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**SECURITIES        AND EXCHANGE COMMISSION **

**Washington,        D.C. 20549 **

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**FORM        10-KSB/A **

**(Amendment        No. 2)**

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**ANNUAL        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE **

**SECURITIES        EXCHANGE ACT OF 1934 **

**For        the Fiscal Year Ended July 31, 2007 **

**Commission        File Number: 000-13176 **

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**NON-INVASIVE        MONITORING **

**SYSTEMS,        INC. **

**(name        of small business issuer as specified in its charter) **

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| **Florida**                                                                                             |   | **59-2007840**                                                                |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
| **(State                  or other jurisdiction of****incorporation                  or organization)** |   | **(I.R.S.                  Employer****Identification                  No.)** |

**1666        Kennedy Causeway Avenue, Suite 308, North Bay Village Florida 33141**

**(Address        of principal executive offices) (Zip Code) **

**(305)        861-0075 **

**(Company’s        telephone number) **

**(Former        name or former address, if changed since last report) **

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**Securities        Registered Under Section 12(b) of the Exchange Act: **

**None        **

**Securities        Registered Under Section 12(g) of the Exchange Act: **

**Common        Stock, $0.01 **

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**APPLICABLE        ONLY TO CORPORATE ISSUERS **

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**NON-INVASIVE        MONITORING SYSTEMS, INC.**

**Report        on Form 10-KSB/A**

**Amendment        No. 2**

**For        the Fiscal Year Ended July 31, 2007 **

**TABLE        OF CONTENTS **

|                         |                                                                                                                                                                                         | Page   |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| PART                  II.    |                                                                                                                                                                                         |   |
| Item                  7.     | Financial                  Statements.                                                                                                                                                       | 4      |
| Item                  8A(T). | Controls                  and Procedures.                                                                                                                                                    | 4      |
|                         |                                                                                                                                                                                         |   |
| PART                  III.   |                                                                                                                                                                                         |   |
| Item                  9.     | Directors,                  Executive Officers, Promoters and Control Persons and Corporate                  Governance; Compliance with Section 16(a) of the Exchange                  Act. | 5      |
| Item                  10.    | Executive                  Compensation.                                                                                                                                                     | 7      |
| Item                  11.    | Security                  Ownership of Certain Beneficial Owners and Management and Related                  Stockholder Matters.                                                            | 9      |
| Item                  12.    | Certain                  Relationships and Related Transactions and Director                  Independence.                                                                                  | 11     |
| Item                  13.    | Exhibits                                                                                                                                                                                     | 13     |
| Signatures                   |                                                                                                                                                                                              | 14     |

**Forward-Looking        Statements **

**Explanatory        Note**

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**PART        II**

| **ITEM 7.** | **FINANCIAL                  STATEMENTS.** |
|------------------|--------------------------------------------|

| **ITEM8A(T).** | **CONTROLS                        AND                        PROCEDURES.** |
|----------------|----------------------------------------------------------------------------|

.        

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**PART        III**

| **ITEM 9.** | **DIRECTORS,                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE                  GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGEACT.** |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Name**                                  |   |    **Age** |   | **Position**                                                                        |
|-------------------------------------------|--------|---------------------------|--------|-------------------------------------------------------------------------------------|
| Marvin                  A. Sackner, M.D.  |   | 75                        |   | Chairman                  of the Board                                              |
|                                      |   |                      |   |                                                                                |
| Taffy                  Gould              |   | 65                        |   | Director                  and Vice Chairman of the Board                            |
|                                      |   |                      |   |                                                                                |
| Morton                  J. Robinson, M.D. |   | 75                        |   | Director                  and Secretary                                             |
|                                      |   |                      |   |                                                                                |
| Gerard                  Kaiser, M.D.      |   | 75                        |   | Director                                                                            |
|                                      |   |                      |   |                                                                                |
| Leila                  Kight              |   | 61                        |   | Director                                                                            |
|                                      |   |                      |   |                                                                                |
| John                  G. Clawson          |   | 79                        |   | Director                                                                            |
|                                      |   |                      |   |                                                                                |
| Gary                  W. Macleod          |   | 44                        |   | Director                  and Chief Executive Officer                               |
|                                      |   |                      |   |                                                                                |
| Gary                  Wetstein            |   | 70                        |   | Senior                  Vice President and Chief Financial                  Officer |

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**Involvement        in Certain Legal Proceedings **

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**Section        16(a) Beneficial Ownership Reporting Compliance **

**Code        of Ethics **

| **ITEM 10.** | **EXECUTIVE                  COMPENSATION.** |
|-------------------|----------------------------------------------|

**Executive        Compensation**

**SUMMARY        COMPENSATION TABLE**

| **Name                  and Principal Position****(a)** |   | **Year****(b)** |   | **Salary                  ($)****(c)** |   | **Bonus****($)****(d)** |   | **Option                  Awards ($)****(f)** |    | **All                  Other Compensation****($)****(i)** |   | **Total****($)****(j)** |                        |
|---------------------------------------------------------|--------|-----------------|--------|----------------------------------------|--------|-------------------------|--------|-----------------------------------------------|---------|-----------------------------------------------------------|--------|-------------------------|-----------------------------|
| Gary                  Macleod – CEO          |   |            | 2007   |                                   | $      | 117,692                 |   |                                          | — |                                                      |   | 92,024                  | (1)     | $ | 13,488 | (2)   | $ | 223,204 |   |
| Marvin                  Sackner                         |   |            | 2007   |                                   | $      | 52,000                  |   |                                          | — |                                                      |   | —                 |                        | $ | 148,750 | (3)   | $ | 200,750 |   |

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**OUTSTANDING        EQUITY AWARDS AT FISCAL YEAR-END**

|                                                       |   | **Option                  Awards**                                                                        |      |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|-----------|
| **Name**                                                   |   | **Number                  of Securities Underlying Unexercised Options (#)                  Exercisable** |      | **Number                  of Securities Underlying Unexercised Options (#)                  Unexercisable** |   | **Option                  Exercise Price**($) |   | **Option Expiration Date** |   |
| (a)                                                        |   | (b)                                                                                                       |      | (c) |   | (e) |   | (f) |   |
| Gary                  Macleod, CEO     |   |                                                                                                      | 1,000,000 |   |   | 500,000 |   | $ | 0.30 |   |   | November** **11,** **2010 |   |

