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

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

| ¨  Large accelerated filer | ¨  Accelerated filer | x  Non Accelerated filer |
|-------------------------------------------|-------------------------------------|------------------------------------|

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IMAG

| PART I   |                                                                                         | Page No   |
|----------|----------------------------------------------------------------------------------------------|-----------|
|     |                                                                                         |      |
| ITEM 1.  | Our Business                                                                                 | 3         |
| ITEM 1A  | Risk Factors                                                                                 | 16        |
| ITEM 1B  | Unresolved Staff Comments                                                                    | 29        |
| ITEM 2.  | Description of Our Property                                                                  | 29        |
| ITEM 3.  | Legal Proceedings                                                                            | 29        |
| ITEM 4.  | Submission of Matters to a Vote of Securities Holders                                        | 30        |
|     |                                                                                         |      |
|     |                                                                                         |      |
| PART II  |                                                                                         |      |
|     |                                                                                         |      |
| ITEM 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and                 | 31        |
|     | Issuer Purchasers of Equity Securities                                                       |      |
| ITEM 6.  | Selected Financial Data                                                                      | 38        |
| ITEM 7.  | Management’s Discussion and Analysis of Financial Conditions and Results of Operations |      |
| ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk                                   | 46        |
| ITEM 8.  | Financial Statements and Supplementary Data                                                  | 47        |
| ITEM 9.  | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure         |      |
| ITEM 9A  | Controls and Procedures                                                                      | 111       |
| ITEM 9B  | Other Information                                                                            | 114       |
|     |                                                                                         |      |
|     |                                                                                         |      |
| PART III |                                                                                         |      |
|     |                                                                                         |      |
| ITEM 10. | Directors, Executive Officers and Corporate Governance                                       | 115       |
| ITEM 11. | Executive Compensation                                                                       | 119       |
| ITEM 12. | Security Ownership of Certain Beneficial Owners and Management                               | 126       |
|     | And Related Stockholder Matters                                                              |      |
| ITEM 13. | Certain Relationships and Related Transactions, and Director Independence                    | 126       |
| ITEM 14. | Principal Accounting Fees and Services                                                       | 127       |
|     |                                                                                         |      |
|     |                                                                                         |      |
| PART IV  |                                                                                         |      |
|     |                                                                                         |      |
| ITEM 15. | Exhibits and Financial Statement Schedules                                                   | 128       |
|     |                                                                                         |      |
|     |  SIGNATURES                                                                             |  131 |

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

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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%         |

Item 1A

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

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

| · | pre-market approval process, |
|--------|------------------------------|

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

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

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| · | 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). |
|--------|---------------------------------------------------------------------|

| · | 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 Sixth Private Equity Agreement pursuant to a prior registration statement which 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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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| · | 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. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 479,911,407 shares for complete utilization of the Sixth Private Equity Credit Agreement |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | 29,330,694 shares required for the exercise of all outstanding options |
|--------|--------|------------------------------------------------------------------------|

|   | · | 10,900,000 shares required for the full conversion of the $54,500 Alpha debentures |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | 15,222,222 shares required for the full exercise of the Whalehaven and Alpha warrants |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | 2,666,666 shares required for the full exercise of the warrants issued to the placement agent |
|--------|--------|-----------------------------------------------------------------------------------------------|

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| · | FDA approval of a pre-market approval application 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 |
|--------|-------------------------------------------------------------------------------------------------------------------------|

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

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| · | economical and political instability, |
|--------|---------------------------------------|

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

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

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

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

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Item 2

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Item 4.

|   | 1.     To elect two directors until the next annual meeting; |
|--------|----------------------------------------------------------------------------------|

|   | 2. | To approve a proposal to amend the Company's Articles of Incorporation to increase the number of authorized shares of the Company's common stock, no par value, from 450,000,000 to 950,000,000; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | To consider and act upon a proposal to adopt the Company's 2007 Non-Statutory Stock Option Plan; |
|--------|----|--------------------------------------------------------------------------------------------------|

|   | 4. | To ratify the appointment by the Board of Directors of Sherb & Co., LLP as independent auditors of the Company for the fiscal year ending June 30, 2009; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Linda B. Grable   | FOR     297,598,494 | WITHHELD     19,404,926 |
|-------------------|----------------------------------------------|--------------------------------------------------|
| Allan L. Schwartz | FOR     299,345,051 | WITHHELD     17,658,369 |

| FOR   248,069,095 | AGAINST   65,441,285 | ABSTAIN     3,493,040 |
|----------------------------------|-------------------------------------|------------------------------------------------|

| FOR   43,439,030 | AGAINST    12,139,683 | ABSTAIN   1,588,350 |
|---------------------------------|-------------------------------------------|------------------------------------|

| FOR   304,754,785 | AGAINST    8,503,228 | ABSTAIN   3,745,406 |
|----------------------------------|------------------------------------------|------------------------------------|

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Item 5.

| QUARTER ENDING                            | High Bid | Low Bid |
|-------------------------------------------|----------|---------|
|                                      |     |    |
| FISCAL YEAR 2007                          |     |    |
| First Quarter                             | $0.15    | $0.09   |
| Second Quarter                            | $0.107   | $0.065  |
| Third Quarter                             | $0.155   | $0.068  |
| Fourth Quarter                            | $0.073   | $0.038  |
|                                      |     |    |
| FISCAL YEAR 2008                          |     |    |
| First Quarter                             | $0.088   | $0.035  |
| Second Quarter                            | $0.074   | $0.045  |
| Third Quarter                             | $0.055   | $0.046  |
| Fourth Quarter                            | $0.049   | $0.02   |
|                                      |     |    |
| 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 (through October 12, 2009) | $0.029   | $0.007  |

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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.

