SECURITIES AND EXCHANGE COMMISSION


                             WASHINGTON, D.C. 20549

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


                                   FORM 10-KSB


                (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended July 31, 1999
              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         For the transition period from
                                    _________

                             Commission file number
                                     0-13176


                      NON-INVASIVE MONITORING SYSTEMS, INC.
             (Exact name of Registrant as specified in its charter)

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

                  1840 West Avenue, Miami Beach, Florida 33139
               (Address of principal executive offices) (Zip Code)

                                 (305) 534-3694
                        (Registrant's telephone number:)
                             -----------------------


           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE
                                (Title of Class)

           Securities registered pursuant to Section 12(g) of the Act:


                     Common Stock, par value $.01 per share
                                (Title of Class)


<PAGE>

         Check whether the issuer: (1) has filed all reports required to be
         filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
         during the preceding 12 months (or for such shorter period that the
         registrant was required to file such reports) and (2) has been subject
         to such filing requirements for the past 90 days.


         Yes   [X]    No  ____


                  Indicate by check mark if disclosure of delinquent filers
         pursuant to Item 405 of Regulation S-K is not contained herein, and
         will not be contained, to the best of registrant's knowledge, in
         definitive proxy or information statements incorporated by reference in
         Part III of this Form 10-KSB or any amendment to this Form 10-KSB [ ].

                  State issuer's revenues for the most recent fiscal year:
         $224,165.

                  State the aggregate market value of the voting stock held by
         non-affiliates of the registrant on October 28, 1999, computed by
         reference to the price at which the stock was sold on that date:
         $2,151,472.


                      APPLICABLE ONLY TO CORPORATE ISSUERS
                      ------------------------------------


                  The number of shares outstanding of the registrant's Common
         Stock, par value $.01 per share (the "Common Stock"), as of October 28,
         1999, was 21,514,726.

                  Transitional Small Business Disclosure Format:
                                                               Yes_____ No __X__

                                       2

<PAGE>


Forward-Looking Statements

This Report contains, in addition to historical information, forward-looking
statements regarding Non-Invasive Monitoring Systems, Inc. (the "Company" or
"NIMS"), which represent the Company's expectations or beliefs including, but
not limited to, statements concerning the Company's operations, performance,
financial condition, business strategies, and other information and that involve
substantial risks and uncertainties. The Company's actual results of operations,
some of which are beyond the Company's control, could differ materially. For
this purpose, any statements contained in this Report that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimate," or "continue" or the
negative or other variations thereof or comparable terminology are intended to
identify forward-looking statements. Factors that could cause or contribute to
such difference include, but are not limited to, history of operating losses and
accumulated deficit; need for additional financing; dependence on relationship
with SensorMedics Corporation ("SMC"); competition; dependence on management;
risks related to proprietary rights; government regulation; and other factors
discussed herein and in the Company's other filings with the Securities and
Exchange Commission.

                                     PART I

ITEM 1.  BUSINESS.

         A.  General Development of Business.
         ------------------------------------

The Company is engaged in research and development of computer assisted,
non-invasive monitoring devices and related software designed to detect abnormal
respiratory, cardiac, and other medical conditions from sensors placed
externally on the body's surface. These devices provide diagnostic information
regarding cardiorespiratory and sleep disorders in infants, children and adults;
in addition, alarms are sounded for adverse cardiac and respiratory events in
critically ill patients. The Company, pursuant to a Research and Consulting
Agreement (the R&D Agreement") by and between LifeShirt.com, Inc. dated November
2, 1999, has also undertaken development of the LifeShirt system, a product that
incorporates an array of the Company's patented sensor technology into a
wearable garment designed to transmit physical and emotional signs of health and
disease over the Internet. In addition, NIMS has licensed, pursuant to a License
Agreement dated November 2, 1999 (the "License Agreement"), the LifeShirt system
to LifeShirt.Com, Inc. and LifeShirt.com, Inc. will manufacture, market and sell
the LifeShirt system. Finally, the Company also has been investigating and
developing a non-invasive, therapeutic, cardiorespiratory device based upon
periodic acceleration. This device helps to soothe babies to sleep in the same
way as a mother does in pushing her baby carriage back and forth, allows
non-invasive ventilation without requiring delivery of gas volume from a
mechanical ventilator at the airway, achieves cardiopulmonary resuscitation
without imposing external pressures on the chest and/or abdomen, and promotes
the body's release of nitric oxide, a substance that is the most powerful
endogenous vasodilator mediator in the body. Release of nitric oxide into the
circulation probably is a major reason for the beneficial effects of exercise


                                       3
<PAGE>

and prevention of coronary artery disease. NIMS is engaged in discussions with
investor groups on means to commercialize the product.


NIMS' principal products in commerce are:
Respitrace 200/204 are small stand alone devices that produce breath waveforms
with respiratory inductive plethysmography; theseare used for diagnostic
polysomnography.

RespiEvents is a PC based software package used in conjunction with the
Respitrace PT, Respitrace Plus and Respitrace 200/204 Data Acquisition System to
detect apnea (cessation of breathing), slowing of heartbeat, diminution of blood
oxygen, and other adverse breathing and cardiac events.

RespiPanel is a personal computer-based software program used in conjunction
with Respitrace 200/204 for PC interaction. RespiPanel allows the operator to
display breath waveforms, calibrate the waveforms to absolute volume units and
switch between AC and DC modes of operation.

Respitrace Plus is a small portable cardiorespiratory monitor used to detect and
alert the patient of adverse cardiac and respiratory conditions or diagnostic
polysomnography. The Respitrace Plus is manufactured and marketed
non-exclusively by SMC under the arrangement described below.

Respitrace PT is a breathing recorder originally developed to monitor infants
prone to Sudden Infant Death Syndrome. The Respitrace PT is manufactured and
marketed as SomnoStar PT by SMC under the arrangement described below.

RespiTrends is a personal computer-based software program used in conjunction
with Respitrace Plus for patient minute-by-minute trends of patient data,
display, analysis, storage and hard copy report.

Respibands Plus are patented, disposable non-invasive Respitrace transducers
worn around the torso manufactured by SMC under the arrangement described below.

In December 1996, the Company and SMC entered into a Joint Development,
Manufacturing and Marketing Agreement (the "SMC Agreement") pursuant to which
the Company granted SMC the exclusive rights to manufacture the Company's
Respiband Plus and the non-exclusive rights to manufacture the Company's
Respitrace Plus and Respitrace PT. NIMS also granted SMC first rights of refusal
for new Respitrace products developed by NIMS. In exchange for such rights, NIMS
received fixed payments from SMC, as well as ongoing royalties. SMC also
produces instruments for pulmonary function testing, metabolic measurements,
sleep diagnostics and like support and has over 30 years experience in the
medical device industry.