**Employment        Agreement and Termination Benefits.**

**Compensation        of Directors **

**DIRECTOR        COMPENSATION (1)(2)**

| Name                                   |   | Fees Earned or Paid in Cash($) |    | Stock                  Awards ($)(3) |   | Total                  ($) |   |
|----------------------------------------|--------|---------------------------------------------------------|---------|--------------------------------------|--------|----------------------------|--------|
| (a)                                    |   | (b)                                                     |    | (c)                                  |   | (h)                        |   |
| Taffy                  Gould           |   |                                                    | — |                                 | $      | 55,534                     |   | $ | 55,534 |   |
| Gerard                  Kaiser, MD     |   |                                                    | — |                                 | $      | 13,300                     |   | $ | 13,300 |   |
| Morton                  J. Robinson MD |   |                                                    | — |                                 | $      | 40,250                     |   | $ | 40,250 |   |
| Leila                  Kight           |   |                                                    | — |                                 |   | —                    |   |   | — |   |
| John                  Clawson          |   |                                                    | — |                                 | $      | 8,750                      |   | $ | 8,750 |   |

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| **ITEM 11.** | **SECURITY                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED                  STOCKHOLDER MATTERS.** |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------|

**Security        Ownership of Certain Beneficial Owners**

| **Name                    of Directors and Officers Names and Addresses of 5% Beneficial                    Owners**                                  |   | **No. of Shares****of Common****Stock                    Beneficially****Owned                    (1)** |       | **Percentage of                    Beneficial Ownership (2)** |   | **No. of Shares                    of Series C Convertible Preferred Stock Beneficially                    Owned**   |          | **Percentage                    of Class (3)** |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------------------------------|-----------|
| Marvin                    A. Sackner, M.D., Director 1666                    Kennedy Causeway, Suite 308 North Bay Village Florida 32341    |   |                                                                                                                   | 13,763,842 | (4)                                                      |   | 20.2                                                                                                                                     | %   |                                                     | 36,855.98 | (4)   |   | 59.4 | % |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| Taffy                    Gould, Director                                                                                                         |   |                                                                                                                   | 1,476,998  | (5)                                                                     |   | 2.2                                                                                                                                      | %             |                                                     | -0-       |   |   | * |   |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| Morton                    J. Robinson, M.D., Director                                                                                            |   |                                                                                                                   | 1,020,320  | (6)                                                                     |   | 1.5                                                                                                                                      | %             |                                                     | 1,073.19  | (6) |   | 1.7 | % |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| Gerard                    Kaiser, M.D., Director                                                                                                 |   |                                                                                                                   | 323,541    | (7)                                                                     |   | *                                                                                                                                        |          |                                                     | 75        | (7) |   | * |   |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| Leila                    Kight, Director                                                                                                         |   |                                                                                                                   | 1,098,332  | (8)                                                                     |   | 1.6                                                                                                                                      | %             |                                                     | -0-       |   |   | * |   |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| John                    G. Clawson, Director                                                                                                     |   |                                                                                                                   | 395,000    | (9)                                                                     |   | *                                                                                                                                        |          |                                                     | -0-       |   |   | * |   |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| Gary                    Macleod, CEO and Director                                                                                                |   |                                                                                                                   | 1,462,500  | (10)                                                                    |   | 2.1                                                                                                                                      | %             |                                                     | -0-       |   |   | * |   |
|                                                                                                                                                            |   |                                                                                                                   |       |                                                                    |   |                                                                                                                                     |          |                                                     |      |   |   |   |   |
| All                    executive officers and directors as a group (7 persons)                                                                   |   |                                                                                                                   | 19,540,533 | (11)                                                                    |   | 28.0                                                                                                                                     | %             |                                                     | 38,004.17 |   |   | 61.2 | % |
| Frost                    Gamma Investments Trust(12) 4400                    Biscayne Blvd Miami,                    FL 33137          |   |                                                                                                                   | 11,413,125 | (13)                                                                    |   | 17.0                                                                                                                                     | %             |                                                     | 525       |   |   | * |   |

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| *    | Less                  than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)  | A                  person is deemed to be the beneficial owner of securities that                  can be                  acquired by such person within 60 days from the date hereof upon                  exercise                  of option and warrants. Each beneficial owner’s percentage ownership is                  determined by assuming that option and warrants that are held by                  such                  person (but not those held by any other person) and that are exercisable                  within 60 days from the date hereof have been exercised.                                                                                                                                                                                                                                                                                                                                           |
| (2)  | Based                  on 67,293,734 shares of Common Stock, issued and outstanding as                  July 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (3)  | Based                  on 62,048 shares of Series C Convertible Preferred Stock issued                  and                  outstanding, as of July 31, 2007. Each share of Series C convertible                  Preferred Stock converts into 25 shares of Common Stock upon payment                  of a                  $4.20 per share of common stock conversion premium,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (4)  | Common                  Stock holdings include 324,096 shares of Common Stock held by Ruth                  Sackner, Dr. Sackner’s spouse, 895,774 shares of Common Stock which may be                  acquired by Dr. Sackner upon conversion of 35,830.98 shares of                  Series C                  Convertible Preferred Stock upon payment of a conversion premium                  of $4.20                  per share of common stock and 25,625 shares of Common Stock which                  may be                  acquired by Ruth Sackner upon conversion of 1,025 shares of Series                  C                  Convertible Preferred Stock upon payment of a conversion premium                  of $4.20                  per share of common stock. Preferred Stock holdings include 1,025                  shares                  of Series C Convertible Preferred Stock held by Ruth Sackner. |
| (5)  | Includes                  options to purchase 270,332 shares of Common Stock. Includes securities                  held by the Taffy Gould Revocable Trust of which Ms. Gould is trustee,                  sole beneficiary and over which she has power to revoke. Does not                  include                  shares of Common Stock and options to purchase Common Stock held                  by family                  members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (6)  | Includes                  186,159 shares held jointly with spouse and 26,250 shares owned                  by spouse.                  Includes 26,829 shares of Common Stock which may be acquired upon                  conversion of Series C Convertible Preferred Stock upon payment                  of a                  conversion premium of $4.20 per share of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (7)  | Includes                  shares of Common Stock held by Dr. Kaiser’s spouse, options to                  purchase 65,000 shares of Common Stock, and 1,875 shares of Common                  Stock                  which may be acquired upon conversion of Series C Convertible Preferred                  Stock upon payment of a conversion premium of $4.20 per share of                  common                  stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (8)  | Includes                  securities held by Leila Kight’s and includes options to purchase 98,332                  shares of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (9)  | Includes                  options to purchase 70,000 Shares of Common Stock and 250,000 shares                  of                  Common Stock held in a trust established by Mr. Clawson for his                  children,                  of which he is neither the trustee nor a beneficiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (10) | Includes                  400,000 shares of Common Stock held by Mr. Macleod’s spouse and                  includes options to purchase 1,062,500 shares of Common Stock exercisable                  within 60 days of July 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (11) | Includes                  950,103 shares of Common Stock which may be acquired upon conversion                  of                  Series C Convertible Preferred Stock upon payment of a conversion                  premium                  of $4.20 per share of common stock and options to purchase 1,566,164                  shares of Common Stock exercisable within 60 days of July 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (12) | Frost                  Gamma Investments Trust. Frost Gamma Investments Trust is controlled                  by                  Dr. Phillip Frost                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (13) | Includes                  13,125 shares of Common Stock that may be acquired upon conversion                  of                  Series C Convertible Preferred Stock upon payment of a conversion                  premium                  of $4.20 per share of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