|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------------|--------|---------------|--------|--------------|---------------|--------|--------|---------------|--------|--------|---------------|-------------|
| The following selected financial data should be read in conjunction with "Item 7. Management's Discussion and Analysis |   |
| of Financial Condition and Results of Operations" and "Item 8. Financial Statements"                                   |   |          |         |   |          |   |         |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |
|                                                                                                                   |   | Year Ended    |         |   | Year Ended    |   |         | Year Ended    |   |   | Year Ended    |   |   | Year Ended    |        |
|                                                                                                                   |   | June 30, 2009 |         |   | June 30, 2008 |   |         | June 30, 2007 |   |   | June 30, 2006 |   |   | June 30, 2005 |        |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |
| Sales                                                                                                                  |   | $             | 70,617       |   |          | $      | 39,647       |          |   | $      | 65,136        |   |   | $             | 675,844     |   |   | $ | 374,952 |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Cost of Sales                                                                                                          |   |          | 20,546       |   |          |   | 20,944       |          |   |   | 17,870        |   |   |          | 316,189     |   |   |   | 166,685 |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Gross Profit                                                                                                           |   |          | 50,071       |   |          |   | 18,703       |          |   |   | 47,266        |   |   |          | 359,655     |   |   |   | 208,267 |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Operating Expenses                                                                                                     |   |          | 4,505,908    |   |          |   | 6,232,663    |          |   |   | 7,123,347     |   |   |          | 6,984,057   |   |   |   | 7,338,806 |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Operating Loss                                                                                                         |   |          | (4,455,837   | )      |          |   | (6,213,960   | )             |   |   | (7,076,081    | )      |   |          | (6,624,402  | ) |   |   | (7,130,539 | ) |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Gain (Loss) on sale of fixed assets                                                                                    |   |          | 1,181,894    |   |          |   | 1,609,525    |          |   |   | -             |   |   |          | (2,439      | ) |   |   | - |   |
| Interest income                                                                                                        |   |          | 636          |   |          |   | 13,377       |          |   |   | 11,455        |   |   |          | 8,416       |   |   |   | 5,680 |   |
| Other income                                                                                                           |   |          | 5,909        |   |          |   | 7,827        |          |   |   | 250,001       |   |   |          | 21,500      |   |   |   | 409,962 |   |
| Interest expense                                                                                                       |   |          | (677,031     | )      |          |   | (40,447      | )             |   |   | (387,697      | )      |   |          | (565,797    | ) |   |   | (598,021 | ) |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Net Loss                                                                                                               |   |          | (3,944,429   | )      |          |   | (4,623,678   | )             |   |   | (7,202,322    | )      |   |          | (7,162,722  | ) |   |   | (7,312,918 | ) |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Dividends on cumulative Pfd. stock:                                                                                    |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| From discount at issuance                                                                                              |   |          | -            |   |          |   | -            |          |   |   | -             |   |   |          | -           |   |   |   | - |   |
| Earned                                                                                                                 |   |          | -            |   |          |   | -            |          |   |   | -             |   |   |          | -           |   |   |   | - |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Net loss applicable to                                                                                                 |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
|      common shareholders                                                                      |   | $             | (3,944,429   | )      |          | $      | (4,623,678   | )             |   | $      | (7,202,322    | )      |   | $             | (7,162,722  | ) |   | $ | (7,312,918 | ) |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Net Loss per common share                                                                                              |   | $             | (0.01        | )      |          | $      | (0.01        | )             |   | $      | (0.03         | )      |   | $             | (0.03       | ) |   | $ | (0.04 | ) |
| Weighted avg. no. of common shares,                                                                                    |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
|     Basic & Diluted                                                                            |   |          | 424,330,162  |   |          |   | 318,673,749  |          |   |   | 271,667,256   |   |   |          | 218,846,738 |   |   |   | 185,636,553 |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
|                                                                                                                   |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
| Cash and Cash Equivalents                                                                                              |   | $             | 12,535       |   |          | $      | 49,433       |          |   | $      | 477,812       |   |   | $             | 1,467,687   |   |   | $ | 765,523 |   |
| Total Assets                                                                                                           |   |          | 1,134,580    |   |          |   | 1,583,356    |          |   |   | 4,365,427     |   |   |          | 6,250,909   |   |   |   | 5,608,004 |   |
| Deficit accumulated during                                                                                             |   |          |         |   |          |   |         |          |   |   |          |   |   |          |        |   |   |   |   |   |
|     the development stage                                                                          |   |          | (106,909,167 | )      |          |   | (102,964,738 | )             |   |   | (98,341,059   | )      |   |          | (91,138,737 | ) |   |   | (83,976,015 | ) |
| Stockholders' Equity                                                                                                   |   |          | (1,129,222   | )      |          |   | (468,761     | )             |   |   | 3,441,322     |   |   |          | 5,651,916   |   |   |   | 4,772,538 |   |

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

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Item 8
Financial 

| Index to Financial Statements                           |                                     |
|---------------------------------------------------------|------------------------------------------|
|                                                    |                                     |   |
|                                                    |                                     | Page |
|                                                    |                                     |   |
| Report of Independent Registered Public Accounting Firm | 48                                       |
|                                                    |                                     |   |
| Financial Statements                                    |                                     |   |
|                                                    |                                     |   |
|                                                    | Balance Sheets                           | 49 |
|                                                    |                                     |   |
|                                                    | Statements of Operations                 | 50 |
|                                                    |                                     |   |
|                                                    | Statements of Stockholders’ Equity | 51 |
|                                                    |                                     |   |
|                                                    | Statements of Cash Flows                 | 62 |
|                                                    |                                     |   |
|                                                    | Notes to Financial Statements            | 64 |