The contract with SMC was amended in April 1999 to read that the right of first
refusal to NIMS' Respitrace products was terminated. In turn, the Company agreed
to allow SMC to scale down

                                       4
<PAGE>

Somnostar PT to include Respitrace channels only and allow designation of this
device as Respitrace QDC. Royalties on this new device would continue at the
same percentage of sales as Somnostar PT. Further, the Company granted SMC the
non-exclusive rights to manufacture, incorporate into their own devices, and
sell Respitrace 200 printed circuit boards within SMC's product line at a fixed
dollar amount royalty to the Company for each board produced.

The Company has operated under significant capital constraints in recent years
and has downsized its operations. The royalties generated under the SMC
Agreement and those from sale of products were not sufficient to fund research
and development activities and otherwise meet working capital requirements
during fiscal 1999. Accordingly, in March 1999, it became necessary for Marvin
Sackner, CEO and Chairman of the Board of Directors, to purchase 5,000,000
shares of the Company's common stock ("Common Stock") for $150,000 in a private
offering to fund operations. Since the Company had entered into negotiations
with LifeShirt.com, Inc., a start-up company marketing vital signs online
through the Internet, it was deemed necessary to continue funding operations of
the Company beyond the fiscal year ending July 31, 1999 ("Fiscal 1999").
Accordingly, Marvin Sackner, CEO and Chairman of the Board of Directors, agreed
to loan the Company money to continue funding operations at 12% per annum and
with an option to purchase 1,000,000 shares of the Common Stock at an exercise
price of 14.5 cents per share. As of October 25, 1999, the principal amounted to
$105,423.

On November 2, 1999, the Company entered into the License Agreement with
LifeShirt.com, Inc., a start-up company. The License Agreement provides that
LifeShirt.com, Inc. will license the Company's technology and software
incorporated into a wearable garment system termed LifeShirt. The Company
received an equity position in LifeShirt.com, Inc., as well as termed royalties
based upon the revenues of LifeShirt.com, Inc. In addition, an Agreement was
signed that called for research and development of the LifeShirt system. This
agreement funds Company operations through April 2000. Thereafter, it is
renewable on a month-by-month basis depending upon needs for further research
and development. As long as LifeShirt.com, Inc. meets its fiscal
responsibilities through the R&D Agreement, the Company should be able to meet
its working capital requirements during fiscal 2000. However, if LifeShirt.com,
Inc. fails to meet its financial obligations to the Company, then the Company
may require additional capital to remain in business. Failure to secure
necessary financing might result in the further reduction and curtailment of
operations.

The term the "Company" refers to both the Company and its subsidiaries, unless
the context requires otherwise. The Company's offices are located at 1840 West
Avenue, Miami Beach, Florida 33139 and its telephone number is (305) 534-3694.

         B.  Financial Information About Industry Segments.
         --------------------------------------------------

Not applicable.


                                       5
<PAGE>


         C. Narrative Description of Business.
         -------------------------------------

Introduction

The Company is engaged in the research and development of computer assisted,
non-invasive monitoring devices designed to detect abnormal respiratory and
related pulmonary events from sensors placed on the body's surface. These
devices provide diagnostic information regarding cardiorespiratory and sleep
disorders in infants, children and adults; in addition, alarms are sounded for
adverse cardiac and respiratory events in critically ill patients. A report in
the journal, Sleep August 1999, dealing with measurement techniques for
respiratory-related sleep disorders was issued by the American Academy of Sleep
Medicine Task Force, a group composed of members of the American Thoracic
Society, European Respiratory Society, and Australasian Sleep Association. It
gave the Company's Respitrace technology the highest rating among non-invasive
monitors of breathing.

The Company has also undertaken development of the LifeShirt system, a product
that incorporates an array of the Company's patented sensor technology into a
wearable garment designed to transmit physical and emotional signs of health and
disease over the Internet. Finally, the Company also has been investigating and
developing a non-invasive, therapeutic, cardiorespiratory device based upon
periodic acceleration. This device helps to soothe babies to sleep in the same
way as a mother does in pushing her baby carriage back and forth, allows
non-invasive ventilation without requiring delivery of gas volume from a
mechanical ventilator at the airway, achieves cardiopulmonary resuscitation
without imposing external pressures on the chest and/or abdomen, and promotes
the body's release of nitric oxide, a substance that is the most powerful
endogenous vasodilator mediator in the body.

Current Products
----------------

Respitrace 200/204 Data Acquisition System Series - commercially introduced in
April 1998, are small stand-alone devices that produce breath waveforms from
respiratory inductive plethysmographic transducers placed around the Rib Cage
and Abdomen. These devices also provide waveforms that depict respiratory
efforts. The Respitrace 200 series devices are indicated in diagnostic
polysomnography and are the lowest priced Respitrace based devices ever
marketed. They offer digital sampling rates that are four times faster than all
other marketed Respitrace products for better display of breath waveforms.
Multiplexing is used for the first time in a Respitrace product to minimize
electrical cross talk between the rib cage and abdominal signals and hence
provide a signal with a higher level of signal/noise ratio. The Waveforms output
may be viewed with a polygraph interface, or a personal computer with RespiPanel
or RespiEvents software.

Respitrace Plus - commercially introduced in April 1991, is a small, portable,
non-invasive, stand-alone patient monitoring unit designed to continuously
monitor heart and breathing abnormalities in a variety of environments inside
and outside a hospital at an economically viable selling price. It can also be
used as a portable battery-powered device during transportation of patients in
ambulances and within a hospital from patient rooms to diagnostic

                                       6
<PAGE>

areas. The system furnishes digital and analog displays of the
electrocardiograph and breath waveforms and interfaces with computer and video
display equipment.

RespiEvents - which was commercially introduced in April 1996, is a software
program for a personal computer ("PC") designed to be used in conjunction with
Respitrace Plus and Respitrace PT. It enables the PC to receive digital
information from the Respitrace Plus Digital Interface (RS232 output) and
display real-time Respitrace Plus waveforms on the computer screen. RespiEvents
allows storage of Respitrace Plus information on the hard drive of the PC for
subsequent display of full fidelity waveforms and derived numerical values and
indices. It includes tools to manipulate the vertical and horizontal gain
displays of waveform information stored on the PC. It can convert the numerical
values of the data files into ASCII format enabling them to be imported into
other programs such as spread sheets (e.g., Excel, Lotus 123, Quattro Pro,
Paradox), databases (e.g., FoxPro, Paradox), and statistical packages (e.g.,
SigmaPlot, Statistica) so that sophisticated analysis and plots can be carried
out.

