55,151,781 |   |   | 1,597,780 |   |   | (51,903,712 | ) |   |   |   |   | (14,309 | ) |   | - |   |   | 4,831,540 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions                                                                          |   |                 | -      |   |   | - |   |   | 11,607,866 |   |   | 6,213,805 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 6,213,805 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                                |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                           |   |                 | -      |   |   | - |   |   | 560,000 |   |   | 294,350 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | (117,600 | ) |   | 176,750 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                        |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (7,997,652 | ) |   |   |   |   | - |   |   | - |   |   | (7,997,652 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2002 (restated)                                                                                        |   |                 | -      |   |   | - |   |   | 131,595,713 |   |   | 61,659,936 |   |   | 1,597,780 |   |   | (59,901,364 | ) |   |   |   |   | (14,309 | ) |   | (117,600 | ) |   | 3,224,443 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions                                                                          |   |                 | -      |   |   | - |   |   | 29,390,708 |   |   | 8,737,772 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 8,737,772 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                                |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                           |   |                 | -      |   |   | - |   |   | 2,007,618 |   |   | 970,653 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | 117,600 |   |   | 1,088,253 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payment of subscriptions receivable                                                                                        |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 14,309 |   |   | - |   |   | 14,309 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss (restated)                                                                                                        |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (8,358,774 | ) |   |   |   |   | - |   |   | - |   |   | (8,358,774 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2003 (restated)                                                                                        |   |                 | -      |   |   | - |   |   | 162,994,039 |   |   | 71,368,361 |   |   | 1,597,780 |   |   | (68,260,138 | ) |   |   |   |   | - |   |   | - |   |   | 4,706,003 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.   |
| **See note 17 for a detailed breakdown by Series.                                                                     |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                        |   |                 |   |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                           |   |                 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                                                                                              |   |                 |   |
|                                                                                                                       |   |                 |   |
| Statements of Stockholders' (Deficit) (Continued)                                                                     |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011*                                                               |   |                 |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                       |   | Number of            |   | Number of |   | Paid-in |   | Development |   |   |   | Subscriptions |   | Deferred |   |   |   |   |   |
|                                                                                                                       |   | Shares               |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   |   |   | Receivable |   | Compensation |   | Total |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2003 (restated)                                                                                        |   |                 | -      |   |   | - |   |   | 162,994,039 |   |   | 71,368,361 |   |   | 1,597,780 |   |   | (68,260,138 | ) |   |   |   |   | - |   |   | - |   |   | 4,706,003 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions                                                                          |   |                 | -      |   |   | - |   |   | 8,630,819 |   |   | 6,541,700 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 6,541,700 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                                |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                           |   |                 | -      |   |   | - |   |   | 734,785 |   |   | 832,950 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 832,950 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exercise of stock options                                                                            |   |                 | -      |   |   | - |   |   | 967,769 |   |   | 492,701 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 492,701 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                   |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (8,402,959 | ) |   |   |   |   | - |   |   | - |   |   | (8,402,959 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2004 (Restated)                                                                                        |   |                 | -      |   |   | - |   |   | 173,327,412 |   |   | 79,235,712 |   |   | 1,597,780 |   |   | (76,663,097 | ) |   |   |   |   | - |   |   | - |   |   | 4,170,395 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions                                                                          |   |                 | -      |   |   | - |   |   | 26,274,893 |   |   | 7,797,807 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 7,797,807 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exchange for services                                                                                |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and compensation                                                                                                           |   |                 | -      |   |   | - |   |   | 285,000 |   |   | 113,850 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 113,850 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - exercise of stock options                                                                            |   |                 | -      |   |   | - |   |   | 13,264 |   |   | 3,404 |   |   | - |   |   | - |   |   |   |   |   | - |   |   | - |   |   | 3,404 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                   |   |                 | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (7,312,918 | ) |   |   |   |   | - |   |   | - |   |   | (7,312,918 | ) |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2005                                                                                                   |   |                 | -      |   | $ | - |   |   | 199,900,569 |   | $ | 87,150,773 |   | $ | 1,597,780 |   | $ | (83,976,015 | ) |   |   |   | $ | - |   | $ | - |   |   | 4,772,538 |   |   |   |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor.   |   |
| **See note 17 for a detailed breakdown by Series.                                                                     |   |
|                                                                                                                       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                        |   |                 |   |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' (Deficit) (Continued)      |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                        |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                        |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                        |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2005                                    |   |   | - |   |   | - |   |   | 199,900,569 |   |   | 87,150,773 |   |   | 1,597,780 |   |   | (83,976,015 | ) |   | - |   |   | - |   |   | 4,772,538 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions           |   |   | - |   |   | - |   |   | 47,776,064 |   |   | 7,409,543 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 7,409,543 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Stock Option Expenses                         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 632,557 |   |   | - |   |   | - |   |   | - |   |   | 632,557 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (7,162,722 | ) |   | - |   |   | - |   |   | (7,162,722 | ) |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2006                                    |   |   | - |   |   | - |   |   | 247,676,633 |   |   | 94,560,316 |   |   | 2,230,337 |   |   | (91,138,737 | ) |   | - |   |   | - |   |   | 5,651,916 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Common stock issued - line of equity transactions     |   |   | - |   |   |  - |   |   | 63,861,405 |   |   | 4,560,415 |   |   |   - |   |   |  - |   |   |    - |   |   |  - |   |   | 4,560,415 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fair Value of Stock Option Expenses                  |   |   |  - |   |   |  - |   |   | - |   |   | - |   |   | 431,313 |   |   |  - |   |   |  - |   |   |  - |   |   | 431,313  |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net loss                                             |   |   |  - |   |   |  - |   |   | - |   |   | - |   |   |  - |   |   | (7,202,322 | ) |   | - |   |   |  - |   |   | (7,202,322 | )  |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Balance at June 30, 2007                             |   |   | -  |   |   |  - |   |   | 311,538,038  |   |   | 99,120,731  |   |   | 2,661,650  |   |   | (98,341,059)  |   |   | - |   |   |  - |   |   | 3,441,322  |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |
| ** See Note 17 for a detailed breakdown by Series.          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' (Deficit) (Continued)      |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                        |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                        |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                        |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2007                                    |   |   | - |   |   | - |   |   | 311,538,038 |   |   | 99,120,731 |   |   | 2,661,650 |   |   | (98,341,059 | ) |   | - |   |   | - |   |   | 3,441,322 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions           |   |   | - |   |   | - |   |   | 13,979,430 |   |   | 530,414 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 7,409,543 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Stock Option Expenses                         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 183,182 |   |   | - |   |   | - |   |   | - |   |   | 183,182 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (4,623,679 | ) |   | - |   |   | - |   |   | (4,623,679 | ) |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2008                                    |   |   | - |   |   | - |   |   | 325,517,468 |   |   | 99,651,145 |   |   | 2,844,832 |   |   | (102,964,738 | ) |   | - |   |   | - |   |   | (468,761 | ) |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions      |   |   | - |   |   |  - |   |   | 158,747,217 |   |   |  1,674,885 |   |   | - |   |   | -  |   |   | -  |   |   | -  |   |   |  1,674,885 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Conversion of Cv Debenture            |   |   |  - |   |   |  - |   |   | 93,958,547 |   |   |  621,220 |   |   | - |   |   | -  |   |   | -  |   |   | -  |   |   |  621,220 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Exercise of Warrants   |   |   |  - |   |   |  - |   |   |  21,755,555 |   |   |  178,778 |   |   | - |   |   | -  |   |   | -  |   |   | -  |   |   |  178,778 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Consulting                            |   |   |  - |   |   |  - |   |   |  5,000,000 |   |   |  55,000 |   |   |  - |   |   | -  |   |   | -  |   |   | -  |   |   |  55,000 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Employees                             |   |   |  - |   |   |  - |   |   |  2,400,000 |   |   |  19,200 |   |   |  - |   |   | -  |   |   | -  |   |   | -  |   |   |  19,200 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Common Stock - Restricted Shares Issued             |   |   |  - |   |   |  - |   |   |  4,000,000 |   |   |  80,000 |   |   |  - |   |   | -  |   |   | -  |   |   | -  |   |   |  80,000 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Stock Option Expenses                    |   |   |  - |   |   |  - |   |   | - |   |   |  - |   |   |  145,577 |   |   | -  |   |   | -  |   |   | -  |   |   |  145,577 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount - FV and BCF for $400,000 Cv Deb.             |   |   |  - |   |   |  - |   |   |  - |   |   |   - |   |   |  400,000 |   |   | -  |   |   | -  |   |   |   |   |   |  400,000 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount - FV and BCF for $400,000 Cv Deb. # 2         |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  92,308 |   |   | -  |   |   | -  |   |   | -  |   |   |  92,308 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repricing of Warrants                                  |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   | 17,000  |   |   | -  |   |   | -  |   |   | -  |   |   | 17,000 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                               |   |                | - |   |   |   - |   |   |  - |   |   |  - |   |   |  - |   |   |  (3,944,429 | )  |   | - |   |   | - |   |   |  (3,944,429 | )  |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance of June 30, 2009                               |   |   |  - |   |   | - |   |   |  611,378,787 |   |   |  102,280,228 |   |   | 3,499,717  |   |   |  (106,909,167 | ) |   | - |   |   | - |   |   |  (1,129,222 | )  |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |
| ** See Note 17 for a detailed breakdown by Series.          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                                               |   |
|                                                                                                                                        |   |
| Statements of Stockholders' (Deficit) (Continued)                                                                                      |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011                                                                                 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |
|                                                                                                                                        |   | Preferred Stock (**) |   | Common Stock |   | Additional |   | During the |   |   |   |   |   |   |   |
|                                                                                                                                        |   | Number of |   | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |   |
|                                                                                                                                        |   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2009                                                                                                                    |   |   | - |   |   | - |   |   | 611,378,787 |   |   | 102,280,228 |   |   | 3,499,717 |   |   | (106,909,167 | ) |   | - |   |   | - |   |   | (1,129,222) |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock issued - Series L(1)                                                                                                        |   |  35 | - |   |   | - |   |   | - |   |   | - |   |   | (10,875 |  ) |   | - |   |   | - |   |   | - |   |   | (10,875) |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions(2)                                                                                        |   |   | - |   |   |  - |   |   | 90,803,568 |   |   |  1,524,764 |   |   | - |   |   | -  |   |   | -  |   |   | -  |   |   |  1,524,764 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Conversion of Cv Debenture                                                                                            |   |   |  - |   |   |  - |   |   | 45,334,856 |   |   |  223,743 |   |   | - |   |   | -  |   |   | -  |   |   | -  |   |   |  223,743 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Exercise of Warrants                                                                                   |   |   |  - |   |   |  - |   |   |  11,180,822 |   |   |  89,444 |   |   | (89,444 | )  |   | -  |   |   | -  |   |   | -  |   |   |  - |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Consulting                                                                                                            |   |   |  - |   |   |  - |   |   |  250,000 |   |   |  2,250 |   |   |  11,250 |   |   | -  |   |   | -  |   |   | -  |   |   |  13,500 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Employees                                                                                                             |   |   |  - |   |   |  - |   |   |  6,150,952 |   |   |  191,790 |   |   |  10,793 |   |   | -  |   |   | -  |   |   | -  |   |   |  202,583 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Add'l Consideration for Loans                                                                                         |   |   |  - |   |   |  - |   |   |  16,625,000 |   |   |  465,500 |   |   |  21,000 |   |   | -  |   |   | -  |   |   | -  |   |   |  486,500 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Collateral for Loans                                                                                                  |   |   |  - |   |   |  - |   |   | 55,363,637 |   |   |  - |   |   |  - |   |   | -  |   |   | -  |   |   | -  |   |   |  - |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Stock Option Expenses                                                                                               |   |   | - |   |   | - |   |   | - |   |   | - |   |   |  588,565 |   |   | -  |   |   | -  |   |   | -  |   |   | 588,565 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount - Add'l Consideration for Loans                                                                                                    |   |   |  - |   |   |  - |   |   |  - |   |   |  - |   |   |  357,000 |   |   | -  |   |   | -  |   |   | -  |   |   |  357,000 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                               |   |                |   |   |   |   - |   |   |  - |   |   |  - |   |   |  - |   |   |  (4,971,715 | )  |   | - |   |   | - |   |   |  (4,971,715 | )  |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance of June 30, 2010(2)                                                                                                                 |   | 35 |   |   |   | - |   |   |  837,087,622 |   |   |  104,777,719 |   |   | 4,388,006  |   |   |  (111,880,882 | ) |   | - |   |   | - |   |   |  (2,715,157 | )  |
|                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |
| (1)Convertible Preferred Shares are reported as a liability and therefore have no value in Stockholders' Equity.                       |   |
| (2)As of June 30, 2010 JH Darbie & Co. is holding 196,431 shares that have been issued but not sold under the Equity Credit Line.  |   |
| ** See Note 17 for a detailed breakdown by Series.                                                                                          |   |
|                                                                                                                                        |   |
| See accompanying notes to the financial statements.                                                                                         |