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| IMAGING DIAGNOSTIC SYSTEMS, INC.                                   |   |
|--------------------------------------------------------------------|--------|
| (a Development Stage Company)                                      |   |
|                                                               |   |   |   |   |   |   |
| Balance Sheets                                                     |   |
|                                                               |   |   |   |   |   |   |
| June 30, 2009 and 2008                                             |   |
|                                                               |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |
| ASSETS                                                             |   |
|                                                               |   | 2009 |   |   | 2008 |   |
| Current assets:                                                    |   |   |   |   |   |   |
| Cash and cash equivalents                                          |   | $ | 12,535 |   |   | $ | 49,433 |   |
| Accounts receivable, net of allowances for doubtful accounts       |   |   |   |   |   |   |   |   |
|     of $114,982 and $67,000, respectively      |   |   | (35,486 | ) |   |   | 39,718 |   |
| Loans receivable                                                   |   |   | 57,357 |   |   |   | 57,357 |   |
| Inventories, net of reserve of $408,000 and $408,000, respectively |   |   | 527,467 |   |   |   | 647,169 |   |
| Prepaid expenses                                                   |   |   | 35,617 |   |   |   | 55,368 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Total current assets                                               |   |   | 597,490 |   |   |   | 849,045 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Property and equipment, net                                        |   |   | 332,031 |   |   |   | 495,076 |   |
| Intangible assets, net                                             |   |   | 205,059 |   |   |   | 239,235 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Total assets                                                       |   | $ | 1,134,580 |   |   | $ | 1,583,356 |   |
|                                                               |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (Deficit)                     |   |
|                                                               |   |   |   |   |   |   |   |   |
| Current liabilities:                                               |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                              |   | $ | 1,994,220 |   |   | $ | 800,068 |   |
| Customer deposits                                                  |   |   | 96,114 |   |   |   | 126,114 |   |
| Convertible Debenture, net of debt discount of $35,532             |   |   | 173,468 |   |   |   | - |   |
|                                                               |   |   |   |   |   |   |   |   |
| Total current liabilities                                          |   |   | 2,263,802 |   |   |   | 926,182 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Long-Term Liabilities:                                             |   |   |   |   |   |   |   |   |
| Deferred Rent Liability                                            |   |   | - |   |   |   | 85,935 |   |
| Deferred Gain - Sale of Building                                   |   |   | - |   |   |   | 1,040,000 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Total Long-Term liabilities                                        |   |   | - |   |   |   | 1,125,935 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Total liabilities                                                  |   |   | 2,263,802 |   |   |   | 2,052,117 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Stockholders equity (Defecit):                                     |   |   |   |   |   |   |   |   |
| Common stock, no par value; authorized 950,000,000 shares,         |   |   |   |   |   |   |   |   |
|  issued 611,378,787 and 325,517,468 shares, respectively      |   |   | 102,280,228 |   |   |   | 99,651,145 |   |
| Additional paid-in capital                                         |   |   | 3,499,717 |   |   |   | 2,844,832 |   |
| Deficit accumulated during the development stage                   |   |   | (106,909,167 | ) |   |   | (102,964,738 | ) |
|                                                               |   |   |   |   |   |   |   |   |
| Total stockholders' equity (Deficit)                               |   |   | (1,129,222 | ) |   |   | (468,761 | ) |
|                                                               |   |   |   |   |   |   |   |   |
| Total assets & stockholders' equity (Deficit)                  |   | $ | 1,134,580 |   |   | $ | 1,583,356 |   |
|                                                               |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |
|                                                               |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.                |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                        |   |
|---------------------------------------------------------|--------|
| (a Development Stage Company)                           |   |
|                                                    |   |   |
| Statements of Operations                                |   |
|                                                    |   |   |   |   |   |   |   |   |   |   | From Inception |   |
|                                                    |   |   |   |   |   |   |   | (December 10, |   |
|                                                    |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |   | 1993) to |   |
|                                                    |   | June 30, 2009 |   |   | June 30, 2008 |   |   | June 30, 2007 |   |   | June 30, 2009 |   |
| Net Sales                                               |   | $ | 70,617 |   |   | $ | 39,647 |   |   | $ | 65,136 |   |   | $ | 2,143,492 |   |
| Cost of Sales                                           |   |   | 20,546 |   |   |   | 20,944 |   |   |   | 17,870 |   |   |   | 906,105 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                            |   |   | 50,071 |   |   |   | 18,703 |   |   |   | 47,266 |   |   |   | 1,237,387 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    General and administrative            |   |   | 2,379,112 |   |   |   | 2,644,556 |   |   |   | 3,012,575 |   |   |   | 54,989,414 |   |
|    Research and development              |   |   | 1,226,718 |   |   |   | 2,080,265 |   |   |   | 2,089,497 |   |   |   | 21,694,015 |   |
|    Sales and marketing                   |   |   | 615,448 |   |   |   | 1,067,655 |   |   |   | 1,351,521 |   |   |   | 8,772,821 |   |
|    Inventory valuation adjustments       |   |   | 82,286 |   |   |   | 258,375 |   |   |   | 493,596 |   |   |   | 4,752,671 |   |
|    Depreciation and amortization         |   |   | 202,344 |   |   |   | 181,812 |   |   |   | 176,158 |   |   |   | 3,157,229 |   |
|    Amortization of deferred compensation |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,064,250 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses                                |   |   | 4,505,908 |   |   |   | 6,232,663 |   |   |   | 7,123,347 |   |   |   | 97,430,400 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Loss                                          |   |   | (4,455,837 | ) |   |   | (6,213,960 | ) |   |   | (7,076,081 | ) |   |   | (96,193,013 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain (Loss) on sale of fixed assets                     |   |   | 1,181,894 |   |   |   | 1,609,525 |   |   |   | - |   |   |   | 2,794,565 |   |
| Interest income                                         |   |   | 636 |   |   |   | 13,377 |   |   |   | 11,455 |   |   |   | 308,401 |   |
| Other income                                            |   |   | 5,975 |   |   |   | 76,954 |   |   |   | 250,001 |   |   |   | 764,392 |   |
| Other income - LILA Inventory                           |   |   | (66 | ) |   |   | (69,127 | ) |   |   | - |   |   |   | (69,193 | ) |
| Interest expense                                        |   |   | (677,031 | ) |   |   | (40,447 | ) |   |   | (387,697 | ) |   |   | (7,666,559 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                                |   |   | (3,944,429 | ) |   |   | (4,623,678 | ) |   |   | (7,202,322 | ) |   |   | (100,061,407 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on cumulative preferred stock:                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    From discount at issuance             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,402,713 | ) |
|    Earned                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,445,047 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss applicable to                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      common shareholders       |   | $ | (3,944,429 | ) |   | $ | (4,623,678 | ) |   | $ | (7,202,322 | ) |   | $ | (106,909,167 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss per common share:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic and diluted                     |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.03 | ) |   | $ | (0.54 | ) |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   common shares outstanding:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic and diluted                     |   |   | 424,330,162 |   |   |   | 318,673,749 |   |   |   | 271,667,256 |   |   |   | 197,647,227 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.     |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit)                |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 |   |
|                                                        |
|                                                        |
|  See accompanying notes to the financial statements.   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 |   |
|                                                        |
|                                                        |
|  See accompanying notes to the financial statements.   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |                 |   |
|-------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                               |   |                 |   |
|                                                        |   |                 |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   | 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 |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |
|                                                        |
|  See accompanying notes to the financial statements.   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |                 |   |
|-------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                               |   |                 |   |
|                                                        |   |                 |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   | 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 |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |   |                 |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |                 |   |
|-------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                               |   |                 |   |
|                                                        |   |                 |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   | 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 |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |   |                 |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |                 |   |
|-------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                               |   |                 |   |
|                                                        |   |                 |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   | 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 |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |   |                 |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |                 |   |
|-------------------------------------------------------------|--------|----------------------|--------|
| (a Development Stage Company)                               |   |                 |   |
|                                                        |   |                 |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |                 |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   | 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 |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |   |                 |   |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 16 for a detailed breakdown by Series.          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