RespiEvents - transforms the PC into a polygraph recorder for Respitrace Plus
generated waveforms and can be used in any situation where such a device might
be employed. This software operates upon the DOS platform. One application is
polysomnography in which apneic/hypopneic events may be diagnosed and classified
and sleep stages characterized according to breath waveform patterns. Another is
to monitor breath by breath changes in ventilation and breathing pattern during
exercise. RespiEvents permits analyses of unusual patterns of breathing and
electrocardiographic waveforms that are particularly useful in documentation of
such occurrences in critically ill pulmonary, cardiac, and neurologic patients.
The Company, based on current market information, believes that the features
presented by RespiEvents are of particular importance to clinicians treating not
only adult patients with cardiorespiratory and sleep disorders but also in the
monitoring of infants both in hospital and at home. The Company has retained
exclusive rights to RespiEvents. Such software is sold to customers directly by
the Company and also to SMC according to the pricing set forth in the SMC
Agreement.

Respievents 5.0 - RespiEvents 4.0 version is a MS DOS software program
introduced to commerce in 1996 that analyzed Respitrace breath waveforms and
Electrocardiographic signals. A new Y2000 compliant version has been converted
to the MS Windows 95/98 platform and is called Respievents 5.0. It provides
on-line video display of 1) breath, electrocardiographic, pulse oximeter, and
other physiological waveforms, 2) minute by minute trends of selected variables,
3) tidal flow-volume and Konno-Mead loops and 4) numerical values of processed
information. In the prior DOS version of the program (also Y2000 compliant),
trends and loop displays were available only in off-line mode. This new version
was released to the market in December 1998. The Windows 95/98 RespiEvents
software speeds up clinical decision making abilities through presentation of
relevant on-line information about breathing and cardiac activities while still
retaining the report capabilities of off-line analysis.

Respitrace PT - commercially introduced in April 1996, is manufactured and
marketed by SMC under the name SomnoStar PT. The PT is a diagnostic sleep
recorder for detecting sleep disorders in adults, children and babies.


                                       7
<PAGE>

RespiTrends - commercially introduced in July 1992 was a PC based MS DOS
software program for use with Respitrace Plus. In September 1998 a new Y2000
compliant MS Windows 95 version of the software was released. RespiTrends is a
medical data storage software program that permits real-time reception and
storage of cardiac and respiratory information for display on the screen of the
device. It also generates a variety of reports and trend-plots of patient
status. The software program also allows the user to down load RespiTrends from
Respitrace Plus to a personal computer for further analysis and report
generation. The new Y2000 RespiTrends software offers enhanced graphics and on
line help. Respitrends v1.6c software does not impact on the safety and
effectiveness of the Respitrace Plus. Incorrect dates and birth date
computations will appear on screens and reports. Although this date is not used
in any calculation in the RespiTrends software affecting physiological monitored
parameters, this anomaly makes RespiTrends software non-Year 2000 compliant.
RespiTrends is sold to SMC by NIMS. The Company is also offering trade-in
opportunities to upgrade to Y2000 Respitrends.

Respi-Ecg Simulator - commercially introduced in January 1994, is an electronic
simulator capable of simulating breathing for the rib cage and abdomen channels
as inputs to all Respitrace monitors. Additionally, it also has a channel for
simulating ECG and heart rate for monitors. The breathing part of the simulator
is theoretically correct to produce an exact calibration of breathing waveforms
and can produce an apnea at the touch of a button. The ECG section of the
simulator is capable of producing two heart rates, allowing a functional check
of Bradycardia alarms on monitor heart channels.

Respitrace Basic System - was introduced in 1979 as the Company's initial
product. By placing one Respiband over the thorax and the other over the
abdomen, changes in the capacity of the thoracic and abdominal cavities during
pulmonary functions are measured and graphically displayed on a recording
device. The Company does not currently manufacture or market the Respitrace
basic system directly, but rather has licensed the rights for its manufacture
and marketing in the United States, Canada and Japan to one party and has
licensed the rights for its manufacturing and marketing in the entire world
except the United States, Canada and Japan to a second concern. Such licenses,
which are exclusive, run in perpetuity and for 20 years, respectively, and
provide for royalty payments of 25% and 20% of net sales (as defined),
respectively. Such entities are also licensed to sell certain other NIMS
products on a non-exclusive basis in such territories. Pursuant to these license
agreements, the Company earned royalties of approximately $24,520 and $10,000
during the fiscal years ended July 31, 1998 and 1997, respectively.

Disposable and Accessories - The Company has also developed disposable and
accessory items utilized with its products including the Respiband Plus.

                                       8
<PAGE>

Products Under Development
--------------------------

The Company has continued to develop upgrades to its RespiEvents software for
the following products listed below and plans to apply to the U.S. Food and Drug
Administration ("FDA") for approval to market them in the fiscal year 2000
through the 510(k) mechanism.

Respi-Neckband - The hardware component of this device, which involves wearing a
Respitrace transducer band around the neck has already been 510(k) approved for
marketing of respiratory efforts detection. This technology provides carotid
arterial pulses and jugular venous pulses with appropriate digital filtering and
or electrocardiographic triggered ensemble averaging. One scientific
peer-reviewed paper has been published on using this technology to obtain
systolic time intervals at rest and exercise, a non-invasive measure for
assessing mechanical function of the heart. Another scientific peer reviewed
paper has been published on non-invasive determination of central venous
pressure ("CVP"), a measure that reflects fluid loading of the cardiovascular
system. Its accuracy has been validated against invasive central venous catheter
measurements. The Company plans an upgrade to RespiEvents 5.0 to market this
software and also incorporate it into the LifeShirt system that is described
below.

RespiCardiograph (Thoracocardiograph) - is a system that is designed to monitor
and record cardiac signals by placing a Respiband around the lower chest. This
technology displays left ventricular cardiac volume curves and serves as a
continuous, non-invasive monitor of the mechanical function of the heart. By
providing recording of changes in blood pumped from the heart, it measures
changes in cardiac output. In addition, analysis of various points of the
ventricular volume curve, provide assessment of systolic (contraction) and
diastolic (relaxation) properties of the heart. The RespiCardiograph also
provides data on regional cardiac motion, which is a key factor in early
detection of acute heart attacks. Five scientific peer-reviewed papers have been
published on this technology, another is in press, and one will be presented at
a national medical meeting (2000). Its accuracy has been validated against
invasive thermodilution cardiac output measurements, automated border edge
detection echocardiography, and Doppler measurements of transmitral blood flows.
The RespiCardiograph is a low cost, much less labor-intensive substitute for
certain aspects of Doppler-Echo technology and a low cost, safe alternative to
invasive Swan-Ganz catheter technology for monitoring the status of the
pulmonary circulation and heart in critically ill patients. The Company plans an
upgrade to RespiEvents 5.0 to market this software and also to incorporate it
into the LifeShirt system that is described below.