----

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------|
| (a Development Stage Company)                                                                                                          |
|                                                                                                                                   |
| Statements of Stockholders' (Deficit) (Continued)                                                                                      |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2011                                                                            |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   | Deficit |   |   |   |   |   |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |
|                                                                                                                                   | Preferred Stock (**) |  Common Stock |   | Additional |   | During the |   |   |   |   |   |   |
|                                                                                                                                   | Number of | Number of |   | Paid-in |   | Development |   | Subscriptions |   | Deferred |   |   |
|                                                                                                                                   | Shares |   | Amount |   | Shares |   | Amount |   | Capital |   | Stage |   | Receivable |   | Compensation |   | Total |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2010                                                                                                               |                35 |   |                   - |   |    837,087,622 |   |    104,777,719 |   |     4,388,006 |   |   (111,880,882) |   |                 - |   |                   - |   |      (2,715,157) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock issued - Series L(1)                                                                                                   |              (15) |   |                   - |   |      10,000,000 |   |           150,000 |   |        (24,989) |   |                     - |   |                 - |   |                   - |   |           125,011 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - line of equity transactions(2)                                                                                   |                - |   |                   - |   |      77,928,568 |   |        1,502,193 |   |                 - |   |                     - |   |                 - |   |                   - |   |        1,502,193 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Employees                                                                                                        |                - |   |                   - |   |        4,750,000 |   |           109,250 |   |                 - |   |                     - |   |                 - |   |                   - |   |           109,250 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reduction in Collateral Shares                                                                                                         |                - |   |                   - |   |                     - |   |        1,076,030 |   |                 - |   |                     - |   |                 - |   |                   - |   |        1,076,030 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustment for Collateral Sharers Issued                                                                                               |                - |   |                   - |   |                     - |   |         (324,879) |   |                 - |   |                     - |   |                 - |   |                   - |   |         (324,879) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued - Extinguishment Debt                                                                                              |                - |   |                   - |   |      12,430,734 |   |           112,674 |   |                 - |   |                     - |   |                 - |   |                   - |   |           112,674 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value on Debt to Equity Conversions                                                                                               |                - |   |                   - |   |                     - |   |                     - |   |        771,865 |   |                     - |   |                 - |   |                   - |   |           771,865 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair Value of Stock Option Expenses                                                                                                    |                - |   |                   - |   |                     - |   |                     - |   |        375,703 |   |                     - |   |                 - |   |                   - |   |           375,703 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount - BCF for Southridge Notes                                                                                                    |                - |   |                   - |   |                     - |   |                     - |   |        779,000 |   |                     - |   |                 - |   |                   - |   |           779,000 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount - BCF for JMJ Financial Notes                                                                                                 |                - |   |                   - |   |                     - |   |                     - |   |        201,621 |   |                     - |   |                 - |   |                   - |   |           201,621 |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification of Fair Value of Derivative Securities                                                                                |                - |   |                   - |   |                     - |   |                     - |   |      (864,954) |   |                     - |   |                 - |   |                   - |   |         (864,954) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                               |                - |   |                   - |   |                     - |   |                     - |   |                 - |   |       (5,877,525) |   |                 - |   |                   - |   |      (5,877,525) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011(2)                                                                                                            |                20 |   |                   - |   |    942,196,924 |   |    107,402,987 |   |     5,626,252 |   |   (117,758,407) |   |                 - |   |                   - |   |      (4,729,168) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Convertible Preferred Shares are reported as a liability and therefore have no value in Stockholders' Equity.                      |   |   |   |   |   |   |   |   |
| (2) As of June 30, 2011 JH Darbie & Co. is holding 505,619 shares that have been issued but not sold under the Equity Credit Line. |   |   |   |   |
| ** See Note 19 for a detailed breakdown by Series.                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                                                    |

----

10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                                                   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
| Statement of Cash Flows                                                                                         |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   | From Inception |   |
|                                                                                                            |   |   |   |   |   |   |   | (December 10, |   |
|                                                                                                            |   | Year Ended |   |   | Year Ended |   |   | 1993) to |   |
|                                                                                                            |   | June 30, 2011 |   |   | June 30, 2010 |   |   | June 30, 2011 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   | * |   |
| Net loss                                                                                                        |   | $ | (5,877,525 | ) |   | $ | (4,971,715 | ) |   | $ | (110,910,647 | ) |
| Adjustments to reconcile net loss to net cash                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|   used for operating activities:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|     Depreciation and amortization                                                      |   |   | 100,751 |   |   |   | 144,445 |   |   |   | 3,410,068 |   |
|     (Gain) Loss on sale of fixed assets                                                     |   |   | - |   |   |   | - |   |   |   | (2,794,565 | ) |
|     Extinguishment of debt                                                                  |   |   | (13,010 | ) |   |   | (98,829 | ) |   |   | (543,301 | ) |
|     Inventory valuation adjustment                                                          |   |   | 95,096 |   |   |   | 67,678 |   |   |   | 4,915,445 |   |
|     Amoritization of deferred compensation                                                  |   |   | - |   |   |   |   |   |   |   | 4,064,250 |   |
|     Noncash interest, compensation and consulting services                                  |   |   | 1,913,754 |   |   |   | 1,835,184 |   |   |   | 23,587,430 |   |
|     Fair Value of Stock Option Expenses                                                     |   |   | 375,704 |   |   |   | 588,564 |   |   |   | 2,356,897 |   |
|     (Increase) decrease in accounts and                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|           loans receivable - employees, net                        |   |   | 39,929 |   |   |   | 5,225 |   |   |   | (130,384 | ) |
|      Increase (decrease) in allowance for                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|           doubful account                                          |   |   | (91,482 | ) |   |   | - |   |   |   | 23,500 |   |
|     (Increase) decrease in inventories, net                                                 |   |   | 18,452 |   |   |   | 23,680 |   |   |   | (2,309,428 | ) |
|     (Increase) decrease in prepaid expenses                                                 |   |   | 11,776 |   |   |   | (25,498 | ) |   |   | (49,339 | ) |
|     (Increase) decrease in other assets                                                     |   |   | - |   |   |   | - |   |   |   | (306,618 | ) |
|     Increase (decrease) in accounts payable and                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|           accrued expenses                                         |   |   | 960,397 |   |   |   | (356,644 | ) |   |   | 2,763,407 |   |
|     Increase (decrease) in other current liabilities                                        |   |   | 14,449 |   |   |   | 2,000 |   |   |   | 112,563 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total adjustments                                               |   |   | 3,425,816 |   |   |   | 2,185,805 |   |   |   | 35,099,925 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net cash used for operating activities                          |   |   | (2,451,709 | ) |   |   | (2,785,910 | ) |   |   | (75,810,722 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|      Proceeds from sale of property & equipment                                    |   |   | - |   |   |   | - |   |   |   | 4,390,015 |   |
|      Prototype equipment                                                               |   |   | - |   |   |   | - |   |   |   | (2,799,031 | ) |
|      Capital expenditures                                                              |   |   | - |   |   |   | - |   |   |   | (4,779,405 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net cash used for investing activities                          |   |   | - |   |   |   | - |   |   |   | (3,188,421 | ) |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|      Repayment of capital lease obligation                                             |   |   | - |   |   |   | - |   |   |   | (50,289 | ) |
|      Proceeds from convertible debenture                                               |   |   | - |   |   |   | - |   |   |   | 4,040,000 |   |
|      Proceeds from loan payable                                                        |   |   | 1,201,171 |   |   |   | 1,241,794 |   |   |   | 5,037,994 |   |
|      (Repayment) of loan payable                                                       |   |   | (19,171 | ) |   |   | (141,794 | ) |   |   | (160,964 | ) |
|      Proceeds from issuance of preferred stock                                         |   |   | - |   |   |   | 350,000 |   |   |   | 18,389,500 |   |
|      Proceeds from exercise of stock options                                           |   |   | - |   |   |   | - |   |   |   | 903,989 |   |
|      Net proceeds from issuance of common stock                                        |   |   | 1,385,000 |   |   |   | 1,397,219 |   |   |   | 51,028,048 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|        Net cash provided by financing activities                             |   |   | 2,567,000 |   |   |   | 2,847,219 |   |   |   | 79,188,278 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                            |   |   | 115,291 |   |   |   | 61,309 |   |   |   | 189,135 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                                |   |   | 73,844 |   |   |   | 12,535 |   |   |   | - |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                                      |   | $ | 189,135 |   |   | $ | 73,844 |   |   | $ | 189,135 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. |   |
|                                                                                                            |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                             |   |