**Securities        Authorized for Issuance under Equity Compensation Plans**

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**Equity        Compensation Plan Information**

| **Plan                  Category**                                                                        |   | **Number of Securities****to be Issued Upon****Exercise of****Outstanding                  Options, Warrants****and                  Rights** |      | **Weighted-Average****Exercise Price of****Outstanding****Options, Warrants****and Rights** |   | **Number of Securities****Remaining Available for****Future Issuance Under Equity                  Compensation Plans**** (Excluding Securities****Reflected in Column                  (a))** |                     |
|-----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|
|                                                                                                      |   |                    **(a)**                                                                                                                                                  |      |                    **(b)**                                                                                 |   | **(c)**                                                                                                                                                                                                                                                    |                     |
|                                                                                                      |   |                                                                                                                                                                             |      |                                                                                                            |   |                                                                                                                                                                                                                                                       |                     |   |   |   |
| Stock                  Option Equity Compensation Plans Approved by Security                  Holders     |   |                                                                                                                                                                             | 50,000    |                                                                                                            | $      | 0.500                                                                                                                                                                                                                                                      |      |   | 1,900,000 |   |
|                                                                                                      |   |                                                                                                                                                                             |      |                                                                                                            |   |                                                                                                                                                                                                                                                       |                     |   |   |   |
| Stock                  Option Equity Compensation Plans Not Approved by Security                  Holders |   |                                                                                                                                                                             | 2,836,161 |                                                                                                            | $      | 0.374                                                                                                                                                                                                                                                      |                     |   | N/A |   |
|                                                                                                      |   |                                                                                                                                                                             |      |                                                                                                            |   |                                                                                                                                                                                                                                                       |                     |   |   |   |
| **Total**                                                                                                 |   |                                                                                                                                                                             | 2,886,161 |                                                                                                            | $      | 0.376                                                                                                                                                                                                                                                      |                     |   | 1,900,000 |   |

| **ITEM 12.** | **CERTAIN                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.** |
|-------------------|-------------------------------------------------------------------------------------------------|

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| **ITEM 13.** | **EXHIBITS.** |
|-------------------|---------------|

|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit No.** |   |   **Description                  of Exhibits**                                                                                                                                                                                                                                                                                                                                                         |
| 3.1                  |   | Articles                  of Incorporation, as amended (Incorporated by Reference from Exhibit                  3.1                  to the Form 8-K filed on April 8, 2008, includes amendment of April                  2,                  2008, which was not in effect at July 31, 2007)                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 3.2                  |   | By-Laws                  (Incorporated by reference from Exhibit 3(b) to the Company’s Registration                  Statement on Form S-1 Filed May 15, 1999 (File                  No. 33-14451))                                                                                                                                                                                                   |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.1                 |   | *                  License Agreement dated as of May 22, 1996 between the Company                  and                  SensorMedics Corporation                                                                                                                                                                                                                                                                 |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2                 |   | *                  Letter of Agreement dated April 21, 1999 between the Company and                  SensorMedics Corporation                                                                                                                                                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3                 |   | *                  Agreement Regarding Assignment of Patents and Intellectual Property                  dated                  August 14, 2000 between the Company and LifeShirt.com,                  Inc.                                                                                                                                                                                                      |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.4                 |   | *                  Amendment to Agreement Regarding Assignment of Patents and Intellectual                  Property dated December 23, 2000 between the Company and LifeShirt.com,                  Inc.                                                                                                                                                                                                        |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.5                 |   | Form                  of Stock Purchase Agreement dated as of August 1, 2005 between                  the Company                  and various Investors (Incorporated By Reference to Exhibit 4.1                  to Form                  8-K filed on August 18, 2005)                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.6                 |   | Product                  Development and Supply Agreement executed September 4, 2007 between                  Sing                  Lin Technologies Ltd and the Company (Incorporated By Reference                  to Exhibit                  10.1 to the Form 10-QSB/A Filed on April 22, 2008 (Confidentiality                  Treatment has Been Requested for Portions of this                  Exhibit) |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.7                 |   | 2000                  Stock Option Plan (Incorporated by Reference to the Company’s Information                  Statement on Schedule 14C filed April 5, 2001)(SEC Accession                  No**.**                  0000950170-01-000484)                                                                                                                                                              |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.8                 |   | Employment                  Agreement dated November 10, 2005 between the Registrant and Gary                  Macleod. (Incorporated                  By Reference to Exhibit 10.2 to the Form 8-K filed March 4, 2008).                                                                                                                                                                                   |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 14.1                 |   | Code                  of Ethics (Incorporated By reference to Exhibit 14.1 to the Company’s                  Annual Report on Form 10-K for the year ended July 31, 2005 and                  incorporated herein by reference)                                                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 21                   |   | *                  Subsidiaries of the Company                                                                                                                                                                                                                                                                                                                                                                   |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.1                 |   | *                  Certification of Periodic Report by Chief Executive Officer pursuant                  to                  Rule 13a-14 and 15d-14 of the Securities Exchange Act of                  1934.                                                                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.2                 |   | *                  Certification of Periodic Report by Chief Financial Officer pursuant                  to                  Rule 13a-14 and 15d-14 of the Securities Exchange Act of                  1934.                                                                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| 32.1                 |   | *                  Certification of 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 of 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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**SIGNATURES**