Respi-HemithoracicBands - consists of two Respitrace bands, one placed over the
right and the other over the left sides of the chest. Differences in volume
expansion and lag of one side to the other help in deciding whether pleural
effusions, pneumothorax or atelectasis might be present. One paper on this
technology has been presented to a National Medical Meeting. The Company plans
an upgrade to RespiEvents 5.0 to market this software and also to incorporate it
into the LifeShirt system that is described below.

LifeShirt - is a Wearable Physiological Computer (patent pending) that
incorporates six inductive plethysmographic transducers, electrocardiographic
electrodes, and a two position sensor into a low turtle neck sleeveless garment.
Pulse oximetry is an optional add-on. These

                                       9
<PAGE>

transducers are connected to a miniaturized electronic module that attaches to a
HandSpring or PalmPilot palm computer for data collection and processing.
Minute-by-minute and hour-by-hour trends of approximately 37 physical and
emotional signs of health and disease are computed. In addition, the monitored
patient can enter symptoms into the Palm Computer. Data from the module is
uploaded into a PC and then transmitted over the Internet up to the
LifeShirt.com, Inc. portal for quality control and generation of reports. Vital
and physiological signs can be obtained non-invasively, continuously, cheaply,
and reliably with the comfortably worn LifeShirt garment system while at rest,
during exercise, at work, and during sleep.

Non-Invasive Therapeutic Motion Platform - The Company has developed and
continues to test a horizontal motion platform that imparts periodic
acceleration to the body in a headward-footward direction at rates of
approximately 90 to 240 times per minute (patent pending). In experimental
animal studies, it has been found and reported at scientific meetings that this
device has several major clinical applications. For example, the system is
capable of supporting ventilation in both normal and diseased lungs even when
the respiratory muscles are paralyzed. This method does not require connection
to the airway for imposed positive pressures, as is the case with conventional
mechanical ventilators. As such, it has the potential to eliminate lung injury
produced by conventional ventilators, a point that is the subject of several
scientific papers. The system also has potential to serve as a stand-alone
device in cardiopulmonary resuscitation.

The motion platform through periodic acceleration also appears to cause release
of nitric oxide from the vascular lining cells. The motion platform is the first
device discovered that can accomplish the release of this natural substance.
Nitric oxide is believed to be the most important mediator of vasodilatation on
the body. As such, it has favorable actions in chronic heart failure, pulmonary
hypertension, and prevention of arteriosclerotic heart disease among others.

The Company is currently seeking financial support from larger medical device
companies and investment groups to bring this device to market.

During the fiscal year ended July 31, 1998, ("fiscal 1998") the Company's
principal product development activities were focused on the new RespiTrace 200
Data Acquisition system, Y2000 compliant, Windows-based versions of the
RespiTrends and RespiEvents programs, the therapeutic motion platform, and the
LifeShirt system.

Manufacturing
-------------

As described in "General Development of Business" above, in December 1996, NIMS
granted SMC the exclusive rights to manufacture Respiband Plus and non-exclusive
rights to manufacture certain other products. To reduce the manufacturing costs
for new products, the Company has chosen to outsource the manufacture of the
Respitrace 200 and Respitrace 204. The Company's products are assembled
utilizing a variety of off-the-shelf components available from a variety of
sources, in addition to custom components such as printed circuit boards and
software fabricated to NIMS' specifications. NIMS provides the manufacturer a
full bill of materials for parts procurement by the manufacturer to the
Company's specifications. This

                                       10
<PAGE>

includes PC boards and cable assemblies. The device is manufactured and final
testing of the product is completed at NIMS. NIMS then packages and ships the
completed products. The Company will continue to outsource manufacturing of its
products.

Marketing and Sales
-------------------

The Company's products are designed for hospitals and other health care
facilities such as outpatient surgical units, sleep disorder centers, nursing
homes, skilled nursing facilities, research facilities and governmental agencies
as well as to health care professionals such as pulmonary and critical care
physicians, neonatologists, anesthesiologists, respiratory therapists, hospital
administrators and directors of home health care agencies.

Pursuant to the SMC Agreement, the Company granted SMC the exclusive rights to
manufacture the Company's Respiband Plus and non-exclusive rights to manufacture
the Company's Respitrace Plus and Respitrace PT. SMC produces instruments for
pulmonary function testing, metabolic measurements, sleep diagnostics and like
support and has over 30 years experience in the medical device industry. SMC
distributes through 35 direct representatives in the United States, the United
Kingdom, the Benelux countries, France, and Germany and uses 50 dealers in other
countries.

Since introducing the Respitrace 200 and 204 Data Acquisition Systems above, the
Company has been selling these systems directly through advertisements in peer
reviewed medical trade journals, the Internet, trade show leads, and its
existing customer base.

New Y2000 compliant Respitrends and RespiEvents 5.0 will be marketed to SMC and
the Company's existing Respitrace Plus customer base. RespiEvents 5.0 will be
marketed by the Company to Respitrace 200 and 204 customers.

Regulatory Compliance
---------------------

Medical device manufacturers are subject to extensive federal and state
regulations relating to nearly every aspect of the development, manufacture and
commercialization of such products. The FDA is the principal regulatory
authority over medical devices in the United States. Additionally, in order to
manufacture and market medical devices overseas, which the Company believes is a
significant potential market for its products, the Company must comply with
regulatory requirements and procedures in various foreign countries. The CE mark
is required for marketing in the European Community. The Company obtained ISO
9001 and equivalent FDA Quality Assurance certification from TUV Rheinland in
May 1999. Therefore, it is permitted to utilize the CE mark on its products.