----

Financial Table of Contents

| IMAGING DIAGNOSTIC SYSTEMS, INC.                            |   |
|-------------------------------------------------------------|--------|
| (a Development Stage Company)                               |   |
|                                                        |   |
| Statements of Stockholders' Equity (Deficit) (Continued)    |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| From December 10, 1993 (date of inception) to June 30, 2009 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   | 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 16 for a detailed breakdown by Series.          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.         |

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| IMAGING DIAGNOSTIC SYSTEMS, INC.                                                       |   |
|----------------------------------------------------------------------------------------|--------|
| (A Development Stage Company)                                                          |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Statement of Cash Flows                                                                |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   | From Inception |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   | (December 10, |   |
|                                                                                   |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |   | 1993) to |   |
|                                                                                   |   | June 30, 2009 |   |   | June 30, 2008 |   |   | June 30, 2007 |   |   | June 30, 2009 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                               |   | $ | (3,944,429 | ) |   | $ | (4,623,678 | ) |   | $ | (7,202,322 | ) |   | $ | (100,061,407 | ) |
| Adjustments to reconcile net loss to net cash                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   used for operating activities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Depreciation and amortization                             |   |   | 202,344 |   |   |   | 181,812 |   |   |   | 176,158 |   |   |   | 3,164,872 |   |
|     (Gain) Loss on sale of fixed assets                            |   |   | (1,181,894 | ) |   |   | (1,609,525 | ) |   |   | - |   |   |   | (2,794,565 | ) |
|     Extinguishment of debt                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (431,462 | ) |
|     Inventory valuation adjustment                                 |   |   | 82,286 |   |   |   | 258,375 |   |   |   | 493,596 |   |   |   | 4,752,671 |   |
|     Amoritization of deferred compensation                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,064,250 |   |
|     Noncash interest, compensation and consulting services         |   |   | 858,510 |   |   |   | 40,414 |   |   |   | 367,698 |   |   |   | 19,838,493 |   |
|     Fair Value of Stock Option Expenses                            |   |   | 145,577 |   |   |   | 183,182 |   |   |   | 431,313 |   |   |   | 1,392,629 |   |
|     (Increase) decrease in accounts and                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         loans receivable - employees, net      |   |   | 27,222 |   |   |   | 49,360 |   |   |   | 332,267 |   |   |   | (175,538 | ) |
|      Increase (decrease) in allowance for                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         doubful account                        |   |   | 47,982 |   |   |   | 37,033 |   |   |   | (10,033 | ) |   |   | 114,982 |   |
|     (Increase) decrease in inventories, net                        |   |   | 28,825 |   |   |   | 457,612 |   |   |   | (85,942 | ) |   |   | (2,351,560 | ) |
|     (Increase) decrease in prepaid expenses                        |   |   | 19,751 |   |   |   | (18,584 | ) |   |   | 6,062 |   |   |   | (35,617 | ) |
|     (Increase) decrease in other assets                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (306,618 | ) |
|     Increase (decrease) in accounts payable and                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         accrued expenses                       |   |   | 1,194,152 |   |   |   | 214,077 |   |   |   | 26,997 |   |   |   | 2,159,654 |   |
|     Increase (decrease) in other current liabilities               |   |   | (30,000 | ) |   |   | 38,000 |   |   |   | 48,114 |   |   |   | 96,114 |   |
|     Increase in deferred rent liability                            |   |   | (85,935 | ) |   |   | 85,935 |   |   |   | - |   |   |   | - |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total adjustments                      |   |   | 1,308,820 |   |   |   | (82,309 | ) |   |   | 1,786,230 |   |   |   | 29,488,305 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net cash used for operating activities |   |   | (2,635,609 | ) |   |   | (4,705,988 | ) |   |   | (5,416,092 | ) |   |   | (70,573,102 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Proceeds from sale of property & equipment           |   |   | 2,400 |   |   |   | 4,357,654 |   |   |   | - |   |   |   | 4,390,015 |   |
|      Prototype equipment                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,799,031 | ) |
|      Capital expenditures                                     |   |   | 7,360 |   |   |   | (320,045 | ) |   |   | (16,500 | ) |   |   | (4,779,405 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net cash used for investing activities |   |   | 9,760 |   |   |   | 4,037,609 |   |   |   | (16,500 | ) |   |   | (3,188,421 | ) |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Repayment of capital lease obligation                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (50,289 | ) |
|      Proceeds from convertible debenture                      |   |   | 800,000 |   |   |   | - |   |   |   | - |   |   |   | 4,040,000 |   |
|      Proceeds from (repayments) loan payable, net             |   |   | - |   |   |   | (250,000 | ) |   |   | 250,000 |   |   |   | 2,595,029 |   |
|      Proceeds from issuance of preferred stock                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 18,039,500 |   |
|      Proceeds from exercise of stock options                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 903,989 |   |
|      Net proceeds from issuance of common stock               |   |   | 1,788,951 |   |   |   | 490,000 |   |   |   | 4,192,717 |   |   |   | 48,245,829 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Net cash provided by financing activities    |   |   | 2,588,951 |   |   |   | 240,000 |   |   |   | 4,442,717 |   |   |   | 73,774,058 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                   |   |   | (36,898 | ) |   |   | (428,379 | ) |   |   | (989,875 | ) |   |   | 12,535 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                       |   |   | 49,433 |   |   |   | 477,812 |   |   |   | 1,467,687 |   |   |   | - |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                                             |   | $ | 12,535 |   |   | $ | 49,433 |   |   | $ | 477,812 |   |   | $ | 12,535 |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |   | Year Ended |   |   | 1993) to |   |
|                                                    |   | June 30, 2009 |   |   | June 30, 2008 |   |   | June 30, 2007 |   |   | June 30, 2009 |   |
| 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                    |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 6,306,350 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as loan fees in                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   connection with loans to the Company        |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 293,694 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as satisfaction of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   loans payable and accrued interest          |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,398,965 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock as satisfaction of             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   certain accounts payable                    |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 257,892 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 for                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   compensation                                |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 2,691,788 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the financial statements.     |   |