|                                     | NON-INVASIVE                    MONITORING SYSTEMS, INC. |
|------------------------------------------|----------------------------------------------------------|
|                                     |                                                     |   |
| Dated:                    April 22, 2008 | By:                                                      | /s/                    Marvin Sackner |
|                                     |                                                     | Marvin                    Sackner |
|                                     |                                                     | Chief                    Executive Officer |
|                                     |                                                     |   |
| Dated:                    April 22, 2008 | By:                                                      | /s/                    Gary Wetstein |
|                                     |                                                     | Gary                    Wetstein |
|                                     |                                                     | Chief                    Financial Officer and Senior Vice                    President |

| /s/                  Marvin A. Sackner    | Chairman                  of the Board, Director and Chief Executive | April                  22, 2008 |
|-------------------------------------------|----------------------------------------------------------------------|---------------------------------|
| MARVIN                  A. SACKNER, M.D.  | Officer                  (Principal Executive Officer)               |                            |
|                                      |                                                                 |                            |
| /s/                  Taffy Gould          | Vice                  Chairman of the Board and Director             | April                  22, 2008 |
| TAFFY                  GOULD              |                                                                 |                            |
|                                      |                                                                 |                            |
| /s/                  Morton J. Robinson   | Secretary                  and Director                              | April                  22, 2008 |
| MORTON                  J. ROBINSON, M.D. |                                                                 |                            |
|                                      |                                                                 |                            |
| /s/                  Gerard Kaiser        | Director                                                             | April                  22, 2008 |
| GERARD                  KAISER, M.D.      |                                                                 |                            |
|                                      |                                                                 |                            |
| /s/                  John G. Clawson      | Director                                                             | April                  22, 2008 |
| JOHN                  G. CLAWSON          |                                                                 |                            |
|                                      |                                                                 |                            |
| /s/                  Leila Kight          | Director                                                             | April                  22, 2008 |
| LEILA                  KIGHT              |                                                                 |                            |

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| Report                  of Independent Registered Public Accounting Firm                                                                    |   |   | F-2    |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                        |   |   |   |   |
| Balance                  Sheet at July 31, 2007                                                                                             |   |   | F-3    |   |
|                                                                                                                                        |   |   |   |   |
| Statements                  of Operations for the Years Ended July 31, 2007 and 2006                                                        |   |   | F-4    |   |
|                                                                                                                                        |   |   |   |   |
| Statements                  of Changes in Shareholders' Equity for the Years Ended July 31,                  2007 and                  2006 |   |   | F-5    |   |
|                                                                                                                                        |   |   |   |   |
| Statements                  of Cash Flows for the Years Ended July 31, 2007 and 2006                                                        |   |   | F-6    |   |
|                                                                                                                                        |   |   |   |   |
| Notes                  to Financial Statements                                                                                              |   |   | F-7    |   |
|                                                                                                                                        |   |   |   |   |
| Exhibit                  index                                                                                                              |   |   |   |   |

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|                             |
|----------------------------------|
|                             |
| /s/                  Eisner, LLP |
| Eisner,                  LLP     |

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**NON-INVASIVE        MONITORING SYSTEMS, INC.**

**BALANCE        SHEET**

**July        31, 2007**

| **ASSETS**                                                                                                 |   |
|------------------------------------------------------------------------------------------------------------|--------|
| **Current                  assets**                                                                        |   |   |   |   |
| Cash                                                                                                       |   | $ | 1,156,337 |   |
| Restricted                  cash                                                                           |   |   | 400,000 |   |
| Royalties                  receivable                                                                      |   |   | 48,756 |   |
| Prepaid                  expenses, deposits, and other current assets                                      |   |   | 29,803 |   |
|                                                                                                       |   |   |      |   |
| Total                  current assets                                                                      |   |   | 1,634,896 |   |
|                                                                                                       |   |   |   |   |
| **Furniture                  and equipment, net**                                                          |   |   | 19,624 |   |
|                                                                                                       |   |   |   |   |
| **Other                  assets, net**                                                                     |   |   | 401 |   |
| **Total                  assets**                                                                          |   | **$** | **1,654,921** |   |
|                                                                                                       |   |   |  |   |
| **LIABILITIES                  AND SHAREHOLDERS' EQUITY**                                                  |
| **Current                  liabilities**                                                                   |   |   |  |   |
| Note                  payable - bank                                                                       |   | $ | 500,000 |   |
| Note                  payable - other                                                                      |   |   | 20,600 |   |
| Accounts                  payable and accrued expenses                                                     |   |   | 217,677 |   |
| Deferred                  warranty income                                                                  |   |   | 3,900 |   |
|                                                                                                       |   |   |      |   |
| Total                  current liabilities                                                                 |   |   | 742,177 |   |
|                                                                                                       |   |   |  |   |
| Deferred                  warranty income                                                                  |   |   | 2,475 |   |
| **Total                  liabilities**                                                                     |   |   | **744,652** |   |
|                                                                                                       |   |   |   |   |
| **Shareholders'                  equity**                                                                  |   |   |  |   |
| Series                  B Preferred Stock, par value $1.00 per share;                                      |   |   |   |   |
| 100                  shares authorized, issued and outstanding                                             |   |   | 100 |   |
| Series                  C Preferred Stock, par value $1.00 per share;                                      |   |   |   |   |
| 62,048                  shares authorized, issued and outstanding                                          |   |   | 62,048 |   |
| Common                  Stock, par value $0 .01 per share; 100,000,000 shares                  authorized; |   |   |   |   |
| 67,293,734                  shares issued and outstanding                                                  |   |   | 672,937 |   |
| Additional                  paid in capital                                                                |   |   | 16,374,180 |   |
| Accumulated                  deficit                                                                       |   |   | (16,198,996 | ) |
| **Total                  shareholders' equity**                                                            |   |   | **910,269** |   |
| **Total                  liabilities and shareholders' equity**                                            |   | **$** | **1,654,921** |   |