Patents and Trademarks
----------------------

The Company currently holds 18 United States and 8 foreign patents with respect
to both overall design and specific features of its present and proposed
products and has submitted applications with respect to an additional 3 United
States and 2 foreign patents. It was granted one new patent in 1999; Means for
Analyzing Breath Waveforms as to their Neuromuscular Respiratory

                                       11
<PAGE>

Implications. No assurance can be given as to the scope of protection afforded
by any patent issued, whether patents will be issued with respect to any pending
or future patent application, that patents issued will not be designed around,
infringed or successfully challenged by others, that the Company will have
sufficient resources to enforce any proprietary protection afforded by its
patents or that the Company's technology will not infringe on patents held by
others. The Company believes that in the event its patent protection is
materially impaired, a material adverse effect on its present and proposed
business could result. The expiration dates of the patents are as follows:
<TABLE>
<CAPTION>

                                            Number of Patents                       Expiration
                                                                                       Date
       ---------------------------------------------------------------------------------------
                                    Domestic                 Foreign
                                    --------                 -------
<S>                                    <C>                                              <C>
                                       3                                                1999
                                       1                                                2000
                                       1                                                2001
                                       2                        2                       2004
                                       2                                                2005
                                       1                        1                       2006
                                       1                        2                       2007
                                       2                                                2008
                                                                2                       2009
                                       2                        1                       2011
                                       2                                                2015
                                       1                                                2016

         Total                        18                        8
</TABLE>

With respect to its present and proposed product line, the Company has 13
trademarks and trade names which are registered in the United States and 13,
which are registered in several foreign countries, including the Company's
principal trademark.

Competition
-----------

The Company competes with several concerns that market non-invasive respiratory
monitoring devices, including Respironics Corporation, Hewlett Packard and
Spacelabs, all of which are larger, have longer operating histories and have
financial and personnel resources far greater than those of the Company.
Management believes, however, that it effectively competes with such concerns on
the basis of uniqueness and quality.

Employees
---------

The Company currently employs five employees on a full-time basis. Two are
engaged in general and administrative duties, two in research and development,
and one in product assembly. The Company also employs one part time employee as
a bookkeeper.


                                       12
<PAGE>

ITEM 2.  PROPERTIES.
         -----------

The Company occupies approximately 2,500 square feet at 1840 West Avenue, Miami
Beach, Florida, which house its executive offices and product development
facilities. Such space is leased on a month-to-month basis from a non-affiliated
party at an annual rental of approximately $30,000. The Company believes that
its facilities are adequate for the Company's needs in the near future.

ITEM 3   LEGAL PROCEEDINGS.
         -----------------

There are no material legal proceedings that are currently pending or, to the
Company's knowledge, contemplated against the Company to which it is a party.

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         ---------------------------------------------------

         None.




                                       13

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
         ---------------------------------------------------------------------

         A.  Market Information.

The Company's Common Stock is currently traded in the over-the-counter market
and is listed on the OTC Bulletin Board. The high and low bid prices for the
Common Stock, as reported by the OTC Bulletin Board for each quarter during the
last two fiscal years were as follows:

         Quarter Ended               High               Low

         October 31, 1997           $0.17             $0.14
         January 31, 1998           $0.17             $0.12
         April 30, 1998             $0.13             $0.09
         July 31, 1998              $0.12             $0.085
         October 31, 1998           $0.11             $0.070
         January 31, 1999           $0.07             $0.065
         April 30, 1999             $0.07             $0.065
         July 31, 1999              $0.069            $0.045

The quotations set forth above reflect inter-dealer prices, without retail
markup, markdown, or commission, and may not necessarily represent actual
transactions.

B.  Holders
    -------

At October 27, 1999 there were approximately 1,560 holders of record of the
Common Stock.

C.  Dividends.
    ---------

The Company has not paid any dividends on its capital stock since its inception
and the Board of Directors of the Company does not contemplate doing so in the
near future. Any decision as to future payment of dividends depends on the
factors, as the Board of Directors deems relevant.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         -----------------------------------------------------------------------
         OF OPERATIONS.

Results of Operations.
----------------------

Fiscal 1999 Compared to Fiscal 1998

The Company's net loss for fiscal 1999 was approximately $569,000 as compared
$519,000 for the year ending July 31, 1998 ("fiscal 1998"). For fiscal 1999,
total revenue was approximately

                                       14
<PAGE>

$241,000 as compared to approximately $224,000 in fiscal 1998. The Company
decided to direct its efforts to develop the Respitrace 200 series, Y2000
compliant Respitrends and RespiEvents MS Windows 95 based software, and the Non
Invasive Therapeutic Motion Platform.

Cost of goods sold expressed as a percentage of product sales were approximately
22% for fiscal 1999 compared to 33% in fiscal 1998. These decreases are due to
certain product sales having very little cost of sales associated with them.

Net operating loss carry forward for the Company as of July 31, 1999 was
approximately $9,976.

Operating expenses were approximately $824,000 for fiscal 1999, compared to
$761,000 in fiscal 1998. Selling, general and administrative expenses were
approximately $53,000 greater in fiscal 1999 as compared to fiscal 1998 as a
result of ISO 9001 costs incurred in fiscal 1999. Research and development
expenses were approximately $11,000 higher in fiscal 1999 as compared to fiscal
1998 due to costs incurred on certain projects, like the Non-Invasive
Therapeutic Motion Platform, Respitrace 200 Data Acquisition System, and, Y2000
compliant Respitrends and RespiEvents software.

Liquidity and Capital Resources
-------------------------------

Working capital at July 31, 1999 was $18,000 as compared to $348,000 at July 31,
1998. The significant decrease in working capital for the year ended July 31,
1999 as compared to July 31,1998 was primarily due to the operating loss
incurred by the Company in 1999 offset by the proceeds from the sale of common
stock in March 1999.

Cash used in operating activities during fiscal 1999 was approximately $485,000
compared to $467,000 during fiscal 1998. The increase in cash used in operating
activities of approximately $18,000 in fiscal 1999 as compared to fiscal 1998 is
primarily attributable to an increase in the Company's net loss (net of non-cash
charges) of $34,000 during fiscal 1999 and an increase in operating assets (net
of liabilities) of $1,000 in fiscal 1999 as compared to an increase of $17,000
in fiscal 1998.

Cash provided by investing activities was approximately $171,000 in fiscal 1999
compared to cash used in investing activities of approximately $286,000 in
fiscal 1998. Investing activities consist primarily of costs for patents,
software production and purchase/sale of short-term investments.

Cash provided by financing activities in fiscal 1999 was approximately $180,000
compared to approximately $245,000 in fiscal 1998 due to proceeds from the
issuance of common stock and proceeds from loans from a shareholder.

The reports of independent auditors on financial statements at and for the two
years ended July 31, 1999, contain an explanatory paragraph raising substantial
doubt of the Company's ability to continue as a going concern. Note 2 to the
consolidated financial statements describes the conditions which raise this
doubt and management's plans. As previously noted, revenues

                                       15
<PAGE>

generated from the SMC Agreement were insufficient to fund operations during
fiscal 1999. If revenues generated from the SMC Agreement or other sales do not
reach levels sufficient to fund working capital requirements during fiscal 2000,
the Company will require further financing to continue operations during fiscal
2000 and in any event may require additional capital to fund research and
development efforts beyond presently contemplated levels. Failure to secure
necessary financing might result in the further reduction and curtailment of
operations.