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Notes 

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|                    | Year Ended    | Year Ended    | Year Ended    |
|-------------------------|---------------|---------------|---------------|
|                    | June 30, 2009 | June 30, 2008 | June 30, 2007 |
| Volatility              | 131.31%       | 63.32%        | 72.34%        |
| Risk Free Interest Rate | 5%            | 5%            | 5%            |
| Expected Term           | 8 yrs         | 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 productfailure. 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    | Year Ended    |
|------------------|---------------|---------------|---------------|
|             | June 30, 2009 | June 30, 2008 | June 30, 2007 |
| Warranty Reserve | $4,065        | $8,502        | $14,952       |

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

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|                                                                    |   | June 30, |     |
|-------------------------------------------------------------------------|--------|----------|----------|
|                                                                    |   | 2009     |     |   | 2008 |   |
| Raw materials consisting of purchased parts, components and supplies    |   | $        | 529,410  |   |   | $ | 578,144 |   |
| Work-in process including units undergoing final inspection and testing |   |     | 28,943   |   |   |   | 28,939 |   |
| Finished goods                                                          |   |     | 377,114  |   |   |   | 448,086 |   |
|                                                                    |   |     |     |   |   |   |   |   |
| Sub-Total Inventories                                                   |   | $        | 935,467  |   |   | $ | 1,055,169 |   |
|                                                                    |   |     |     |   |   |   |   |   |
|      Less Inventory Reserve                    |   |     | (408,000 | ) |   |   | (408,000 | ) |
|                                                                    |   |     |     |   |   |   |   |   |
| Total Inventory - Net                                                   |   | $        | 527,467  |   |   | $ | 647,169 |   |

|                                             |   | June 30, |       |
|--------------------------------------------------|--------|----------|------------|
|                                             |   | 2009     |       |   | 2008 |   |
| Furniture and fixtures                           |   | $        | 257,565    |   |   | $ | 262,264 |   |
| Building and land (See Note 8)                   |   |     | -          |   |   |   | - |   |
| Computers, equipment and software                |   |     | 426,873    |   |   |   | 425,642 |   |
| CTLM® software costs                        |   |     | 352,932    |   |   |   | 352,932 |   |
| Trade show equipment                             |   |     | 298,400    |   |   |   | 298,400 |   |
| Clinical equipment                               |   |     | 440,937    |   |   |   | 432,346 |   |
| Laboratory equipment                             |   |     | 212,560    |   |   |   | 212,560 |   |
|                                             |   |     |       |   |   |   |   |   |
| Total Property & Equipment                   |   |     | 1,989,267  |   |   |   | 1,984,144 |   |
|    Less: accumulated depreciation |   |     | (1,657,236 | ) |   |   | (1,489,068 | ) |
|                                             |   |     |       |   |   |   |   |   |
| Total Property & Equipment - Net             |   | $        | 332,031    |   |   | $ | 495,076 |   |

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

|                                                                 |   | June 30, |    |
|----------------------------------------------------------------------|--------|----------|---------|
|                                                                 |   | 2009     |    |   | 2008 |   |
|                                                                 |   |     |    |   |   |   |
| Patent license agreement, net of accumulated                         |   |     |    |   |   |   |
|    amortization of $375,941 and $341,765 respectively |   | $        | 205,059 |   |   | $ | 239,235 |   |
|                                                                 |   |     |    |   |   |   |   |   |
| Totals                                                               |   | $        | 205,059 |   |   | $ | 239,235 |   |