----

**NON-INVASIVE        MONITORING SYSTEMS, INC.**

**STATEMENTS        OF OPERATIONS**

**Years        ended July 31, 2007 and 2006**

|                                                     |   | **2007** |           | **2006** |   |
|----------------------------------------------------------|--------|----------|----------------|----------|--------|
| **Revenues**                                             |   |     |                |     |   |  |   |
| Product                  sales, net                      |   | $        | 40,949         |     | $      | 5,151 |   |
| Royalties                                                |   |     | 265,080        |     |   | 223,127 |   |
| Research,                  consulting and warranty       |   |     | 4,285          |     |   | 112,319 |   |
|                                                     |   |     |           |     |   |   |   |
| Total                  revenues                          |   |     | 310,314        |     |   | 340,597 |   |
|                                                     |   |     |           |     |   |   |   |
| **Operating                  expenses**                  |   |     |                |     |   |   |   |
|                                                     |   |     |           |     |   |   |   |
| Cost                  of revenues                        |   |     | 10,490         |     |   | 71,839 |   |
| Selling,                  general and administrative     |   |     | 1,389,506      |     |   | 601,705 |   |
| Research                  and development                |   |     | 282,304        |     |   | 212,472 |   |
|                                                     |   |     |           |     |   |   |   |
| Total                  operating expenses                |   |     | 1,682,300      |     |   | 886,016 |   |
|                                                     |   |     |           |     |   |   |   |
| **Operating                  loss**                      |   | **$**    | **(1,371,986** | **)**    | **$**  | **(545,419** | **)** |
|                                                     |   |     |           |     |   |   |   |
| **Interest                  income (expense), net**      |   |     | 13,294         |     |   | (67,641 | ) |
|                                                     |   |     |           |     |   |   |   |
| **Net                  loss**                            |   | **$**    | **(1,358,692** | **)**    | **$**  | **(613,060** | **)** |
|                                                     |   |     |           |     |   |   |   |
| Weighted                  average number of common       |   |     |           |     |   |   |   |
| shares                  outstanding - Basic and diluted  |   |     | 64,093,238     |     |   | 51,295,259 |   |
|                                                     |   |     |           |     |   |   |   |
| Basic                  and diluted loss per common share |   | $        | (0.02          | )        | $      | (0.01 | ) |

----

**NON-INVASIVE        MONITORING SYSTEMS, INC.**

**STATEMENTS        OF CHANGES IN SHAREHOLDERS’ EQUITY**

**Years        ended July 31, 2007 and 2006**

|                                                                                                                                        |   | Preferred Stock |   |          |   | Additional        |   |     |   |        |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|---------------|--------|-------------------|--------|----------|--------|-------------|--------|
|                                                                                                                                        |   | Series B        |   | Series C |   | Common Stock |   | Paid-in- |   | Accumulated |   |   |   |
|                                                                                                                                        |   | Shares               |   | Amount        |   | Shares            |   | Amount   |   | Shares      |   | Amount |   | Capital |   | Deficit |   | Total |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |
| **Balance                  at July 31, 2005**                                                                                               |   |                 | 100    |          | $      | 100               |   |     | 62,048 |        | $      | 62,048 |   |   | 31,221,971 |   | $ | 312,220 |   | $ | 12,921,955 |   | $ | (14,227,244 | ) | $ | (930,921 | ) |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for cash and converted bridge loans                                                                    |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | 21,000,000 |   |   | 210,000 |   |   | 782,500 |   |   | - |   |   | 992,500 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for legal settlement                                                                                   |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | 93,750 |   |   | 938 |   |   | 29,062 |   |   | - |   |   | 30,000 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                  issued to bank debt guarantors                                                                                     |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | - |   |   | - |   |   | 37,426 |   |   | - |   |   | 37,426 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  loss**                                                                                                               |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | - |   |   | - |   |   | - |   |   | (613,060 | ) |   | (613,060 | ) |
| **Balance                  at July 31, 2006**                                                                                               |   |                 | 100    |          | $      | 100               |   |     | 62,048 |        | $      | 62,048 |   |   | 52,315,721 |   | $ | 523,158 |   | $ | 13,770,943 |   | $ | (14,840,304 | ) | $ | (484,055 | ) |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for cash, converted stock holder loan and cashless                  options                  exercised |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | 14,554,512 |   |   | 145,544 |   |   | 2,218,997 |   |   | - |   |   | 2,364,541 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                  market value for Bonus Shares issued to directors and                  guarantors                                     |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | 423,501 |   |   | 4,235 |   |   | 292,216 |   |   | - |   |   | 296,451 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SFAS                  123R Expense                                                                                                          |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | - |   |   | - |   |   | 92,024 |   |   | - |   |   | 92,024 |   |
|                                                                                                                                        |   |                 |   |          |   |              |   |     |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  loss**                                                                                                               |   |                 | -      |          |   | -                 |   |     | -      |        |   | - |   |   | - |   |   | - |   |   | - |   |   | (1,358,692 | ) |   | (1,358,692 | ) |
| **Balance                  at July 31, 2007**                                                                                               |   |                 | 100    |          | $      | 100               |   |     | 62,048 |        | $      | 62,048 |   |   | 67,293,734 |   | $ | 672,937 |   | $ | 16,374,180 |   | $ | (16,198,996 | ) | $ | 910,269 |   |