Year 2000
---------

NIMS has made every effort that all currently marketed devices are Year 2000
compliant. All of the Company's hardware and software products are able to
perform date recording and computations beginning with January 1, 2000. As part
of the Company's routine Good Manufacturing Processes and Regulatory Compliance,
NIMS addressed this potential problem and implemented through its normal working
procedures the implementation of Y2000 as a criteria of new and present product
development. The Company recently released Respitrends v2.0, a personal computer
based software which is Year 2000 compliant to be used with the Respitrace Plus
as a replacment for Respitrends a non compliant software peoduct There is no
impact on the safety and effectiveness of the Respitrace Plus which utilizes the
Respitrends software, although incorrect dates and birth date computations will
appear on screens and reports. These dates are not used in any calculation in
the Respitrends software, affecting physiological monitored parameters however
it is this anomaly which makes Respitrends software non-Year 2000 compliant (See
"Products and Services" and "Products Under Development").

ITEM 7.  FINANCIAL STATEMENTS.
         --------------------

The financial statements required by this Item, the accompanying notes thereto
and the reports of independent accountants are included as part of this Form
10-KSB immediately following the signature page, beginning at page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         ---------------------------------------------------------------
         FINANCIAL DISCLOSURE.
         ---------------------

The Company terminated Ernst & Young LLP ("E&Y") as its auditors on September 8,
1998. During the Company's past two fiscal years, E&Y's reports on the Company's
financial statements contained an explanatory paragraph raising substantial
doubt about the Company's ability to continue as a going concern. The decision
to terminate its relationship with E&Y was approved by the Board of Directors of
the Company. During the past two fiscal years there were no disagreements with
E&Y on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of E&Y would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. Pursuant to action
approved by the Company's Board of Directors, the Company retained Gerson,
Preston & Company, P.A. as its auditors as of September 8, 1998.


                                       16
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         -------------------------------------------------------------
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
         --------------------------------------------------

The current directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>

         Name                               Age      Position
<S>                                         <C>      <C>
         Marvin A. Sackner, M.D.            67       Chairman of the Board,
                                                     Chief Executive Officer and Director

         Ruth Sackner                       63       Secretary and Director

         Gerard Kaiser, M.D.                67       Director

         Morton J. Robinson, M.D.           67       Director

         Stanley C. Sackner, D.O.           63       Director

         Edward Shapiro                     85       Director
</TABLE>

MARVIN A. SACKNER, M.D. was elected to his positions with the Company in
November 1989, upon the Company's acquisition by merger (the "Merger") of all of
the capital stock of Non-Invasive Monitoring Systems, Inc., a privately held
Florida corporation ("NIMS/Fla"). Dr. Sackner co-founded NIMS/Fla in 1977 and
was the Chairman of the Board from 1981 until October 1989 and Chief Executive
Officer from 1985 until the Merger. From 1974 until October 1991, Dr. Sackner
was the Director of Medical Services at Mount Sinai in Miami Beach, Florida.
From 1973 to 1986, Dr. Sackner was consultant to Key Pharmaceutical, Inc. and
has been a consultant to the Sherwood Medical Division of American Home Products
and Schering-Plough Corporation since 1986. Dr. Sackner was the President of the
American Thoracic Society from 1979 to 1980 and was the Chairman of the
Pulmonary Disease Subspecialty Examining Board of the American Board of Internal
Medicine from 1977 to 1980.

RUTH SACKNER was elected a Director of the Company in November 1989 upon
completion of the Merger. Mrs. Sackner was a Director of NIMS/FLA from 1986
until the Merger. Mrs. Sackner is an Overseer of the Library Committee at the
University of Pennsylvania.

GERARD KAISER, M.D. was elected a Director of the Company in November 1989 upon
completion of the Merger. From 1988 until the Merger, Dr. Kaiser was a Director
of NIMS/FLA. Since 1971,he has been at the University of Miami School of
Medicine and currently serves as Deputy Dean for Clinical Affairs and Daughtry
Professor of Cardiothoracic Surgery. He also serves as Senior Vice President for
Medical Affairs at Jackson Memorial Hospital.

                                       17
<PAGE>


MORTON J. ROBINSON, M.D. was elected a Director of the Company in November 1989
upon completion of the Merger. Dr. Robinson was a Director of NIMS/FLA from 1986
until the Merger. For at least the past 6 years, Dr. Robinson has been a
Director of the Department of Pathology and Laboratory Medicine at Mount Sinai.

STANLEY C. SACKNER, D.O. was elected a Director of the Company in November 1989
upon completion of the Merger. Dr. Sackner was a Director of NIMS/FLA from 1986
until the Merger. Dr. Sackner is on honorary staff of the Department of
Anesthesiology at Memorial Hospital in Union, New Jersey.

EDWARD SHAPIRO was elected a Director of the Company in November 1989 upon
completion of the Merger. Mr. Shapiro was a Director of NIMS/FLA from 1987 until
the Merger. From 1969 to the present, Mr. Shapiro has been a private real estate
investor. From 1950 until 1981, he was a Director and President of several
divisions of Maryland Cup Corporation. From 1979 until 1982, Mr. Shapiro was the
Chairman of the Board of Directors of Mount Sinai Medical Center, Miami Beach,
Florida.

Ruth Sackner and Dr. Stanley C. Sackner are Marvin A. Sackner's spouse and
brother, respectively.

Directors of the Company hold their offices until the next annual meeting of the
Company's shareholders until their successors have been duly elected and
qualified or until their earlier resignation, removal of office or death. Other
than an Audit and Legal Committee consisting of Edward Shapiro, Gerard Kaiser
and Ruth Sackner and a Compensation and Stock Option Review Committee consisting
of Marvin A. Sackner and Morton J. Robinson, there are no committees of the
Board of Directors. Officers of the Company serve at the pleasure of the Board
of Directors and until the first meeting of the Board of Directors following the
next annual meeting of the Company's shareholders and until their successors
have been chosen and qualified.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's Directors, executives officers and holders of more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and NASDAQ. Such persons
are required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
oral or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, during fiscal 1998,
all filing requirements applicable to its directors, executive officers and
greater than 10% beneficial owners were complied with.