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| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                                                   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
| Statement of Cash Flows (Continued)                                                                             |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   | From Inception |   |
|                                                                                                            |   |   |   |   |   |   |   | (December 10, |   |
|                                                                                                            |   | Year Ended |   |   | Year Ended |   |   | 1993) to |   |
|                                                                                                            |   | June 30, 2011 |   |   | June 30, 2010 |   |   | June 30, 2011 |   |
| Supplemental disclosures of cash                                                                                |   |   |   |   |   |   |   |   | * |   |
|   flow information:                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                                                          |   | $ | - |   |   | $ | - |   |   | $ | 215,962 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures of noncash                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|   investing and financing activities:                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock and options                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   in exchange for services                                                                            |   | $ | - |   |   | $ | 11,250 |   |   | $ | 6,317,600 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as loan fees in                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|   connection with loans to the Company                                                                |   | $ | - |   |   | $ | - |   |   | $ | 293,694 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as collateral in                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   connection with loans to the Company                                                                |   | $ | - |   |   | $ | 1,150,000 |   |   | $ | 1,150,000 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as additional consideration                                                            |   |   |   |   |   |   |   |   |   |
|   in connection with loans to the Company                                                             |   | $ | - |   |   | $ | 465,500 |   |   | $ | 465,500 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as satisfaction of                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|   loans payable and accrued interest                                                                  |   | $ | 112,674 |   |   | $ | - |   |   | $ | 3,511,639 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as satisfaction of                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|   certain accounts payable                                                                            |   | $ | - |   |   | $ | 2,250 |   |   | $ | 260,142 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock in                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|   exchange for property and equipment                                                                 |   | $ | - |   |   | $ | - |   |   | $ | 89,650 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock and other current liability                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   in exchange for patent liceensing agreement                                                         |   | $ | - |   |   | $ | - |   |   | $ | 581,000 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock through                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|   exercise of incentive stock options                                                                 |   | $ | - |   |   | $ | - |   |   | $ | 3,117,702 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|   payment for preferred stock dividends                                                               |   | $ | - |   |   | $ | - |   |   | $ | 507,645 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisition of property and equipment                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|   through the issuance of a capital                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|   lease payable                                                                                       |   | $ | - |   |   | $ | - |   |   | $ | 50,289 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| * The numbers presented from inception December 10, 1993 to June 30, 2005 are unaudited by our current auditor. |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                                                             |   |

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IMAGIN

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|                    | Year Ended    | Year Ended    |
|-------------------------|---------------|---------------|
|                    | June 30, 2011 | June 30, 2010 |
| Volatility              | 173.73%       | 173.16%       |
| Risk Free Interest Rate | 5%            | 5%            |
| Expected Term           | 8 yrs         | 8 yrs         |

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| · | A significant adverse change in legal factors or in the business climate                                    |
|--------|-------------------------------------------------------------------------------------------------------------|
| · | An adverse action or assessment by a regulator                                                              |
| · | Unanticipated competition                                                                                   |
| · | Loss of key personnel                                                                                       |
| · | An expectation that all or a significant portion of a deporting unit will be sold or otherwise disposed of. |

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|   | (n) Warranty Reserve |
|--------|----------------------|

|   | The Company established a warranty reserve effective for the fiscal year ending June 30, 2005.  The table below reflects the Warranty Reserve established for the last three fiscal years.  Although the Company tests its product in accordance with its quality programs and processes, its warranty obligation is affected by product failure rates and service delivery costs incurred in correcting a product failure. Should actual product failure rates or service costs differ from the Company’s estimates, which are based on limited historical data, where applicable, revisions to the estimated warranty liability would be required. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|             |   | Year Ended    |   |   | Year Ended    |   |
|------------------|--------|---------------|--------|--------|---------------|--------|
|             |   | June 30, 2011 |   |   | June 30, 2010 |   |
| Warranty Reserve |   | $             | 3,013  |   |          | $      | 3,244 |   |

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|   | (s) Reclassifications |
|--------|-----------------------|

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|                                                                    |   | June 30, |     |
|-------------------------------------------------------------------------|--------|----------|----------|
|                                                                    |   | 2011     |     |   | 2010 |   |
| Raw materials consisting of purchased parts, components and supplies    |   | $        | 508,176  |   |   | $ | 513,556 |   |
| Work-in process including units undergoing final inspection and testing |   |     | 28,943   |   |   |   | 28,943 |   |
| Finished goods                                                          |   |     | 184,443  |   |   |   | 292,611 |   |
|                                                                    |   |     |     |   |   |   |   |   |
| Sub-Total Inventories                                                   |   | $        | 721,562  |   |   | $ | 835,110 |   |
|                                                                    |   |     |     |   |   |   |   |   |
|      Less Inventory Reserve                    |   |     | (399,000 | ) |   |   | (399,000 | ) |
|                                                                    |   |     |     |   |   |   |   |   |
| Total Inventory - Net                                                   |   | $        | 332,562  |   |   | $ | 436,110 |   |

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|                                             |   | June 30, |       |
|--------------------------------------------------|--------|----------|------------|
|                                             |   | 2011     |       |   | 2010 |   |
| Furniture and fixtures                           |   | $        | 257,565    |   |   | $ | 257,565 |   |
| Building and land (See Note 8)                   |   |     | -          |   |   |   | - |   |
| Computers, equipment and software                |   |     | 426,873    |   |   |   | 426,873 |   |
| CTLM® software costs                        |   |     | 352,932    |   |   |   | 352,932 |   |
| Trade show equipment                             |   |     | 298,400    |   |   |   | 298,400 |   |
| Clinical equipment                               |   |     | 447,462    |   |   |   | 440,937 |   |
| Laboratory equipment                             |   |     | 212,560    |   |   |   | 212,560 |   |
|                                             |   |     |       |   |   |   |   |   |
| Total Property & Equipment                   |   |     | 1,995,792  |   |   |   | 1,989,267 |   |
|    Less: accumulated depreciation |   |     | (1,834,079 | ) |   |   | (1,767,504 | ) |
|                                             |   |     |       |   |   |   |   |   |
| Total Property & Equipment - Net             |   | $        | 161,713    |   |   | $ | 221,763 |   |

|   | Furniture, fixtures, clinical, computers, laboratory  |                |
|--------|-------------------------------------------------------|---------------------|
|   |     equipment and trade show equipment | 5-7 years           |
|   | Building                                              |  40 years      |
|   | CTLM® software costs                             |   5 years |

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|                                                                 |   | June 30, |    |
|----------------------------------------------------------------------|--------|----------|---------|
|                                                                 |   | 2011     |    |   | 2010 |   |
|                                                                 |   |     |    |   |   |   |
| Patent license agreement, net of accumulated                         |   |     |    |   |   |   |
|    amortization of $444,294 and $410,118 respectively |   | $        | 136,706 |   |   | $ | 170,882 |   |
|                                                                 |   |     |    |   |   |   |   |   |
| Totals                                                               |   | $        | 136,706 |   |   | $ | 170,882 |   |

|                                             |   | June 30, |      |
|--------------------------------------------------|--------|----------|-----------|
|                                             |   | 2011     |      |   | 2010 |   |
|                                             |   |     |      |   |   |   |
| Accounts payable - trade                         |   | $        | 877,449   |   |   | $ | 894,432 |   |
| Accrued tangible personal property taxes payable |   |     | 6,000     |   |   |   | 6,000 |   |
| Accrued compensated absences                     |   |     | 53,063    |   |   |   | 47,529 |   |
| Accrued wages payable and payroll taxes          |   |     | 1,287,800 |   |   |   | 498,424 |   |
| Other accrued expenses                           |   |     | 261,823   |   |   |   | 92,363 |   |
|                                             |   |     |      |   |   |   |   |   |
| Totals                                           |   | $        | 2,486,135 |   |   | $ | 1,538,748 |   |

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|              |   | June 30, |    |
|-------------------|--------|----------|---------|
|              |   | 2011     |    |   | 2010 |   |
|              |   |     |    |   |   |   |
| Customer deposits |   | $        | 112,563 |   |   | $ | 98,114 |   |
|              |   |     |    |   |   |   |   |   |
| Total             |   | $        | 112,563 |   |   | $ | 98,114 |   |

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| §   | $300,000 paid to Borrower within 2 business days of execution and closing of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of Definitive Proxy to increase authorized shares to 2,000,000,000 or more. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of effective increase in authorized shares to 2,000,000,000 or more. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| §   | $100,000 paid to Borrower within 5 business days of filing of registration statement, and that registration statement must be filed no later than 10 days from the effective increase of authorized shares. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $400,000 paid to Borrower within 5 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $300,000 paid to Borrower within 90 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $300,000 paid to Borrower within 150 business days of notice of effective registration statement, and that registration statement must be effective no later than 120 days from the execution of the agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the Conversion Price calculation on Borrower’s common stock must yield a Conversion Price equal to or greater than $0.015 per share (based on the Conversion Price calculation, regardless of whether a conversion is actually completed or not). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, the total dollar trading volume of Borrower’s common stock for the previous 23 trading days must be equal to or greater than $1,000,000.  The total dollar volume will be calculated by removing the three highest dollar volume days and summing the dollar volume for the remaining 20 trading days. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | At the time of each payment interval, there shall not exist an event of default as described within any of the agreements between Borrower and Holder. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |
|---------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|
|                      |   | Total  |    |   | 2012   |   |    | 2013   |   |   | 2014    |   |   | 2015   |   |
| Capital Lease Obligations |   | $      | 3,394   |   |   | $      | 3,394   |   |   | $      | -       |   |   | $      | -      |   |   | $ | - |   |
|                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Operating Lease –   |   | $      | 292,564 |   |   | $      | 137,773 |   |   | $      | 143,273 |   |   | $      | 11,518 |   |   | $ | - |   |
| Fort Lauderdale Business  |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Plaza Associates(i)       |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
|                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Additional Space(ii)      |   | $      | 122,273 |   |   | $      | 47,700  |   |   | $      | 59,243  |   |   | $      | 15,329 |   |   |   |   |   |