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

**STATEMENTS      OF CASH FLOWS**

**Years      ended July 31, 2007 and 2006**

|                                                                                                          |   | **2007** |          | **2006** |   |
|---------------------------------------------------------------------------------------------------------------|--------|----------|---------------|----------|--------|
| **Operating                Activities**                                                                       |   |     |               |     |   |  |   |
| Net                loss                                                                                       |   | $        | (1,358,692    | )        | $      | (613,060 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities:     |   |     |          |     |   |   |   |
| Deferred                warranty income                                                                       |   |     | (3,900        | )        |   | (3,900 | ) |
| Depreciation                and amortization                                                                  |   |     | 18,821        |     |   | 11,718 |   |
| Stock                based compensation expense                                                               |   |     | 92,024        |     |   | –  |   |
| Fair                value of bonus shares issued to directors and bank debt                guarantors         |   |     | 296,451       |     |   | –  |   |
| Common                stock issued for legal settlement                                                       |   |     | –  |     |   | 30,000 |   |
| Options                issued to bank debt guarantors                                                         |   |     | –  |     |   | 37,426 |   |
| Provision                for inventory obsolescence                                                           |   |     | –  |     |   | 26,225 |   |
| Changes                in operating assets and liabilities                                                    |   |     |          |     |   |   |   |
| Accounts                and royalties receivable                                                              |   |     | (25,152       | )        |   | 28,443 |   |
| Inventories                                                                                                   |   |     | 10,490        |     |   | –  |   |
| Prepaid                expenses and other assets                                                              |   |     | 11,471        |     |   | (9,686 | ) |
| Accounts                payable and accrued expenses                                                          |   |     | 10,072        |     |   | 93,063 |   |
| Deferred                research and consulting revenues                                                      |   |     | –  |     |   | (5,000 | ) |
| **Net                cash used in operating activities**                                                      |   |     | **(948,415**  | **)**    |   | **(404,771** | **)** |
| **Investing                Activities**                                                                       |   |     |          |     |   |   |   |
| Fixed                asset purchases                                                                          |   |     | (18,602       | )        |   | –  |   |
| Restricted                cash                                                                                |   |     | (400,000      | )        |   | –  |   |
| **Net                cash used in investing activities**                                                      |   |     | **(418,602**  | **)**    |   | –  |   |
|                                                                                                          |   |     |          |     |   |   |   |
| **Financing                activities**                                                                       |   |     |          |     |   |   |   |
| Net                proceeds from issuance of common stock and exercise of options and                warrants |   |     | 2,199,541     |     |   | 892,500 |   |
| Net                proceeds from bank loan                                                                    |   |     | 500,000       |     |   | –  |   |
| Repayments                of note payable                                                                     |   |     | (580,563      | )        |   | (85,095 | ) |
| **Net                cash provided by financing activities**                                                  |   |     | **2,118,978** |     |   | **807,405** |   |
| **Net                (decrease) increase in cash**                                                            |   |     | **751,961**   |     |   | **402,634** |   |
| Cash,                beginning of year                                                                        |   |     | 404,376       |     |   | 1,742 |   |
| Cash,                end of year                                                                              |   | $        | 1,156,337     |     | $      | 404,376 |   |
|                                                                                                          |   |     |          |     |   |   |   |
| Supplemental                disclosure                                                                        |   |     |          |     |   |   |   |
| Cash                paid for income taxes                                                                     |   | $        | –       |     | $      | 647 |   |
| Cash                paid for interest                                                                         |   | $        | 63,723        |     | $      | 38,878 |   |
|                                                                                                          |   |     |          |     |   |   |   |
| Supplemental                schedule of non-cash financing activities                                         |   |     |          |     |   |   |   |
| Notes                converted to common stock or used in option exercises                                    |   | $        | 165,000       |     | $      | 100,000 |   |
| Insurance                premiums financed by notes payable.                                                  |   | $        | 38,758        |     | $      | – |   |

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

| **1.** | **ORGANIZATION                AND BASIS OF PRESENTATION** |
|--------|-----------------------------------------------------------|

***Organization.***

***Basis      of Presentation.***

| **2.** | **SUMMARY                OF SIGNIFICANT ACCOUNTING POLICIES** |
|--------|---------------------------------------------------------------|

***Use      of Estimates.***

***Inventories.***

***Furniture      and Equipment.***

***Long-lived      Assets.***

***Income      Taxes.***

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

***Revenue      Recognition.***

***Advertising      Costs.***

***Research      and Development Costs.***

***Warranties.***

***Earnings      (Loss) Per Share.***Basic      net      loss per common share is computed using the weighted average number of common      shares outstanding during the year. Diluted net loss per share is computed      using      the weighted average number of common and dilutive common equivalent shares      outstanding during the year. No dilution resulted from outstanding securities      during the years ended July 31, 2007 and 2006 due to the net losses incurred      for      such years:

|                                                                           |   | 2007   |      | 2006   |   |
|--------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
| Stock                Options                                                   |   |   | 2,886,161 |   |   | 7,503,659 |   |
| Warrants                                                                       |   |   | 325,000   |   |   | 9,500,000 |   |
| Common                stock issuable on conversion of Series C Preferred Stock |   |   | 1,551,200 |   |   | 1,551,200 |   |

***Fair      Value of Financial Instruments.***

***Stock      Based Compensation***
**.      **

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

|                                                                                                                                                         |   | 2006   |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|
| Net                loss as reported                                                                                                                          |   | $      | (613,060 | ) |
| Add:                Total stock based compensation included in reported net loss                                                                             |   |   |     |   |
| Deduct:                Total stock-based employee compensation expense determined under                fair                value based method for all awards |   |   | (153,375 | ) |
| Proforma                net loss                                                                                                                             |   | $      | (766,435 | ) |
|                                                                                                                                                         |   |   |          |   |
| Net                loss per share attributable to common stockholders                                                                                        |   |   |          |   |
| Basic &                Diluted - as reported                                                                                                        |   | $      | (0.012   | ) |
|                                                                                                                                                         |   |   |          |   |
| Basic &                Diluted - pro forma                                                                                                          |   | $      | (0.015   | ) |

***Recent      Accounting Pronouncements.***

*“Accounting      for Uncertainty in Income Taxes – An interpretation of FASB Statement      No. 109,”*