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|                           |   | June 30, |      |
|--------------------------------|--------|----------|-----------|
|                           |   | 2009     |      |   | 2008 |   |
|                           |   |     |      |   |   |   |
| Accounts payable - trade       |   | $        | 1,194,964 |   |   | $ | 658,524 |   |
| Accrued property taxes payable |   |     | 30,819    |   |   |   | 30,819 |   |
| Accrued compensated absences   |   |     | 46,368    |   |   |   | 47,409 |   |
| Accrued wages payable          |   |     | 583,896   |   |   |   | 21,855 |   |
| Other accrued expenses         |   |     | 138,173   |   |   |   | 41,461 |   |
|                           |   |     |      |   |   |   |   |   |
| Totals                         |   | $        | 1,994,220 |   |   | $ | 800,068 |   |

|              |   | June 30, |   |
|-------------------|--------|----------|--------|
|              |   | 2009     |   |   | 2008 |   |
|              |   |     |   |   |   |   |
| Customer deposits |   | $        | 96,114 |   |   | $ | 126,114 |   |
|              |   |     |   |   |   |   |   |   |
| Total             |   | $        | 96,114 |   |   | $ | 126,114 |   |

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|                      |   | Payments Due by Fiscal Year |    |
|---------------------------|--------|-----------------------------|---------|
|                      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | Total                       |    |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |
| Capital Lease Obligations |   | $                           | 10,597  |   |   | $ | 3,888 |   |   | $ | 3,888 |   |   | $ | 2,821 |   |   | $ | - |   |   | $ | - |   |
|                      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Lease -         |   | $                           | 35,507  |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Bright Investments, LLC   |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Lease –   |   | $                           | 552,467 |   |   | $ | 127,414 |   |   | $ | 132,489 |   |   | $ | 137,773 |   |   | $ | 143,273 |   |   | $ | 11,518 |   |
| Fort Lauderdale Business  |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Plaza Associates          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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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)   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (17) COVERTIBLE PREFERRED STOCK (Continued) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | Series A |   | Series B |   | Series C |   | Series D |   | Series E |   | Series F |   | Series H |   | Series I |   | Series K |   | Total |   |
|                                        |   | 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                    |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |   | - |   | $ | - |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additional information:                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount off market price                   |   |   |   |   |   | 25 | % |   |   |   |   | 18 | % |   |   |   |   | 25 | % |   |   |   |   | 25 | % |   |   |   |   | 25 | % |   |   |   |   | 30 | % |   |   |   |   | 25 | % |   |   |   |   | 25 | % |   |   |   |   | 12.5 | % |   |   |   |   |   |   |
| Fair market value-issue rate                |   |   |   |   | $ | 8.31 |   |   |   |   | $ | 3.25 |   |   |   |   | $ | 1.63 |   |   |   |   | $ | 0.99 |   |   |   |   | $ | 1.07 |   |   |   |   | $ | 1.24 |   |   |   |   | $ | 0.57 |   |   |   |   | $ | 0.38 |   |   |   |   | $ | 1.13 |   |   |   |   |   |   |   |
| Deemed preferred stock dividend             |   |   |   |   | $ | 1,335,474 |   |   |   |   | $ | 998,120 |   |   |   |   | $ | 705,738 |   |   |   |   | $ | 182,433 |   |   |   |   | $ | 182,250 |   |   |   |   | $ | 318,966 |   |   |   |   | $ | 351,628 |   |   |   |   | $ | 492,857 |   |   |   |   | $ | 708,130 |   |   |   |   |   |   |   |

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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      |                        |             -       |   |

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| 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    |   |            - |                         |
|                         |                                                                      |                     |   |                                                                |                         |
| 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        |
|                         |                                                                      |                     |   |                                                                |                         |

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Financial Table of Contents

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

| Outstanding at June 30, 2007       |   8,408,597                                          |   .96 |   |   8,590,415                                          |    .22 |
|------------------------------------|----------------------------------------------------------------|-----------------|--------|----------------------------------------------------------------|-----------------------|
|    Granted          |                                                           |            |   |   2,336,526                                          |    .05 |
|    Exercised        |                                                           |            |   |                                                           |                  |
|    Canceled         |      (29,750)                         |            |   |  (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      |

| ** 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 guidelines discussed in the FASB Interpretation No. 44, of APB Opinion No. 25. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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   |           -       |                  |                        |   |   |
|                         |                                                                |                  |                        |   |   |
| 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   |            - |                  |                        |              - |   |
|                         |                                                                |                  |                        |   |   |

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

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

| 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 |

|                   | June 30, 2009                                     |   | June 30, 2008                                     |   | June 30, 2007                                     |
|------------------------|---------------------------------------------------|--------|---------------------------------------------------|--------|---------------------------------------------------|
| Employee ISO           |     7,284,152                 |   |     8,367,819                 |   |     8,377,119                 |
| Director ISO           |        500,000 |   |        500,000 |   |        500,000 |
| Employee Non-Statutory |   15,084,499                            |   |     5,723,630                 |   |     3,748,584                 |
| Director Non-Statutory |     3,700,000                 |   |     3,600,000                 |   |     2,550,000                 |
|                   |                                              |   |                                              |   |                                              |
| Total                  |   26,568,651                            |   |   18,191,449                            |   |   15,175,703                            |

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| (19) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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Financial Table of Contents

| (19) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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Financial Table of Contents

| (19) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (19) | STOCK OPTIONS (Continued) |
|------|---------------------------|