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|   | 1.  Forgiveness of approximately $725,795 of accrued interest (dividends) in connection with the Series B Convertible Preferred stock.  The Company recorded the forgiveness of the accrued interest (dividends) by reducing the accrual along with a reduction in the accumulated deficit. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.  Settlement of all litigation concerning the Series B Convertible Preferred stock. |
|--------|-------------------------------------------------------------------------------------------------|

|   | 3.  Cancellation of 112,500 warrants that were issued with the Series B Convertible Preferred stock. |
|--------|----------------------------------------------------------------------------------------------------------------|

|   | 4.  A limitation on the owner(s) of the Series B Convertible Preferred stock to ownership of not more than 4.99% of the Company’s outstanding common stock at any one time. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                                                                                        |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (a Development Stage Company)                                                                                                                           |   |
|                                                                                                                                                    |   |
| Notes to Financial Statements (Continued)                                                                                                               |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (19) COVERTIBLE PREFERRED STOCK (Continued)                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                    |   | Series A |   |   | Series B |   |   | Series C |   |   | Series D |   |   | Series E |   |   | Series F |   |   | Series H |   |   | Series I |   |   | Series K |   |   | Series L |   |   | Total |   |
|                                                                                                                                                    |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |
| Balance at June 30, 1995                                                                                                                                |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Series A                                                                                                                                        |   |   | 4,000 |   |   |   | 3,600,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4,000 |   |   |   | 3,600,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series A conversion                                                                                                                                     |   |   | (1,600 | ) |   |   | (1,440,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,600 | ) |   |   | (1,440,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1996                                                                                                                                |   |   | 2,400 |   |   |   | 2,160,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,400 |   |   |   | 2,160,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Series B                                                                                                                                        |   |   |   |   |   |   |   |   |   |   | 450 |   |   |   | 4,500,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 450 |   |   |   | 4,500,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series A conversion                                                                                                                                     |   |   | (2,400 | ) |   |   | (2,160,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (2,400 | ) |   |   | (2,160,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1997                                                                                                                                |   |   | - |   |   |   | - |   |   |   | 450 |   |   |   | 4,500,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 450 |   |   |   | 4,500,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of preferred stock                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    (Series C - H)                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 210 |   |   |   | 2,100,000 |   |   |   | 54 |   |   |   | 540,000 |   |   |   | 54 |   |   |   | 540,000 |   |   |   | 75 |   |   |   | 750,000 |   |   |   | 108 |   |   |   | 1,080,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 501 |   |   |   | 5,010,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (210 | ) |   |   | (2,100,000 | ) |   |   | (25 | ) |   |   | (250,000 | ) |   |   | (30 | ) |   |   | (300,000 | ) |   |   | (75 | ) |   |   | (750,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (340 | ) |   |   | (3,400,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1998                                                                                                                                |   |   | - |   |   |   | - |   |   |   | 450 |   |   |   | 4,500,000 |   |   |   | - |   |   |   | - |   |   |   | 29 |   |   |   | 290,000 |   |   |   | 24 |   |   |   | 240,000 |   |   |   | - |   |   |   | - |   |   |   | 108 |   |   |   | 1,080,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 611 |   |   |   | 6,110,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Series I                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 138 |   |   |   | 1,380,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 138 |   |   |   | 1,380,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock                                                                                                                           |   |   |   |   |   |   |   |   |   |   | (60 | ) |   |   | (600,000 | ) |   |   |   |   |   |   |   |   |   |   | (29 | ) |   |   | (290,000 | ) |   |   | (24 | ) |   |   | (240,000 | ) |   |   |   |   |   |   |   |   |   |   | (40 | ) |   |   | (400,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (153 | ) |   |   | (1,530,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 1999                                                                                                                                |   |   | - |   |   |   | - |   |   |   | 390 |   |   |   | 3,900,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 68 |   |   |   | 680,000 |   |   |   | 138 |   |   |   | 1,380,000 |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | 596 |   |   |   | 5,960,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock, net                                                                                                                      |   |   |   |   |   |   |   |   |   |   | (390 | ) |   |   | (3,900,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (68 | ) |   |   | (680,000 | ) |   |   | (138 | ) |   |   | (1,380,000 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (596 | ) |   |   | (5,960,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2000                                                                                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Series K                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 50 |   |   |   | 5,000,000 |   |   |   |   |   |   |   |   |   |   |   | 50 |   |   |   | 5,000,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (50 | ) |   |   | (5,000,000 | ) |   |   |   |   |   |   |   |   |   |   | (50 | ) |   |   | (5,000,000 | ) |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2001                                                                                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale of Series L(1)                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 35 |   |   |   | 350,000 |   |   |   | 35 |   |   | $ | 350,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2010                                                                                                                                |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   |   |   |   | $ | - |   |   |   | 35 |   |   |   | 350,000 |   |   |   | 35 |   |   | $ | 350,000 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion of preferred stock                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (15) |   |   |   | (150,000) |   |   |   | (15) |   |   |   | (150,000) |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011                                                                                                                           |   |   |  - |   |   |   | - |   |   |   | -  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 20  |   |   |   | 200,000 |   |   |   | 20  |   |   |   | 200,000  |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additional information:                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount off market price                                                                                                                               |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 18 | % |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 30 | % |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 25 | % |   |   |   |   |   |   | 12.5 | % |   |   |   |   |   |   | 58.63 | % |   |   |   |   |   |   |   |   |
| Fair market value-issue rate                                                                                                                            |   |   |   |   |   | $ | 8.31 |   |   |   |   |   |   | $ | 3.25 |   |   |   |   |   |   | $ | 1.63 |   |   |   |   |   |   | $ | 0.99 |   |   |   |   |   |   | $ | 1.07 |   |   |   |   |   |   | $ | 1.24 |   |   |   |   |   |   | $ | 0.57 |   |   |   |   |   |   | $ | 0.38 |   |   |   |   |   |   | $ | 1.13 |   |   |   |   |   |   | $ | 0.0211 |   |   |   |   |   |   |   |   |   |
| Deemed preferred stock dividend                                                                                                                         |   |   |   |   |   | $ | 1,335,474 |   |   |   |   |   |   | $ | 998,120 |   |   |   |   |   |   | $ | 705,738 |   |   |   |   |   |   | $ | 182,433 |   |   |   |   |   |   | $ | 182,250 |   |   |   |   |   |   | $ | 318,966 |   |   |   |   |   |   | $ | 351,628 |   |   |   |   |   |   | $ | 492,857 |   |   |   |   |   |   | $ | 708,130 |   |   |   |   |   |   | $ | 10,875 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (Continued) |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)The Series L Convertible Preferred Stock was initially issued as collateral for a short-term loan and was converted by the holder on March 31, 2010. |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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10-K Financial Table of Contents

|                                        |              | Series L Convertible |              |
|---------------------------------------------|-------------------|----------------------|-------------------|
| Range of Input Variables                    | JMJ Notes         | Preferred Stock      | Southridge Notes  |
| Stock price                                 | $.015 to $.026    | $.015 to $.03        | $.015 to $.037    |
| Exercise Price                              | $.011 to $.0185   | $.02                 | $.01              |
| Expected Term                               | 2.67 to 3 years   | .17 to 1.5 years     | .08 to .38 years  |
| Volatility                                  | 174.8% to 261.98% | 147.19% to 192.97%   | 24.61 % to 46.18% |
| Discount rate – Bond Equivalent Yield | .03% to .012%     | .03% to .12%         | .02% to .03%      |

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|                         | Incentive Stock Options                                                   |                                          | Non Statutory Stock Options |
|------------------------------|---------------------------------------------------------------------------|-----------------------------------------------|-----------------------------|
|                         | Shares                                                                    | Wtd. Avg.  Price                    |                        | Shares | Wtd. Avg.  Price |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1994 |        -0-                             |                                          |                        |        -0- |   |
|    Granted    |         75,000                    |     $ 1.40                |                        |    1,500,000 | $ 1.12 |
|    Exercised  |             - |                                          |                        |             - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1995 |         75,000                    |       1.40      |                        |    1,500,000 |    1.12 |
|    Granted    |       770,309                               |       1.66      |                        |       750,000 |    1.44 |
|    Exercised  |      (164,956)                                   |        .92 |                        |   (1,800,000) |    1.50 |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1996 |       680,353                               |       1.81      |                        |       450,000 |      .13 |
|    Granted    |       371,377                               |       3.27      |                        |       750,000 |    3.88 |
|    Exercised  |      (395,384)                                   |       1.10      |                        |             - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1997 |       656,346                               |       3.07      |                        |    1,200,000 |    2.47 |
|    Granted    |       220,755                               |       1.95      |                        |       750,000 |    2.75 |
|    Exercised  |             - |                                          |                        |        (65,712) |      .35 |
|    Canceled   |      (175,205)                                   |       4.25      |                        |             -       |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1998 |       701,896                               |  2.42                                    |                        |   1,884,288 |     2.66 |
|    Granted    |       786,635                               |    .48                         |                        |      750,000 |     .43 |
|    Exercised  |             - |                                          |                        |      (65,612) |     .35 |
|    Canceled   |        (82,500)                        |  3.37                                    |                        |           - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 1999 |    1,406,031                                               |    .53 **                      |                        |   2,568,676 |    2.24 |
|    Granted    |    3,139,459                                               |    .34                         |                        |            - |   |
|    Exercised  |      (770,702)                                   |    .37                         |                        |     (318,676) |    .35 |
|    Canceled   |        (64,334)                        |    .47                         |                        |            - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 2000 |    3,710,454                                               |    .42                         |                        |   2,250,000 |  2.35 |
|    Granted    |    1,915,700                                               |  2.59                                    |                        |            - |   |
|    Exercised  |   (3,030,964)                                                   |    .32                         |                        |     (750,000) |    .31 |
|    Canceled   |      (279,982)                                   |    .60                         |                        |  (1,500,000) |  2.75 |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 2001 |    2,315,208                                               |  2.38                                    |                        |            - |   |
|    Granted    |    6,839,864                                               |    .68                         |                        |            - |   |
|    Exercised  |             - |                                          |                        |            - |   |
|    Canceled   |   (2,695,482)                                                   | 1.17                                          |                        |            - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 2002 |    6,459,590                                               |    .85                         |                        |            - |   |
|    Granted    |    1,459,705                                               |    .38                         |                        |            - |   |
|    Exercised  |             - |                                          |                        |            - |   |
|    Canceled   |       (56,788)                              |    .74                         |                        |            - |   |
|                         |                                                                      |                                          |                        |   |   |
| Outstanding at June 30, 2003 |   7,862,507                                                     |    .76                         |                        |            - |   |
|    Granted    |   1,576,620                                                     |  1.12                                    |                        |        31,748 |    .69 |
|    Exercised  |    (517,769)                                               |    .44                         |                        |            - |   |
|    Canceled   |      (97,525)                                    |    .78                         |                        |            - |   |
|                         |                                                                      |                                          |                        |   |   |
|                         |                                                                      |                                          |                        |   |   |