*Fair      Value Measurements”*

*The      Fair Value Option for Financial Assets and Financial      Liabilities”*

| **3.** | **ROYALTIES                RECEIVABLE** |
|--------|-----------------------------------------|

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

| **4.** | **FURNITURE                AND EQUIPMENT, NET** |
|--------|-------------------------------------------------|

| Computer                equipment and software          |   | $      | 27,825 |   |
|---------------------------------------------------------|--------|--------|--------|--------|
| Furniture,                fixtures and office equipment |   |   | 9,512  |   |
|                                                    |   |   | 37,337 |   |
| Less                accumulated depreciation            |   |   | 17,713 |   |
| Furniture                and equipment, net             |   | $      | 19,624 |   |

| **5.** | **OTHER                ASSETS, NET** |
|--------|--------------------------------------|

| **6.** | **NOTES                PAYABLE – RELATED PARTY** |
|--------|-------------------------------------------------------------|

| **7.** | **DEFERRED                EXTENDED WARRANTY INCOME** |
|--------|------------------------------------------------------|

| **8.** | **INCOME                TAXES** |
|--------|---------------------------------|

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

| **9.** | **SHAREHOLDERS’                EQUITY** |
|--------|-----------------------------------------------|

**August,      2005 Equity Financing **

**October,      2006 Equity Financing **

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

| **10.** | **STOCK                OPTIONS** |
|---------|----------------------------------|

**Stock      Options **

|                                                     |   | **Number of Shares** |                        |                    **Weighted Average****Exercise Price** |   |
|----------------------------------------------------------|--------|--------------------------------|-----------------------------|--------------------------------------------------------------------------|--------|
|                                                     |   |                           |                        |                                                           |   |
| Options                  outstanding, July 31, 2005 |   |                           | 6,                  371,161 |                                                           | $      | 0.411 |   |
| Options                  granted                         |   |                           | 1,593,331                   |                                                                     |   | 0.291 |   |
| Options                  exercised                       |   |                           | -                           |                                                                     |   | - |   |
| Options                  forfeited                       |   |                           | (460,833                    | )                                                                        |   | 0.335 |   |
| Options                  outstanding, July 31, 2006 |   |                           | 7,503,659                   |                                                                     |   | 0.390 |   |
| Options                  granted                         |   |                           | -                           |                                                                     |   | - |   |
| Options                  exercised                       |   |                           | (3,217,504                  | )                                                                        |   | 0.399 |   |
| Options                  forfeited                       |   |                           | (1,399,994                  | )                                                                        |   | 0.400 |   |
| Options                  outstanding, July 31, 2007 |   |                           | 2,886,161                   |                                                                     | $      | 0.376 |   |

| **Options Outstanding**                                  |   |                         |      | **Weighted**                                 |   | **Options Exercisable**                  |   |
|---------------------------------------------------------------|--------|------------------------------|-----------|----------------------------------------------|--------|-----------------------------------------------|--------|
| **Range of Exercise****Prices**                     |   | **Number of****Shares** |      | **Weighted****Average****Exercise****Price** |   | **Average****Contractual****Life****(years)** |   | **Number of****Shares** |   | **Weighted****Average****Price** |   |
| 14.5¢ - 20¢                     |   |                         | 326,996   |                               | $      | 0.174                                         |   |   | 3.250 |   |   | 326,996 |      | $ | 0.174 |   |
| 30¢ - 40¢                       |   |                         | 1,537,500 |                                         | $      | 0.302                                         |   |   | 2.266 |   |   | 1,037,500 |   | $ | 0.304 |   |
| 50¢ - 75¢                       |   |                         | 1,021,665 |                                         | $      | 0.551                                         |   |   | 3.828 |   |   | 1,021,665 |   | $ | 0.551 |   |
|                                                     |   |                         |           |                                         |   |                                               |   |   |  |   |   |  |   |   |  |   |
| Total                                               |   |                         | 2,886,161 |                                         | $      | 0.376                                         |   |   | 3.504 |   |   | 2,386,161 |   | $ | 0.392 |   |

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

The      Company estimates the fair value of stock options using a Black-Scholes      valuation model consistent with provisions of SFAS No. 123(R), Securities and      Exchange Commission (SEC) Staff Accounting Bulletin No. 107 and the Company’s      prior period pro forma disclosures of net loss, including the fair value of      stock-based compensation. Key input assumptions used to estimate the fair value      of stock options include the expected term until exercise of the option,      expected volatility of the Company’s stock, the risk free interest rate, option      forfeiture rates and dividends, if any. The expected term of the option is      based      on a historical weighted average of exercised options. The expected volatility      is derived from historical volatility of the Company’s stock on the U.S. Over      the Counter market for a period that matches the expected term of the option.      The risk-free interest rate is the yield from a treasury bond or note      corresponding to the expected term of the option. The Company has not paid      dividends and does not expect to pay dividends in the      future.

The      Company’s 2000 Stock Plan (the “plan”), as amended, provides for a total of      2,000,000 shares of Common Stock, of which a total of 1,900,000 shares remain      available at July 31, 2007. The Plan allows the issuance of incentive stock      options, stock appreciation rights and restricted stock awards. The exercise      price of the options is determined by the compensation committee of the      Company’s Board of Directors, but incentive stock options must be granted at an      exercise price not less than the fair market value of the Company’s Common Stock      as of the grant date or an exercise price of not less than 110% of the fair      value for the a 10% shareholder. Options expire ten years from the date of      the      grant and are exercisable according to the terms of the individual options      agreement. 

**Warrants      **

**Common      Shares Reserved**

| Options                issued and Outstanding              |   |   | 2,886,161 |   |
|------------------------------------------------------------|--------|--------|-----------|--------|
| Options                available under the 2000 Stock Plan |   |   | 1,900,000 |   |
| Warrants                                                   |   |   | 325,000   |   |
| Conversion                of Class C Preferred Shares      |   |   | 1,551,200 |   |
|                                                       |   |   | 6,662,361 |   |

**Legal      Settlement. **

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

**PREFERRED      STOCK **

| **11.** | **RELATED                PARTY TRANSACTIONS** |
|---------|-----------------------------------------------|

| **12.** | **COMMITMENTS                AND CONTINGENCIES** |
|---------|--------------------------------------------------|