ITEM 10.  EXECUTIVE COMPENSATION.
          ----------------------

         A.  Summary Compensation Table
             --------------------------

The following compensation table sets forth, for the fiscal years ending July
31, 1998 and 1999, the cash and certain other compensation paid by the Company
to the Company's Chief Executive Officer

                                       18
<PAGE>

("CEO"). No other current executive officer had an annual salary and bonus in
excess of $100,000 during either of such fiscal years:

                                                   Annual Compensation
Name and Principal Position          Year                Salary ($)

Marvin A. Sackner
Chairman of the Board, and
Chief Executive Officer             1998                $85,000
                                    1999                $85,000

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
          --------------------------------------------------------------

The following table sets forth certain information regarding NIMS' Common Stock,
Series C Convertible Preferred Stock and NIMS' voting securities beneficially
owned on October 28, 1998 and giving effect to the Exchange Offer, by (i) each
person who is known by NIMS to own beneficially or exercise voting or
dispositive control over 5% or more of NIMS' Common Stock, (ii) each of NIMS'
Directors and (iii) all executive officers and Directors as a group:
<TABLE>
<CAPTION>
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Name and Address   No of Shares     Percentage of    No of Shares    Percentage of    No. of Shares    Percentage of
Identity of Group  of Common        Beneficial       of Series C     Class            of   Voting      Beneficial
                   Stock            Ownership        Convertible                      Securities       Ownership
                   Beneficially                      Preferred                        Beneficially
                   Owned (1)                         Stock                            Owned (1)
                                                     Beneficially
                                                     Owned
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
<S>                <C>              <C>              <C>       <C>   <C>              <C>              <C>
Marvin A.          11,565,445(2)    53.9%            36,855.92 (2)   9.4%             11,602,300.92    53.9%
Sackner, M.D.                                                                         (2)
1840 West Avenue
Miami Beach, FL
33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Ruth Sackner       11,565,445(2)    53.9%            36,855.92 (2)   9.4%             11,602,300.92    53.9%
1840 West Avenue                                                                      (2)
Miami Beach, FL
33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Stanley C.         416,575(4)       1.9%             1,198.19 (4)    0.9%             417,773.19 (4)   1.9%
Sackner, D.O.
1840 West Avenue
Miami Beach, FL
33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Morton J.          409,492(3)       1.9%             1,073.19 (3)    1.7%             77,232.19 (3)    1.9%
Robinson, M.D.
1840 West
Avenue, Miami
Beach, FL  33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Edward Shapiro     26,250 (5)       *                525.00 (5)      *                26,775. (5)      *
1840 West Avenue
Miami Beach, Fl
33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Gerard Kaiser,     46,541 (6)       *                75.00 (6)       *                46,616. (6)      *
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------

                                       19

<PAGE>
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
M.D.
1840 West Avenue
Miami Beach, FL
33139
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
All executive      12,130,970       56.0%            39,727.30       62.0%            12,170,697.30    56.0%
officers and       (2)-(6)                           (2)-(8)                          (2)-(6)
directors as a
group (6persons)
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
</TABLE>

         ---------------------------
         * Less than 1%
(1)      Holders of Series C Preferred Stock (conversion option expired 7/31/91)
         are entitled to vote together with the holders of shares of Common
         Stock and Series B Preferred Stock (conversion option expired 7/31/91),
         on a share-for-share basis as a single class, on all matters except as
         otherwise required by law.
(2)      Represents securities held by Dr. Marvin A. Sackner and Ruth Sackner,
         his spouse.
(3)      Includes securities held jointly by Dr. Robinson and his spouse and by
         a pension plan established in connection with Dr. Robinson's medical
         practice. Does not include securities held by trust established for the
         benefit of Dr. Robinson's children, in which securities he disclaims
         beneficial ownership.
(4)      Includes shares of Common Stock held by a pension plan established in
         connection with Dr. Stanley Sackner's medical practice and securities
         held jointly by Dr. Sackner and his spouse.
(5)      Includes securities held jointly by Mr. Shapiro and his spouse.
(6)      Includes shares of Common Stock held by Dr. Kaiser's spouse.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         On April 30, 1998, the Company completed a private offering of
4,074,997 shares of common stock to certain directors, executive officers and
employees of the Company, at a price of $0.6 per share for total proceeds of
$244,500. Such shares were sold pursuant to the exemption from registration
afforded by Section 4 (2) of the Securities Act of 1933, as amended by
Regulation D promulgated thereunder, each purchaser of shares having delivered
appropriate investment representations of the Company and having consented to
the imposition of a restrictive legend on certificates evidencing the shares.


                                       20

<PAGE>

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
          ----------------------------------------------------------------

(a).  Exhibits

Exhibit No.            Description of Exhibits
-----------            -----------------------

         3(a)          Articles of Incorporation, as amended (1)

         (b)           By-Laws, as amended (2)

         4(a)          Form of Certificate evidencing shares of Common Stock (3)

         10(c)         Revised SMC Agreement (4)

         16            Letter regarding Change in Certifying Accountants (5)

         21            Subsidiaries of the Company (2)

         27            Financial Data Schedule (SEC use only)

(1)      Included as an Exhibit to the Company's Registration Statement on Form
         S-1 (File No. 33-14451), including all pre and post effective
         Amendments thereto, and incorporated herein by reference, except for
         Articles of Amendment and a Certificate of Designation, Rights,
         Preferences and Limitations of Series C Convertible Preferred Stock,
         which are included as Exhibits to the Company's Annual Report on Form
         10-K for the year ended July 31, 1989 and are incorporated herein by
         reference.
(2)      Included as an Exhibit to the Company's Registration Statement on Form
         S-1 (File No. 33-14451) including all pre and post effective Amendments
         thereto, and incorporated herein by reference.
(3)      Included as an Exhibit to the Company's Annual Report on Form 10-K for
         the year ended July 31, 1990 and incorporated herein by reference.
(4)      Included as an Exhibit to the Company's Annual Report on Form 10-K for
         the year ended July 31, 1996 and incorporated herein by reference.
(5)      Included as an Exhibit to the Company's Current Report on Form 8-K
         dated September 10, 1998 and incorporated herein by reference.

(b)      Reports on Form 8-K
         None.



                                       21
<PAGE>


         SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) of the
         Securities Exchange Act of 1934 the registrant has duly caused this
         report to be signed on its behalf by the undersigned, thereunto duly
         authorized.

                      NON-INVASIVE MONITORING SYSTEMS, INC.