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10-K Financial Table of Contents

| Outstanding at June 30, 2004       |    8,823,833                                              |  .84             |   |         31,748                               |  .69         |
|------------------------------------|---------------------------------------------------------------------|-----------------------|--------|---------------------------------------------------------------------------------|------------------------|
|     Granted         |            -      |                  |   |    4,253,159                                                          | .34                    |
|     Exercised       |       (13,264)                             |  .26             |   |             -            |                   |
|     Canceled        |     (142,891)                                        |  .68             |   |             -            |                   |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2005       |   8,667,678                                               |    .98 |   |   4,284,907                                                           |    .34  |
|    Granted          |            - |                  |   |      532,855                                           |    .18  |
|    Exercised        |            - |                  |   |            -             |                   |
|    Canceled         |    (254,277)                                         |    .74 |   |      (23,100)                                          |    .26  |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2006  |    8,413,401                                         |  .96             |   |   4,794,662                                                                |   .32        |
|    Granted          |            -      |                  |   |   3,927,437                                                                |   .10        |
|    Exercised        |            - |                  |   |            -             |                   |
|    Canceled         |       (4,804)                         |    .70 |   |     (131,684)                                               |    .16  |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2007       |     8,408,597                                   |   .96       |   |     8,590,415                                               |    .22  |
|    Granted          |            - |                  |   |     2,336,526                                               |    .05  |
|    Exercised        |            - |                  |   |              - |                   |
|    Canceled         |        (29,750)                  |   .60       |   |    (2,707,852)                                                   |    .14  |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2008       |     8,378,847                                   |   .90       |   |     8,219,089                                               |    .20  |
|    Granted          |            - |                  |   |     7,123,300                                               |    .01  |
|    Exercised        |            - |                  |   |              - |                   |
|    Canceled         |   (1,094,655)                                             |   .60       |   |      (495,846)                                         |    .18  |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2009       |     7,284,152                                   |   .95       |   |   14,846,543                                                          |   .20        |
|    Granted          |            - |                  |   |   18,600,000                                                          |    .05  |
|    Exercised        |            - |                  |   |              - |                   |
|    Canceled         |      (230,913)                             |   .79       |   |      (203,769)                                         |    .08  |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2010       |     7,053,239                                   |  1.02            |   |   33,242,774                                                          |   .08        |
|    Granted               |            -      |                  |   |     2,200,000                                                    |    .02  |
|    Exercised             |            -      |                  |   |              -      |                   |
|    Canceled              |   (1,480,689)                                             |  2.11            |   |   (4,115,319)                                                              |  .27              |
|                               |                                                                |                  |   |                                                                            |                   |
| Outstanding at June 30, 2011  |    5,572,550                                         |   .73            |   |   31,327,455                                                               |   .05             |

| ** On June 25, 1999, the exercise price of 502,225 outstanding incentive stock options was restated to $.60 per share.  The Company has recorded compensation of $330,569 during the fiscal year ended June 30, 1999 as a result of this re-pricing, in accordance with the guidance provided by ASC 718. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Director Plan: |
|----------------|

|                         | Incentive Stock Options                                       |                  | Non Statutory Stock Options |
|------------------------------|---------------------------------------------------------------|-----------------------|-----------------------------|
|                         | Shares                                                        | Wtd. Avg. Price       |                        | Shares | Wtd. Avg.  Price |
|                         |                                                          |                  |                        |   |   |
| Outstanding at June 30, 2000 |          -0-     |                  |                        |           - |   |
|    Granted    |      150,000                         |   $.65      |                        |           - |   |
|    Exercised  |           - |                  |                        |           - |   |
|    Canceled   |           - |                  |                        |           - |   |
|                         |                                                          |                  |                        |   |   |
| Outstanding at June 30, 2001 |      150,000                         |    .65 |                        |           - |   |
|    Granted    |      300,000                         |    .55 |                        |           - |   |
|    Exercised  |           - |                  |                        |           - |   |
|    Canceled   |           - |                  |                        |           - |   |
|                         |                                                          |                  |                        |   |   |

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10-K Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC. |
|----------------------------------|

| Director Plan (Continued) |
|---------------------------|

| Outstanding at June 30, 2002       |      450,000                               | .58                   |   |              -           |                  |
|------------------------------------|---------------------------------------------------------------------|-----------------------|--------|---------------------------------------------------------------------------------|-----------------------|
|     Granted         |      400,000                                    |  .18        |   |              - |                  |
|     Exercised       |            -      |                  |   |              -      |                  |
|     Canceled        |            -      |                  |   |              -           |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2003       |      850,000                               |    .40 |   |              - |                  |
|    Granted          |      100,000                               |  1.07            |   |        700,000                               |    .76 |
|    Exercised        |    (450,000)                                         |    .58 |   |              - |                  |
|    Canceled         |           -       |                  |   |              - |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2004       |      500,000                               |    .39 |   |        700,000                               |    .76 |
|    Granted          |            - |                  |   |        800,000                               |    .35 |
|    Exercised        |            - |                  |   |              - |                  |
|    Canceled         |            - |                  |   |              - |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2005       |      500,000                               |    .39 |   |     1,500,000                                               |    .54 |
|    Granted          |            - |                  |   |        800,000                               |    .14 |
|    Exercised        |            - |                  |   |              - |                  |
|    Canceled         |            - |                  |   |              - |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2006       |      500,000                               |    .39 |   |     2,300,000                                               |    .40 |
|    Granted          |            - |                  |   |        800,000                               |    .08 |
|    Exercised        |            - |                  |   |              - |                  |
|    Canceled         |            - |                  |   |              - |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2007       |      500,000                               |    .39 |   |     3,100,000                                               |    .32 |
|    Granted          |            - |                  |   |        600,000                               |    .05 |
|    Exercised        |            - |                  |   |              - |                  |
|    Canceled         |            - |                  |   |              - |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2008       |      500,000                               |    .39 |   |     3,700,000                                               |    .27 |
|    Granted          |            - |                  |   |            -             |                  |
|    Exercised        |            - |                  |   |            -             |                  |
|    Canceled         |            - |                  |   |            -             |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2009       |      500,000                               |    .39 |   |     3,700,000                                               |    .27 |
|    Granted          |            - |                  |   |            -             |                  |
|    Exercised        |            - |                  |   |            -             |                  |
|    Canceled         |            - |                  |   |            -             |                  |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2010       |      500,000                               |    .39 |   |     3,700,000                                               |    .27 |
|    Granted          |            -      |                  |   |            -             |                  |
|    Exercised             |            - |                  |   |            -                  |                  |
|    Canceled         |    (500,000)                                              |  .39             |   |    (3,700,000)                                                        |  .27             |
|                               |                                                                |                  |   |                                                                            |                  |
| Outstanding at June 30, 2011  |            -      |                  |   |            -                  |                  |

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| IMAGING DIAGNOSTIC SYSTEMS, INC. |
|----------------------------------|

|                   | June 30, 2011                                                                                |   | June 30, 2010                                     |
|------------------------|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
| Employee ISO           |     5,572,550                                                            |   |     7,053,239                 |
| Director ISO           |           -       |   |        500,000 |
| Employee Non-Statutory |   28,906,923                                                                       |   |     23,442,789                |
| Director Non-Statutory |     -                                      |   |     3,700,000                 |
|                   |                                                                                         |   |                                              |
| Total                  |   34,479,473                                                                       |   |   34,696,028                            |

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| (22) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (22) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (22) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (22) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (22) | STOCK OPTIONS (Continued) |
|------|---------------------------|

|            |       |   | Outstanding options |   |       | Exercisable options |   |
|-----------------|------------|--------|---------------------|--------|------------|---------------------|--------|
|            |       |   |                |   |       | Weighted            |   |   |   |   |   |   |   |   |   |   |
|            |       |   |                |   |       | average             |   |   |   |   |   |   |   |   |   |   |
| Range of        |       |   |                |   |       | remaining           |   |   | Weighted |   |   |   |   |   | Weighted |   |
| exercise prices |       |   | Shares              |   |       | life (years)        |   |   | avg. price |   |   | Shares |   |   | avg. price |   |
| $               | .01 - 1.25 |   |                |   | 36,900,004 |                |   |   | 7.25 |   |   | $ | .15 |   |   |   | 34,479,473 |   |   | $ | .19 |   |

| (24) | FAIR VALUE OF FINANCIAL INSTRUMENTS |
|------|-------------------------------------|

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|                                 |   |                                                        |   |                                    |   |                                 |   |                |     |   |   |     |   |
|--------------------------------------|--------|-------------------------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------|--------|---------------------|----------|--------|--------|----------|--------|
|                                 |   | QuotedPrices inActiveMarkets forIdenticalInstrumentsLevel 1 |   | SignificantOtherObservableInputsLevel 2 |   | SignificantUnobservableInputsLevel 3 |   | Assets atFair Value |     |
|                                 |   |                                                        |   |                                    |   |                                 |   |                |     |
| Liabilities:                         |   |                                                        |   |                                    |   |                                 |   |                |     |   |   |     |   |
| Series L Convertible Preferred Stock |   | $                                                           |   |                                    | $      |                                 |   | $                   | (200,000 | )      | $      | (200,000 | )      |
| Series L Accrued Dividend Payable    |   |                                                        |   |                                    |   |                                 |   |                | (35,864  | )      |   | (35,864  | )      |
| Derivative Liability                 |   |                                                        |   |                                    |   |                                 |   |                | (794,072 | )      |   | (794,072 | )      |

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Item 9.  
Changes 

Item 9A.  
Controls 

| 1.   | We do not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the selection and application of U.S. GAAP and SEC reporting requirements commensurate with our financial reporting requirements. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | We do not maintain sufficient policies and procedures to prevent and/or detect material misstatements over the valuation and recording of derivative securities or beneficial conversion rights of debt and equity instruments. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Implement changes to our internal control over financial reporting to ensure that we properly record and calculate derivative securities and beneficial conversion rights of debt and equity instruments. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Our plan is to: |
|--------|-----------------|

| ·   | Either hire additional accounting personnel or employ third party consultants to assess our current deficiencies and to formulate recommendations and implement them and overall financial reporting controls to assure compliance with GAAP and SEC requirements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We anticipate that we will be able to complete these remediation efforts by the end our next fiscal year-end of June 30, 2012. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

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Item 9B.  
Other 

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Item 10.  
Directors

|   |  | the program is designed to achieve our goals of promoting financial and operational success by attracting, motivating and facilitating the retention of key employees with outstanding talent and ability; and |
|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  | the program adequately rewards performance which is tied to creating stockholder value.                                                                                                                        |
|   |  | Our current executive compensation program is based on two components, which are designed to be consistent with our compensation philosophy: (1) base salary and (2) grants of stock options.                  |