***Leases.***

| **13.** | **SUBSEQUENT                EVENTS** |
|---------|--------------------------------------|

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

| **14.** | **REVISIONS                TO PREVIOUSLY ISSUED FINANCIAL STATEMENTS AS OF AND FOR THE TWO YEARS                ENDED JULY 31, 2007** |
|---------|---------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | **As Previously                Reported** |       | **Adjustment** |   | **As                Restated** |   |
|---------------------------------------------------|--------|------------------------------------------------|------------|----------------|--------|--------------------------------|--------|
| Options                outstanding, July 31, 2005 |   |                                           | 6,124,160  |           |   | 247,001                        |   |   | 6,371,161 |   |
| Options                granted                    |   |                                           | 1,593,331  |           |   | -                              |   |   | 1,593,331 |   |
| Options                exercised                  |   |                                           | -          |           |   | -                              |   |   | - |   |
| Options                forfeited                  |   |                                           | (460,833   | )              |   | -                              |   |   | (460,833 | ) |
| Options                outstanding, July 31, 2006 |   |                                           | 7,256,658  |           |   | 247,001                        |   |   | 7,503,659 |   |
| Options                granted                    |   |                                           | -          |           |   | -                              |   |   | - |   |
| Options                exercised                  |   |                                           | (3,217,504 | )              |   | -                              |   |   | (3,217,504 | ) |
| Options                forfeited                  |   |                                           | (1,399,994 | )              |   | -                              |   |   | (1,399,994 | ) |
| Options                Outstanding, July 31, 2007 |   |                                           | 2,639,160  |           |   | 247,001                        |   |   | 2,886,161 |   |

----

**NON-INVASIVE      MONITORING SYSTEMS, INC.**

|                                                       |   | **As Previously                Reported** |      | **Adjustment** |   | **As Restated** |   |
|------------------------------------------------------------|--------|------------------------------------------------|-----------|----------------|--------|----------------------|--------|
| **Options              Outstanding**                       |   |                                           |      |           |   |                 |   |   |   |   |
| Exercise                prices from 14.5¢ to 15¢ |   |                                           | 266,660   |           |   | 60,336               |   |   | 326,996 |   |
| Exercise                prices from 30¢ to 40¢   |   |                                           | 1,662,500 |           |   | (125,000             | )      |   | 1,537,500 |   |
| Exercise                prices from 50¢ to 75¢   |   |                                           | 710,000   |           |   | 311,665              |   |   | 1,021,665 |   |
| Total                options outstanding, July 31, 2007    |   |                                           | 2,639,160 |           |   | 247,001              |   |   | 2,886,161 |   |
| Weighted                average exercise price             |   | $                                              | 0.390     |           | $      | (0.014               | )      | $ | 0.376 |   |
| Weighted                average contractual life (years)   |   |                                           | 3.337     |           |   | 0.167                |   |   | 3.504 |   |
| **Options                Exercisable**                     |   |                                           |      |           |   |                 |   |   |   |   |
| Exercise                prices from 14.5¢ to 15¢ |   |                                           | 266,660   |           |   | 60,336               |   |   | 326,996 |   |
| Exercise                prices from 30¢ to 40¢   |   |                                           | 1,162,500 |           |   | (125,000             | )      |   | 1,037,500 |   |
| Exercise                prices from 50¢ to 75¢   |   |                                           | 710,000   |           |   | 311,665              |   |   | 1,021,665 |   |
| Total                options exercisable, July 31, 2007    |   |                                           | 2,139,160 |           |   | 247,001              |   |   | 2,386,161 |   |
| Weighted                average exercise price             |   | $                                              | 0.372     |           | $      | 0.020                |   | $ | 0.392 |   |

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**Exhibit      Index **

| **Exhibit No.** |   | **Description                of Exhibits**                                                                                                                                                                                                                                                                                                                                                        |
|----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                  |   | Articles                of Incorporation, as amended (Incorporated by Reference from Exhibit                3.1                to the Form 8-K filed on April 8, 2008, includes amendment of April                2,                2008, which was not in effect at July 31, 2007)                                                                                                               |
|                 |   |
| 3.2                  |   | By-Laws                (Incorporated by reference from Exhibit 3(b) to the Company’s Registration                Statement on Form S-1 Filed May 15, 1999 (File                No. 33-14451))                                                                                                                                                                                          |
|                 |   |
| 10.1                 | *      | License                Agreement dated as of May 22, 1996 between the Company and Sensormedics                Corporation                                                                                                                                                                                                                                                                         |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.2                 | *      | Letter                of Agreement dated April 21, 1999 between the Company and Sensormedics                Corporation                                                                                                                                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3                 | *      | Agreement                Regarding Assignment of Patents and Intellectual Property dated August                14,                2000 between the Company and LifeShirt.com, Inc.                                                                                                                                                                                                                |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.4                 | *      | Amendment                to Agreement Regarding Assignment of Patents and Intellectual Property                dated December 23, 2000 between the Company and LifeShirt.com,                Inc.                                                                                                                                                                                                 |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5                 |   | Form                of Stock Purchase Agreement dated as of August 1, 2005 between the                Company                and various Investors (Incorporated By Reference to Exhibit 4.1 to                Form                8-K filed on August 18, 2005)                                                                                                                                  |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6                 |   | Product                Development and Supply Agreement executed September 4, 2007 between                Sing                Lin Technologies Ltd and the Company (Incorporated By Reference to                Exhibit                10.1 to the Form 10-QSB/AFiled                on April 22, 2008 (Confidentiality Treatment has Been Requested for                Portions of this Exhibit) |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.7                 |   | 2000                Stock Option Plan (Incorporated by Reference to the Company’s Information                Statement on Schedule 14C filed April 5, 2001)(SEC Accession                No**.**                0000950170-01-000484)                                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.8                 |   | Employment                Agreement dated November 10, 2005 between the Registrant and Gary                Macleod.(Incorporated                By Reference to Exhibit 10.2 to the Form 8-K filed March 4, 2008).                                                                                                                                                                                |
|                 |   |
| 14.1                 |   | Code                of Ethics (Incorporated By reference to Exhibit 14.1 to the Company’s                Annual Report on Form 10-K for the year ended July 31, 2005 and                incorporated herein by reference)                                                                                                                                                              |
|                 |   |
| 21                   | *      | Subsidiaries                of the Company                                                                                                                                                                                                                                                                                                                                                        |
|                 |   |
| 31.1                 | *      | Certification                of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14                and                15d-14 of the Securities Exchange Act of 1934.                                                                                                                                                                                                               |
|                 |   |
| 31.2                 | *      | Certification                of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14                and                15d-14 of the Securities Exchange Act of 1934.                                                                                                                                                                                                               |
|                 |   |
| 32.1                 | *      | Certification                of 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                of 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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