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| (19) | 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  |   |                |   | 28,263,144 |                |   |   | 4.89 |   |   | $ | .26 |   |   |   | 25,501,101 |   |   | $ | .29 |   |
|            | 1.26 - 2.49 |   |                |   | 67,550     |                |   |   | 1.00 |   |   |   | .89 |   |   |   | 67,550 |   |   |   | .89 |   |
|            | 2.50 - 2.85 |   |                |   | 1,000,000  |                |   |   | 1.00 |   |   |   | 2.85 |   |   |   | 1,000,000 |   |   |   | 2.85 |   |
|            |        |   |                |   |       |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $               | .035 - 2.85 |   |                |   | 29,330,694 |                |   |   | 4.75 |   |   | $ | .35 |   |   |   | 26,568,651 |   |   | $ | .39 |   |

----

Financial Table of Contents

|                      |   |                                                        |   |                                    |   |                                 |   |                |     |   |   |     |   |
|---------------------------|--------|-------------------------------------------------------------|--------|-----------------------------------------|--------|--------------------------------------|--------|---------------------|----------|--------|--------|----------|--------|
|                      |   | QuotedPrices inActiveMarkets forIdenticalInstrumentsLevel 1 |   | SignificantOtherObservableInputsLevel 2 |   | SignificantUnobservableInputsLevel 3 |   | Assets atFair Value |     |
|                      |   |                                                        |   |                                    |   |                                 |   |                |     |
| Liabilities:              |   |                                                        |   |                                    |   |                                 |   |                |     |   |   |     |   |
| Convertible notes payable |   | $                                                           |   |                                    | $      |                                 |   | $                   | (209,000 | )      | $      | (209,000 | )      |

----

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Financial Table of Contents

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Table of Contents

Item 9.

Item 9A.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 

|   | · | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

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Item 9B.

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Item 10.

|   | · | 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(1)               | Age    | Position                        | Year Elected or Appointed |
|-----------------------|--------|---------------------------------|---------------------------|
| Linda B. Grable       | 72     | Chief Executive Officer and     | 2008                      |
|                  |   | Chairman of the Board           |                      |
|                  |   |                            |                      |
| Allan L. Schwartz     | 67     | Executive Vice-President, Chief | 1994                      |
|                  |   | Financial Officer and Director  |                      |
|                  |   |                            |                      |
| Deborah O’Brien | 45     | Senior Vice-President           | 2003                      |

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Table of Contents

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                   | 2009   |       143,878                                                 |         - |      800                 |     60,333                                |                   - |                   - |                    - |           205,011                                                 |
| Interim CEO and COB(1)(2)         | 2008   |         30,000                                      |         - |         - |      1,667                           |                   - |                   - |                    - |             31,667                                      |
|                              | 2007   |                - |         - |         - |           - |                   - |                   - |                    - |                    - |
|                              |   |                                                                                        |                                              |                                              |                                                          |                                                                                                          |                                                                                                          |                                                                                                                |                                                                                                                |
|                              |   |                                                                                        |                                              |                                              |                                                          |                                                                                                          |                                                                                                          |                                                                                                                |                                                                                                                |
| Allan L. Schwartz                 | 2009   |       188,237                                                 |         - |      800                 |     31,667                                |                   - |                   - |                    - |           220,704                                                 |
| Exec V.P.,CFO and Director(1),(3) | 2008   |       185,802                                                 |         - |         - |     12,500                                |                   - |                   - |                    - |           198,302                                                 |
|                              | 2007   |       191,048                                                 |         - |         - |     18,500                                |                   - |                   - |                    - |           209,548                                                 |
|                              |   |                                                                                        |                                              |                                              |                                                          |                                                                                                          |                                                                                                          |                                                                                                                |                                                                                                                |
|                              |   |                                                                                        |                                              |                                              |                                                          |                                                                                                          |                                                                                                          |                                                                                                                |                                                                                                                |
| Deborah O'Brien                   | 2009   |       137,832                                                 |         - |      800                 |      3,109                           |                   - |                   - |                    - |           141,741                                                 |
| Senior Vice- President(1),(4)     | 2008   |       139,588                                                 |         - |         - |     16,018                                |                   - |                   - |                    - |           155,606                                                 |
|                              | 2007   |       130,769                                                 |         - |         - |     35,609                                |                   - |                   - |                    - |           166,378                                                 |

| (1) | All Named Executive Officers receive reimbursement for auto expense in the amount of $500 per month.  However, during f/y 2009 the Executive Officers agreed to accrue all monthly auto expenses until a time where the Company secures additional financing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Salary recorded for f/y 2009 includes base salary of $144,000.  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.  On April 16, 2008, Ms. Grable came out of retirement and rejoined the company as Chairman ofthe Board and CEO.                                                                                                                                                                                                                                                                                                                                                                                                         |
| (3) | Salary recorded for f/y 2009 includes base salary of $192,400.  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.  From July 1, 2008 through July 31, 2008, Mr. Schwartz deferred $4,008 (25%) of his salaryuntil 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.  From April 1, 2008 through June 30, 2008, Mr. Schwartz deferred $12,025 (25%) of his salary until a time where the Company secures additional financing.  Salary recorded for f/y 2007 includes base salary of $185,000 plus $6,048 vacation pay. |
| (4) | Salary recorded for f/y 2009 includes base salary of $138,000.  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.  Salary recorded for f/y 2008 includes base salary of $135,342 plus $4,246 vacation pay.  Salaryrecorded for f/y 2007 includes base salary of $125,000 plus $5,769 vacation pay.                                                                                                                                                                                                                                                                                                                       |
| (5) | During the third and fourth quarter, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (6) | During March 2009, 100,000 shares of restricted stock were issued to all Company employees.  Compensation expense of $800 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 No. 123R, “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           |         |          |   | -      |         |   |    | -        |   |   | $       | 2.85   |   | 8/30/2010                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| CEO and Chairman   |   |          | 500,000           |         |          |   | -      |         |   |    |   - |   |   | $  | 0.77   |   |        8/30/2011 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| of the Board(1)         |   |          |   2,250,000  |         |          |   | -      |         |   |    | -        |   |   | $  | 0.60   |   |        12/1/2011 |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 1,000,000         |         |          |   | -      |         |   |    | -        |   |   | $  | 0.045  |   |       4/16/2018  |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 3,000,000         |         |          |   | -      |         |   |    | -        |   |   | $  | .01    |   |  3/23/2019                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |   |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |   |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Allan L. Schwartz  |   |          | 500,000                |         |          |   | -      |         |   |    | -        |   |   | $       | 2.85        |   |  8/30/2010                                |       |   | -      |             |   |   | -             |   |   |   | - |   |   |   | - |   |
| Exec V.P., CFO and      |   |          | 500,000                |         |          |   | -      |         |   |    | -        |   |   | $       | 0.77        |   |  8/30/2011                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| Director(2)             |   |          | 500,000                |         |          |   | -      |         |   |    | -        |   |   | $       | 0.30        |   | 8/30/2012                                      |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          | 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                                |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |   |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
|                    |   |          |                   |         |          |   |   |         |   |    |     |   |   |    |        |   |                                           |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |
| 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       |       |   |   |             |   |   |          |   |   |   |   |   |   |   |   |   |