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|   | • | the executive’s position with us and total compensation package;           |
|--------|---------|----------------------------------------------------------------------------------|
|   | • | the executive’s performance of his or her individual responsibilities; and |
|   | • | the executive’s contribution to the success of our financial performance.  |

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| Name                  | Age    | Position                        | Year Elected or Appointed |
|-----------------------|--------|---------------------------------|---------------------------|
|                  |   |                            |                      |
| Linda B. Grable       | 74     | Chief Executive Officer and     | 2008                      |
|                  |   | Chairman of the Board           |                      |
|                  |   |                            |                      |
| Allan L. Schwartz     | 69     | Executive Vice-President, Chief | 1994                      |
|                  |   | Financial Officer and Director  |                      |
|                  |   |                            |                      |
| Deborah O’Brien | 47     | Senior Vice-President           | 2003                      |
|                  |   |                            |                      |
| David Schmidt         | 48     | Director                        | 2011                      |

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Item 11.

|                              |   |                                        |                                              |                                    |                                            |                                                                                                          | Change in                                                                                                     |                                                                                                                |                                                                |
|-----------------------------------|--------|---------------------------------------------|---------------------------------------------------|-----------------------------------------|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          | Pension Value                                                                                                 |                                                                                                                |                                                                |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          | and                                                                                                           |                                                                                                                |                                                                |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          | Nonqualified                                                                                                  |                                                                                                                |                                                                |
|                              |   |                                        |                                              |                                    |                                            | Non-Equity                                                                                                    | Deferred                                                                                                      |                                                                                                                |                                                                |
|                              |   |                                        |                                              | Stock                                   | Option                                          | Incentive Plan                                                                                                | Compensation                                                                                                  | All other                                                                                                           |                                                                |
| Name and                          |   | Salary                                      | Bonus                                             | Awards                                  | Awards                                          | Compensation                                                                                                  | Earnings                                                                                                      | Compensation                                                                                                        | Total                                                               |
| Principal Position                | Year   | ($)(5)                                      | ($)                                               | ($)(6)                                  | ($)(7)                                          | ($)                                                                                                           | ($)                                                                                                           | ($)                                                                                                                 | ($)                                                                 |
| Linda B. Grable                   | 2011   |       168,000 |         - |     5,750           |    109,375                       |                   - |                   - |                    - |           283,125 |
| CEO and COB(1)(2)                 | 2010   |       156,000 |         - |     5,000           |    190,625                       |                   - |                   - |                    - |           351,625 |
|                              | 2009   |       143,878 |         - |       800 |      60,333            |                   - |                   - |                    - |           205,011 |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          |                                                                                                          |                                                                                                                |                                                                |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          |                                                                                                          |                                                                                                                |                                                                |
| Allan L. Schwartz                 | 2011   |       192,400 |         - |     5,750           |    109,375                       |                   - |                   - |                    - |           307,525 |
| Exec V.P.,CFO and Director(1),(3) | 2010   |       192,400 |         - |     5,000           |    190,625                       |                   - |                   - |                    - |           388,025 |
|                              | 2009   |       188,237 |         - |       800 |      31,667            |                   - |                   - |                    - |           220,704 |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          |                                                                                                          |                                                                                                                |                                                                |
|                              |   |                                        |                                              |                                    |                                            |                                                                                                          |                                                                                                          |                                                                                                                |                                                                |
| Deborah O'Brien                   | 2011   |       138,000 |                                              |     5,750           |    109,375                       |                   - |                   - |                    - |           253,125 |
| Senior Vice- President(1),(4)     | 2010   |       105,859 |         - |     5,000           |    190,625                       |                   - |                   - |                    - |           301,484 |
|                              | 2009   |       137,832 |         - |       800 |        3,109 |                   - |                   - |                    - |           141,741 |

| (1) | All Named Executive Officers receive reimbursement for auto expense in the amount of $500 per month.  However, during f/y 2011 and 2010 the Executive Officers agreed to accrue various monthly auto expenses until a time where the Company secures additional financing.  During f/y 2009 the Executive Officers agreed to accrue all monthly auto expenses until a time where the Company secures additional financing.  The Company secured the additional financing and paid the Executive Officers all of their accrued auto expense from f/y 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Salary recorded for f/y 2011 and 2010 includes base salary of $168,000.  Effective January 1, 2010, Ms. Grable’s salary increased from $144,000 to $168,000.   Salary recorded for f/y 2009 includes base salary of $144,000.  Previously, from January 1, 2009 through June 30, 2009, Ms. Grable deferred $39,000 of her salary which was accrued until such time as the Company secures additional financing.  The Company secured the additional financing and Ms. Grable was paid the $39,000 of deferred salary in f/y 2010.  On April 16, 2008, Ms. Grable came out of retirement and rejoined the company as Chairman of the Board and CEO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3) | Salary recorded for f/y 2011 and 2010 includes base salary of $192,400.  Previously, from January 1, 2009 through June 30, 2009, Mr. Schwartz deferred $52,108 of his salary which was accrued until such time as the Company secures additional financing.  The Company secured the additional financing and Mr. Schwartz was paid the $52,108 of deferred salary in f/y 2010.  Salary recorded for f/y 2009 includes base salary of $192,400.  From July 1, 2008 through July 31, 2008, Mr. Schwartz deferred $4,008 of his salary until a time where the Company secures additional financing. Salary recorded for f/y 2008 includes base salary of $179,142 plus $6,660 vacation pay.  FromApril 1, 2008 through June 30, 2008, Mr. Schwartz deferred $12,025 of his salary until a time where the Company secures additional financing.  As of June 30, 2011, Mr. Schwartz is owed a total of $16,033 of his salary from previous fiscal years.                                                                                                                                                                                                                                                                              |
| (4) | Salary recorded for f/y 2011 and 2010 includes base salary of $138,000.  However, Ms. O’Brien took a temporary leave of absence during f/y 2010 and was only paid $105,859.  Previously, from January 1, 2009 through June 30, 2009, Ms. O’Brien deferred $37,375 of her salary which was accrued until such time as the Company secures additional financing.  The Company secured the additional financing and Ms. O’Brien was paid the $37,375 of deferred salary in f/y 2010.  Salary recorded for f/y 2009 includes base salary of $138,000.  Salary recorded for f/y 2008 includes base salary of $135,342 plus $4,246 vacation pay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (5) | During the third and fourth quarter of f/y 2009, the Executive Officers were paid a portion of their respective salaries with the balance due accrued until such time as the Company secured additional funds.  The Company secured the additional financing and all three Executive Officers were paid their deferred salary in f/y 2010 except Mr. Schwartz is owed a total of $16,033 of his salary from previous fiscal years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (6) | During September 2010, 250,000 shares of shares of common stock were issued as a bonus to all Company employees.  However, the executive officers’ shares were issued with a restrictive legend while the other employees’ shares were issued without restrictive legend due to the de-minimus size of the issuance.  Compensation expense of $5,750 per employee was recorded as the fair market value of the common stock on the date of issuance was $.023 per share.  During December 2009, 250,000 shares of common stock were issued as a bonus to all Company employees.  However, the executive officers’ shares were issued with a restrictive legend while the otheremployees’ shares were issued without restrictive legend due to the de-minimus size of the issuance.  Compensation expense of $5,000 per employee was recorded as the fair market value of the common stock on the date of issuance was $.02 per share.  During March 2009, 100,000 shares of restricted stock were issued as a bonus to all Company employees.  Compensation expense of $800 per employee was recorded as the fair market value of the common stock on the date of issuance was $.008 per share. |
| (7) | Amount listed represents the dollar amount we recognized for financial reporting purposes under FASB guidance, “Share Based Payment”.  Assumptions made for the purpose of computing this amount are discussed in Note 2(j) to the Notes to our Financial Statements contained in this report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |
|-------------------------|--------|---------------|------------------------|--------------|---------------|--------|-----------------|--------------|--------|---------|----------|--------|--------|---------|-------------|--------|------------------------------------------------|------------|--------|--------|------------------|--------|--------|---------------|--------|
|                    |   | Option Awards |                   | Stock Awards |          |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   | Equity        |   |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   | Incentive     |   |
|                    |   |          |                   |         |          |   |            | Equity       |   |    |     |   |   |    |        |   |                                           |       |   |   | Equity Incentive |   |   | Plan Awards:  |   |
|                    |   |          |                   |         |          |   |            | Incentive    |   |    |     |   |   |    |        |   |                                           |       |   |   | Plan Awards:     |   |   | Market or     |   |
|                    |   |          |                   |         |          |   |            | Plan Awards: |   |    |     |   |   |    |        |   |                                           | Market     |   |   | Number of        |   |   | Payout Value  |   |
|                    |   | Number of     |                   |         | Number of     |   |            | Number of    |   |    |     |   |   |    | Number of   |   |                                           | Value of   |   |   | Unearned         |   |   | of Unearned   |   |
|                    |   | Securities    |                   |         | Securities    |   |            | Securities   |   |    |     |   |   |    | Shares or   |   |                                           | Shares or  |   |   | Shares, Units    |   |   | Shares, Units |   |
|                    |   | Underlying    |                   |         | Underlying    |   |            | Underlying   |   |    |     |   |   |    | Units of    |   |                                           | Units of   |   |   | or Other         |   |   | or Other      |   |
|                    |   | Unexercised   |                   |         | Unexercised   |   |            | Unexercised  |   |    | Option   |   |   |    | Stock That  |   |                                           | Stock That |   |   | Rights That      |   |   | Rights That   |   |
|                    |   | Options       |                   |         | Options       |   |            | Unearned     |   |    | Exercise |   | Option |    | Have Not    |   |                                           | Have Not   |   |   | Have Not         |   |   | Have Not      |   |
|                    |   |          | (#)                    |         |          |   | (#)             |         |   | Options |     |   | Price  |    | Expiration  |   | Vested                                         |       |   | Vested |             |   | Vested |          |   | Vested |   |
| Name                    |   | Exercisable   |                   |         | Unexercisable |   |            |         | (#)    |    |     | ($)    |   | Date    |        |   | (#)                                            |       |   | ($)    |             |   |   | (#)           |   |   | ($) |   |
| Linda B. Grable    |   |          | 500,000           |         |          |   | -               |         |   |    |   - |   |   | $  | 0.77   |   |        8/30/2011 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| CEO and Chairman   |   |          |   2,250,000  |         |          |   | -               |         |   |    | -        |   |   | $  | 0.60   |   |        12/1/2011 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| of the Board(1)         |   |          | 1,000,000         |         |          |   | -               |         |   |    | -        |   |   | $  | 0.045  |   |        4/16/2018 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000         |         |          |   | -               |         |   |    | -        |   |   | $  | .01    |   |  3/23/2019                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000         |         |          |   | 3,000,000  |         |   |    |     |   |   | $       | .05    |   |  3/22/2020                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Allan L. Schwartz  |   |          | 500,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.77        |   |  8/30/2011                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Exec V.P., CFO and      |   |          | 500,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.30        |   | 8/30/2012                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Director(2)             |   |          | 500,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 1.21        |   | 8/30/2013                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 500,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.30        |   | 8/30/2014                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 100,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.20        |   | 9/12/2015                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 250,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.11        |   | 9/12/2016                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 250,000                |         |          |   | -               |         |   |    | -        |   |   | $  | 0.058  |   |       8/30/2017  |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000              |         |          |   | -               |         |   |    | -        |   |   | $       | .01    |   | 3/23/2019                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000              |         |          |   | 3,000,000  |         |   |    |     |   |   | $       | .05    |   | 3/22/2020                                 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |            |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Deborah O'Brien         |   |          | 200,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.56        |   |  10/25/2011                               |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Senior Vice-            |   |          | 25,000                 |         |          |   | -               |         |   |    | -        |   |   | $       | 0.50        |   |  2/02/2012                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| President(3)            |   |          | 302,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 1.13        |   |  9/15/2013                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 250,000                |         |          |   | -               |         |   |    | -        |   |   | $       | 0.11        |   |  9/12/2016                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |  250,000          |         |          |   | -               |         |   |    | -        |   |   | $  | 0.084  |   |        9/15/2017 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000              |         |          |   | 3,000,000  |         |   |    |     |   |   | $  | .05    |   |  3/22/2020                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |

| (1) | Ms. Grable had 12,750,000 stock options outstanding as of June 30, 2011 of which 13,250,000 are fully vested.      |
|-----|--------------------------------------------------------------------------------------------------------------------|
| (2) | Mr. Schwartz had 11,600,000 stock options outstanding as of June 30, 2011 of which 12,100,000 are fully vested.    |
| (3) | Ms. O’Brien had 7,027,000 stock options outstanding as of June 30, 2011 of which 7,027,000 are fully vested. |

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|                  | Option Awards                                                                                                   |                                                                                                                 | Stock Awards |
|-----------------------|-----------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|--------------|
|                  | Number of                                                                                                       |                                                                                                                 |         | Number of |   |
|                  | Shares Acquired                                                                                                 | Value Realized                                                                                                       |         | Shares Acquired | Value Realized |
|                  | on Exercise                                                                                                     | on Exercise                                                                                                          |         | on Vesting | on Vesting |
| Name                  | (#)                                                                                                             | ($)                                                                                                                  |         | (#) | ($) |
| Linda B. Grable       |                                                                                                            |                                                                                                                 |         |   |   |
| CEO and Chairman      |                                                                                                            |                                                                                                                 |         |   |   |
| of the Board          |                     - |                     - |         |                    - |                    - |
|                  |                                                                                                            |                                                                                                                 |         |   |   |
| Allan L. Schwartz     |                                                                                                            |                                                                                                                 |         |   |   |
| Exec V.P., CFO        |                                                                                                            |                                                                                                                 |         |   |   |
| and Director          | -                                                                                                               | -                                                                                                                    |         | - | - |
|                  |                                                                                                            |                                                                                                                 |         |   |   |
| Deborah O'Brien       |                                                                                                            |                                                                                                                 |         |   |   |
| Senior Vice-President | -                                                                                                               | -                                                                                                                    |         | - | - |

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tem 12.  

|   | · | each person that we know of who beneficially owns more than 5% of the outstanding shares of our common stock, |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | each current director and executive officer, and |
|--------|--------|--------------------------------------------------|

|   | · | all executive officers and directors as a group. |
|--------|--------|--------------------------------------------------|

| Name and Address           | Number of Shares Owned                                                                                                                                                                                                                             | % of Outstanding                                                                                                                                                      |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| of Beneficial Owner        | Beneficially(1)(2)                                                                                                                                                                                                                                 | Shares of Common Stock                                                                                                                                                |
|                       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Linda B. Grable            |     29,260,274(3)                                                                                                                                                                                                              |     2.97%                                                                                                                                         |
| 5307 NW 35th Terrace       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Fort Lauderdale, FL 33309  |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
|                       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Allan L. Schwartz          |     15,755,520(4)                                                                                                                                                                                                              |     1.60%                                                                                                                                         |
| 5307 NW 35th Terrace       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Fort Lauderdale, FL 33309  |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
|                       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Deborah O’Brien      |       8,137,000(5)                                                                                                                                                                                                   |      0.82%                                                                                                                                   |
| 5307 NW 35th Terrace       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Fort Lauderdale, FL 33309  |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
|                       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| David Schmidt         |                                          0 |                             0% |
| 5307 NW 35th Terrace       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| Fort Lauderdale, FL 33309  |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
|                       |                                                                                                                                                                                                                                               |                                                                                                                                                                  |
| All officers and directors |    53,152,794(6)                                                                                                                                                                                                                    |      5.39%                                                                                                                                   |
| as a group (4 persons)     |                                                                                                                                                                                                                                               |                                                                                                                                                                  |

| (1) | Except as indicated in the footnotes to this table, based on information provided by such persons, the persons named in the table above have sole voting power and investment power with respect to all shares of common stock shown beneficially owned by them.                                                                                                                            |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Percentage of ownership is based on 985,468,507 shares of common stock outstanding as of September 20, 2011 plus each person’s options that are exercisable within 60 days.  Shares of common stock subject to stock options that are exercisable within 60 days as of September 20, 2011 are deemed outstanding for computing the percentage of that person and the group. |
| (3) | Includes 12,250,000 shares subject to options and 17,010,274 shares owned by Linda B. Grable.                                                                                                                                                                                                                                                                                               |
| (4) | Includes 11,100,000 shares subject to options and 9,000 shares owned by the wife of Allan L. Schwartz, Carolyn Schwartz, of which he disclaims beneficial ownership.                                                                                                                                                                                                                        |
| (5) | Includes 7,027,000 shares subject to options.                                                                                                                                                                                                                                                                                                                                               |
| (6) | Includes 30,377,000 shares subject to options held by Linda Grable, Allan Schwartz and Deborah O’Brien.  Also includes 9,000 shares owned by the wife of Allan L. Schwartz, Carolyn Schwartz, of which he disclaims beneficial ownership.                                                                                                                                   |

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10-K Main Table of Contents

Item 13.  
Certain 

Item 14.  
Principal 

|         |   | June 30, |   |
|--------------|--------|----------|--------|
|         |   | 2011     |   |   | 2010 |   |
| Audit Fees   |   | $        | 49,000 |   |   | $ | 67,000 |   |
| Tax Services |   | $        | 2,500  |   |   | $ | 2,500 |   |
|         |   |     |   |   |   |   |   |   |
| Totals       |   | $        | 51,500 |   |   | $ | 69,500 |   |

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10-K Main Table of Contents

Item 15.  
Exhibits

| EXHIBIT | DESCRIPTION |
|---------|-------------|

| 3.1   | Articles of Incorporation (Florida)- Incorporated by reference to Exhibit 3(a) of our Form 10-KSB for the fiscal year ending June 30, 1995.                                                                                                                                                   |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2   | Amendment to Articles of Incorporation (Designation of Series A Convertible Preferred Shares) - Incorporated by reference to Exhibit 3.  (i). 6 of our Form 10-KSB for the fiscal year ending June 30, 1996.  File number 033-04008.                                      |
| 3.3   | Amendment to Articles of Incorporation (Designation of Series B Convertible Preferred Shares).  Incorporated by reference to our Registration Statement on Form S-1 dated July 1, 1997.                                                                                             |
| 3.4   | Amendment to Articles of Incorporation (Designation of Series C Convertible Preferred Shares).  Incorporated by reference to our Form 8-K dated October 15, 1997.                                                                                                                   |
| 3.5   | Amendment to Articles of Incorporation (Designation of Series D Convertible Preferred Shares).  Incorporated by reference to our Form 8-K dated January 12, 1998.                                                                                                                   |
| 3.6   | Amendment to Articles of Incorporation (Designation of Series E Convertible Preferred Shares).  Incorporated by reference to our Form 8-K dated February 19,1998.                                                                                                                   |
| 3.7   | Amendment to Articles of Incorporation (Designation of Series F Convertible Preferred Shares).  Incorporated by reference to our Form 8-K dated March 6, 1998.                                                                                                                      |
| 3.8   | Amendment to Articles of Incorporation (Designation of Series H Convertible Preferred Shares).  Incorporated by reference to our Registration Statement on Form S-2 File Number 333-59539.                                                                                          |
| 3.9   | Certificate of Dissolution - is incorporated by reference to Exhibit (3)(a) of our Form 10-KSB for the fiscal year ending June 30, 1995.                                                                                                                                                      |
| 3.10  | Articles of Incorporation and By- Laws (New Jersey) -are incorporated by reference to Exhibit 3 (i) of our Form 10-SB, as amended, file number 0-26028, filed on May 6, 1995 ("Form 10-SB").                                                                                                  |
| 3.11  | Certificate and Plan of Merger - is incorporated by reference to Exhibit 3(i) of the Form 10-SB.                                                                                                                                                                                              |
| 3.12  | Certificate of Amendment - is incorporated by reference to Exhibit 3(i) of the Form 10-SB.                                                                                                                                                                                                    |
| 3.13  | Amended Certificate of Amendment-Series G Designation.                                                                                                                                                                                                                                        |
| 3.14  | Certificate of Amendment-Series I Designation                                                                                                                                                                                                                                                 |
| 3.15  | Amended Certificate of Amendment-Series B Designation                                                                                                                                                                                                                                         |
| 3.16  | Certificate of Amendment-Series K Designation.  Incorporated by reference to our Form 10-KSB for the fiscal year ending June 30, 2000 filed on September 14, 2000.                                                                                                                  |
| 3.17  | Certificate of Amendment-Series L Designation.                                                                                                                                                                                                                                                |
| 10.2  | Patent Licensing Agreement.  Incorporated by reference to our Registration Statement on Form S-2, File Number 333-59539.                                                                                                                                                            |
| 10.70 | License Agreement dated as of June 16, 2006, as amended as of August 30, 2006, between Bioscan, Inc. and Imaging Diagnostic Systems, Inc.  Incorporated by reference to our Form 8-K, filed on September 5, 2006.                                                                   |
| 10.77 | 2007 Non-Statutory Stock Option Plan                                                                                                                                                                                                                                                          |
| 10.78 | Agreement of Sale by and between Imaging Diagnostic Systems, Inc. and Superfun B.V. dated September 13, 2007 including Form of Lease Agreement (Exhibit D).  Incorporated by reference to our Form 8-K filed on September 13, 2007.                                                 |
| 10.79 | Lease Agreement by and between Bright Investments, LLC (“Landlord”) and Imaging Diagnostic Systems, Inc. (“Tenant”) dated March 14, 2008.  Incorporated by reference to our Form 8-K filed on April 3, 2008.                                                |
| 10.81 | Sixth Private Equity Credit Agreement between IDSI and Charlton Avenue LLC dated April 21, 2008 without exhibits.  Incorporated by reference to our Form 8-K filed on April 22, 2008.                                                                                               |
| 10.82 | Two-Year Employment Agreement dated as of April 16, 2008 between Imaging Diagnostic Systems, Inc. and Linda B. Grable, Interim CEO.  Incorporated by reference to our Form 8-K filed on May 5, 2008.                                                                                |
| 10.83 | Stock Option Agreement dated as of April 16, 2008 between Imaging Diagnostic Systems, Inc. and Linda B. Grable, Interim CEO.  Incorporated by reference to our Form 8-K filed on May 5, 2008.                                                                                       |
| 10.84 | Business Lease Agreement by and between Ft. Lauderdale Business Plaza Associates (“Lessor”) and Imaging Diagnostic Systems, Inc. (“Lessee”) dated June 2, 2008.  Incorporated by reference to our Form 8-K filed on June 5, 2008.                           |
| 10.85 | Financial Services Agreement by and between Imaging Diagnostic Systems, Inc. (the “Company” or “IDSI”) and R.H. Barsom Company, Inc. (the “Consultant”) dated July 15, 2008.  Incorporated by reference to our Form 8-K filed on July 18, 2008. |

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10-K Main Table of Contents

| 10.86  | Securities Purchase Agreement by and between Imaging Diagnostic Systems, Inc. (the “Company” or “IDSI”) and Whalehaven Capital Fund Limited (the “Purchaser” and collectively, the “Purchasers”) dated July 31, 2008.  Incorporated by reference to our Form 8-K filed on August 5, 2008. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.87  | Form of 8% Senior Secured Convertible Debenture, Exhibit A.  Incorporated by reference to our Form 8-K filed on August 5, 2008.                                                                                                                                                                                                           |
| 10.88  | Registration Rights Agreement, Exhibit B.  Incorporated by reference to our Form 8-K filed on August 5, 2008.                                                                                                                                                                                                                             |
| 10.89  | Common Stock Purchase Warrant, Exhibit C.  Incorporated by reference to our Form 8-K filed on August 5, 2008.                                                                                                                                                                                                                             |
| 10.90  | Form of Legal Opinion, Exhibit D.  Incorporated by reference to our Form 8-K filed on August 5, 2008.                                                                                                                                                                                                                                     |
| 10.91  | Security Agreement, Exhibit E.  Incorporated by reference to our Form 8-K filed on August 5, 2008.                                                                                                                                                                                                                                        |
| 10.92  | Amendment Agreement by and between Imaging Diagnostic Systems, Inc. (the “Company”) and Whalehaven Capital Fund Limited (“Whalehaven”, or the “Holder”) dated as of October 23, 2008.  Incorporated by reference to our Form 8-K filed on October 23, 2008.                                           |
| 10.93  | Securities Purchase Agreement by and between Imaging Diagnostic Systems, Inc. (the “Company” or “IDSI”) and Whalehaven Capital Fund Limited (the “Purchasers”) dated November 20, 2008.  Incorporated by reference to our Form 8-K filed on November 26, 2008.                                        |
| 10.94  | Form of 8% Senior Secured Convertible Debenture, Exhibit A.  Incorporated by reference to our Form 8-K filed on November 26, 2008.                                                                                                                                                                                                        |
| 10.95  | Registration Rights Agreement, Exhibit B.  Incorporated by reference to our Form 8-K filed on November 26, 2008.                                                                                                                                                                                                                          |
| 10.96  | Form of Legal Opinion, Exhibit D.  Incorporated by reference to our Form 8-K filed on November 26, 2008.                                                                                                                                                                                                                                  |
| 10.97  | Security Agreement, Exhibit E.  Incorporated by reference to our Form 8-K filed on November 26, 2008.                                                                                                                                                                                                                                     |
| 10.98  | Amendment Agreement by and among Imaging Diagnostic Systems, Inc., Whalehaven Capital Fund Limited, and Alpha Capital Anstalt dated as of December 10, 2008. Incorporated by reference to our Form 8-K filed on December 12, 2008.                                                                                                                  |
| 10.99  | Amendment Agreement by and among Imaging Diagnostic Systems, Inc., Whalehaven Capital Fund Limited, and Alpha Capital Anstalt dated as of December 31, 2008.  Incorporated by reference to our Form 8-K filed on January 5, 2009.                                                                                                         |
| 10.100 | Amendment Agreement (Revised) by and among Imaging Diagnostic Systems, Inc., Whalehaven Capital Fund Limited, and Alpha Capital Anstalt dated as of December 31, 2008.  Incorporated by reference to our Form 8-K/A filed on January 7, 2009.                                                                                             |
| 10.101 | Amendment Agreement by and among Imaging Diagnostic Systems, Inc., Whalehaven Capital Fund Limited, and Alpha Capital Anstalt dated as of March 20, 2009.  Incorporated by reference to our Form 8-K filed on March 26, 2009.                                                                                                             |
| 10.102 | One-Year Employment and Stock Option Agreement dated March 23, 2009 between Imaging Diagnostic Systems, Inc. and Linda B. Grable, Chief Executive Officer.  Incorporated by reference to our Form 8-K filed on March 27, 2009.                                                                                                            |
| 10.103 | One-Year Employment and Stock Option Agreement dated March 23, 2009 between Imaging Diagnostic Systems, Inc. and Allan L. Schwartz, Executive Vice President and Chief Financial Officer.  Incorporated by reference to our Form 8-K filed on March 27, 2009.                                                                             |
| 10.104 | Private Equity Credit Agreement between Imaging Diagnostic Systems, Inc. and Southridge Partners II LP dated November 23, 2009.  Incorporated by reference to our Form 8-K filed on November 25, 2009.                                                                                                                                    |
| 10.105 | Registration Rights Agreement between Imaging Diagnostic Systems, Inc. and Southridge Partners II LP dated November 23, 2009.  Incorporated by reference to our Form 8-K filed on November 25, 2009.                                                                                                                                      |
| 10.106 | Private Equity Credit Agreement (Amended) between Imaging Diagnostic Systems, Inc. and Southridge Partners II LP dated January 7, 2010.  Incorporated by reference to our Form S-1 filed on January 12, 2010.                                                                                                                             |
| 10.107 | Registration Rights Agreement (Amended) between Imaging Diagnostic Systems, Inc. and Southridge Partners II LP dated January 7, 2010.  Incorporated by reference to our Form S-1 filed on January 12, 2010.                                                                                                                               |

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10-K Main Table of Contents

| 10.108 | Employment Agreement and Stock Option Agreement dated March 22, 2010, between Imaging Diagnostic Systems, Inc. and Linda B. Grable, Chief Executive Officer.  Incorporated by reference to our Form 8-K filed on March 25, 2010.                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.109 | Employment Agreement and Stock Option Agreement dated March 22, 2010, between Imaging Diagnostic Systems, Inc. and Allan L. Schwartz, Executive Vice President and Chief Financial Officer.  Incorporated by reference to our Form 8-K filed on March 25, 2010.                                              |
| 10.110 | Employment Agreement and Stock Option Agreement dated March 22, 2010, between Imaging Diagnostic Systems, Inc. and Deborah O’Brien, Senior Vice-President.  Incorporated by reference to our Form 8-K filed on March 25, 2010.                                                                         |
| 10.111 | 2010 Non-Statutory Stock Option Plan dated March 11, 2010.  Incorporated by reference to our Form S-1 Amendment No. 1 filed on May 24, 2010.                                                                                                                                                                 |
| 10.112 | Convertible Promissory Note by and between Imaging Diagnostic Systems, Inc. (the “Company” or “Borrower”) and JMJ Financial (the “Lender or “JMJ’’) dated February 23, 2011, Exhibit A.  Incorporated by reference to our Form 8-K/A filed on March 2, 2011. |
| 10.113 | Letter Addendum to Promissory Note dated February 23, 2011, Exhibit B.  Incorporated by reference to our Form 8-K/A filed on March 2, 2011.                                                                                                                                                                  |
| 10.114 | Registration Rights Agreement dated February 23, 2011, Exhibit C.  Incorporated by reference to our Form 8-K/A filed on March 2, 2011.                                                                                                                                                                       |
| 10.115 | Patent Licensing Agreement, originally filed as Exhibit 10.2 to Form S-2 on July 21, 1998 as a text document.  Incorporated by reference to our S-1 Amendment No. 2, filed on March 15, 2011.                                                                                                                |
| 10.116 | U.S. Patent 5.692,511 issued Dec. 2, 1997, Exhibit A to Patent Licensing Agreement filed as Exhibit 10.115.  Incorporated by reference to our S-1 Amendment No. 3, filed on April 26, 2011.                                                                                                                  |
| 14.2   | Code of Conduct of Imaging Diagnostic Systems, Inc. dated November 7, 2007.                                                                                                                                                                                                                                            |
| 31.1   | Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |
| 31.2   | Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |
| 32.1   | Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |
| 32.2   | Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |

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10-K Main Table of Contents

SIGNATURES

|   | By:    | /s/ Linda B. Grable                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------|
|   |   | Linda B. Grable,  Chief Executive Officer and Chairman of the Board of Directors |

| Signatures           | Title                                  | Date                     |
|----------------------|----------------------------------------|--------------------------|
|                 |                                   |                     |
|                 |                                   |                     |
| /s/Linda B. Grable   | Chief Executive Officer                | September 22, 2011       |
| Linda B. Grable      | and Chairman of the Board of Directors |                     |
|                 |                                   |                     |
|                 |                                   |                     |
| /s/Allan L. Schwartz | Director, Executive Vice-President,    | September 22, 2011       |
| Allan L. Schwartz    | and Chief Financial Officer            |                     |
|                 | (Principal Accounting and Financial    |                     |
|                 | Officer)                               |                     |
|                 |                                   |                     |
|                 |                                   |                     |
| /s/ David Schmidt    | Director                          | September 22, 2011  |
| David Schmidt   |                                   |                     |

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