| (1) | Ms. Grable had 7,250,000 stock options outstanding as of June 30, 2009 of which 7,250,000 are fully vested.        |
|-----|--------------------------------------------------------------------------------------------------------------------|
| (2) | Mr. Schwartz had 6,100,000 stock options outstanding as of June 30, 2009 of which 6,100,000 are fully vested.      |
| (3) | Ms. O’Brien had 1,027,000 stock options outstanding as of June 30, 2009 of which 1,027,000 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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Item 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            |   23,760,274(3)       |     3.37%       |
| 5307 NW 35th Terrace       |                            |                                |
| Fort Lauderdale, FL 33309  |                            |                                |
|                       |                            |                                |
| Allan L. Schwartz          |    10,255,520(4) |     1.46%       |
| 5307 NW 35th Terrace       |                            |                                |
| Fort Lauderdale, FL 33309  |                            |                                |
|                       |                            |                                |
| Deborah O’Brien      |    1,637,000(5)  |      0.23% |
| 5307 NW 35th Terrace       |                            |                                |
| Fort Lauderdale, FL 33309  |                            |                                |
|                       |                            |                                |
|                       |                            |                                |
| All officers and directors |  35,652,794(6)             |      5.06% |
| as a group (3 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 704,175,785 shares of common stock outstanding as of October 12, 2009 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 October 12, 2009 are deemed outstanding for computing the percentageof that person and the group. |
| (3) | Includes 7,250,000 shares subject to options and 16,510,274 shares owned by Linda B. Grable.                                                                                                                                                                                                                                                                                           |
| (4) | Includes 6,100,000 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 1,027,000 shares subject to options.                                                                                                                                                                                                                                                                                                                                          |
| (6) | Includes 14,377,000 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.                                                                                                                              |

Item 13

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Item 14.

|         |   | June 30, |   |
|--------------|--------|----------|--------|
|         |   | 2009     |   |   | 2008 |   |
| Audit Fees   |   | $        | 38,000 |   |   | $ | 52,020 |   |
| Tax Services |   | $        | 2,500  |   |   | $ | 2,500 |   |
|         |   |     |   |   |   |   |   |   |
| Totals       |   | $        | 40,500 |   |   | $ | 54,520 |   |

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Item 15.

| 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.                                                                             |
| 10.2  | Patent Licensing Agreement.  Incorporated by reference to our Registration Statement on Form S-2, File Number 333-59539.                                                                                                                       |
| 10.3  | Incentive Stock Option Plan - is incorporated by reference to Exhibit 10(b) of the Form 10-SB.                                                                                                                                                           |
| 10.60 | Employment Agreement with Deborah O’Brien, Senior Vice President dated September 15, 2003.                                                                                                                                                         |
| 10.61 | Fourth Private Equity Credit Agreement between IDSI and Charlton Avenue LLC dated as of January 9, 2004, with exhibits.  Incorporated by reference to our Form S-2, File Number 333-112377 filed on January 30, 2004.                          |
| 10.62 | Registration Rights Agreement between IDSI and Charlton Avenue, LLC dated as of January 9, 2004.  Incorporated by reference to our Form S-2, File Number 333-112377 filed on January 30, 2004.                                                 |
| 10.67 | Stock Option Agreement with Timothy B. Hansen, Chief Executive Officer, dated February 23, 2005.  Incorporated by reference to our Registration Statement on Form S-2, File Number 333-123197 filed on March 8, 2005.                          |
| 10.69 | Fifth Private Equity Credit Agreement between IDSI and Charlton Avenue LLC dated March 21, 2006 with all exhibits.  Incorporated by reference to our Form S-1, File Number 333-132664 filed on March 23, 2006.                                 |

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| 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.                                                                                                      |
| 10.80 | Consulting Agreement between Imaging Diagnostic Systems, Inc. and Tim Hansen dated as of January 1, 2008.  Incorporated by reference to our Form 8-K filed on December 28, 2007.                                                                                                                                                          |
| 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.                                                       |
| 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.                                                                                                                                                                                                                          |

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| 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. |
| 14.1   | Code of Ethics.                                                                                                                                                                                                                                                         |
| 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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SIGN

|   | 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                | October 13, 2009 |
| Linda B. Grable      | and Chairman of the Board of Directors |             |
|                 |                                   |             |
|                 |                                   |             |
| /s/Allan L. Schwartz | Director, Executive Vice-President,    | October 13, 2009 |
| Allan L. Schwartz    | and Chief Financial Officer            |             |
|                 | (Principal Accounting and Financial    |             |
|                 | Officer)                               |             |

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