         Dated: November 11, 1999                   By:/S/ Marvin A. Sackner

                                                    Marvin A. Sackner,
                                                    Chairman of the Board
         -----------------------------------------------------------------

                  Pursuant to the requirements of the Securities Exchange Act of
         1934, this report has been signed below by the following persons in the
         capacities and on the dates indicated.
<TABLE>
<CAPTION>

          Signatures                                              Title                                             Date
          ----------                                              -----                                             ----
<S>      <C>                                        <C>                                                       <C>
         /S/ Marvin A. Sackner
         MARVIN A. SACKNER                          Chairman of the Board, Chief Executive Officer and
                                                    Director -(Principal Executive, Financial and
                                                    Accounting Officer)                                       November 11, 1999
         /S/ Morton J. Robinson
         MORTON J. ROBINSON                         Director                                                  November 11, 1999


         /S/ Ruth Sackner
         RUTH SACKNER                               Director and Secretary                                    November 11, 1999


         /S/ Stanley C. Sackner
         STANLEY C. SACKNER                         Director                                                  November 11, 1999


         /S/ Edward Shapiro
         EDWARD SHAPIRO                             Director                                                  November 11, 1999

         /S/ Gerard Kaiser
         GERARD KAISER                              Director                                                  November 11, 1999


</TABLE>

                                       22
<PAGE>

             Non-Invasive Monitoring Systems, Inc. and Subsidiaries

                               Form 10-KSB-Item 13
                          Index to Financial Statements



                                    Contents




The following consolidated financial statements of Non-Invasive Monitoring
Systems, Inc. and subsidiaries are included in item 7:

<TABLE>
<CAPTION>
<S>     <C>                                                                         <C>
         Report of Independent Certified Public Accountants                         F-1

         Consolidated Balance Sheet - July 31, 1999                                 F-2-3

         Consolidated Statements of Operations - Years ended July 31, 1999
         and 1998                                                                   F-4

         Consolidated Statements of Shareholders' Equity - Years ended
         July 31, 1999 and 1998                                                     F-5

         Consolidated Statements of Cash Flows - Years ended July 31,
         1999 and 1998                                                              F-6

         Notes to Consolidated Financial Statements                                 F-7
</TABLE>



<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Non-Invasive Monitoring Systems, Inc. and Subsidiaries


We have audited the accompanying consolidated balance sheet of Non-Invasive
Monitoring Systems, Inc. and Subsidiaries as of July 31, 1999 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended July 31, 1999 and 1998. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Non-Invasive
Monitoring Systems, Inc. and Subsidiaries at July 31, 1999, and the results of
their operations and their cash flows for each of the two years in the period
ended July 31, 1999, in conformity with generally accepted accounting
principles.

The accompanying consolidated financial statements referred to above have been
prepared assuming that Non-Invasive Monitoring Systems, Inc. and Subsidiaries
will continue as a going concern. As more fully described in Note 2, the
Company's significant operating losses and negative cash flows raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans as to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                        /s/ GERSON, PRESTON & COMPANY, PA
                                        --------------------------------
                                        GERSON, PRESTON & COMPANY, PA

Miami Beach, Florida
October 11, 1999

                                      F-1
<PAGE>
<TABLE>
<CAPTION>
NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
At July 31, 1999

---------------------------------------------------------------------------------------------------------------------------------
                                        ASSETS
<S>                                                                                                                      <C>
Current assets
  Cash                                                                                                                   $ 3,198
  Accounts and royalties receivable, net of allowance of $4,343                                                           35,636
  Inventories                                                                                                             37,665
---------------------------------------------------------------------------------------------------------------------------------

       Total current assets                                                                                               76,499
---------------------------------------------------------------------------------------------------------------------------------

Property and equipment
  Furniture and equipment                                                                                                722,339
  Leasehold improvements                                                                                                  15,731
---------------------------------------------------------------------------------------------------------------------------------

                                                                                                                         738,070
  Less accumulated depreciation                                                                                          712,036
---------------------------------------------------------------------------------------------------------------------------------

       Depreciated cost                                                                                                   26,034
---------------------------------------------------------------------------------------------------------------------------------

Other assets
  Patent costs, net of accumulated amortization of $202,035                                                              283,632
  Other                                                                                                                    6,758
---------------------------------------------------------------------------------------------------------------------------------

       Total other assets                                                                                                290,390
---------------------------------------------------------------------------------------------------------------------------------

       Total assets                                                                                                    $ 392,923
=================================================================================================================================

                                      F-2
<PAGE>
---------------------------------------------------------------------------------------------------------------------------------
                         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses                                                                                 $ 64,629
  Loan payable to shareholder                                                                                             29,500
---------------------------------------------------------------------------------------------------------------------------------

       Total current liabilities                                                                                          94,129
---------------------------------------------------------------------------------------------------------------------------------

Shareholders' equity
  Preferred stock, $1 par value; 1,000,000 shares authorized:
    Series B - 100 shares issued and outstanding                                                                             100
    Series C - 62,048 shares issued and outstanding                                                                       62,048
  Common stock, $.01 par value; 100,000,000 shares authorized;
    21,514,726 shares issued and outstanding                                                                             215,148
  Additional paid-in capital                                                                                          10,996,877
  Accumulated deficit                                                                                                (10,975,379)
---------------------------------------------------------------------------------------------------------------------------------

       Total shareholders' equity                                                                                        298,794
---------------------------------------------------------------------------------------------------------------------------------




        Total liabilities and shareholders' equity                                                                     $ 392,923
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                                                              NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                                                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                  Years Ended July 31, 1999 and 1998


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

                                                                                                 1 9 9 9                1 9 9 8
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                    <C>
Revenues
  Product sales                                                                                 $ 158,648              $ 109,765
  Royalties                                                                                        82,000                114,400
---------------------------------------------------------------------------------------------------------------------------------

     Total revenues                                                                               240,648                224,165
---------------------------------------------------------------------------------------------------------------------------------

Operating expenses
  Cost of goods sold                                                                               35,367                 35,866
  Selling, general and administrative                                                             400,997                348,453
  Research and development                                                                        387,516                377,125
---------------------------------------------------------------------------------------------------------------------------------

     Total operating expenses                                                                     823,880                761,444
---------------------------------------------------------------------------------------------------------------------------------

Loss from operations before other income                                                         (583,232)              (537,279)

Other income                                                                                       14,347                 18,476
---------------------------------------------------------------------------------------------------------------------------------

Net loss                                                                                       $ (568,885)            $ (518,803)
=================================================================================================================================




Weighted average number of common shares outstanding                                           18,199,658             13,458,478
---------------------------------------------------------------------------------------------------------------------------------

Basic and diluted loss per common share                                                           $ (0.03)               $ (0.04)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                                                                              NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                                                                     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                                                                  Years Ended July 31, 1999 and 1998

------------------------------------------------------------------------------------------------------------------------------------
                                            Preferred Stock                    Subscribed     Additional
                                     --------------------------   Common         Common         Paid-in      Accumulated
                                       Series B      Series C      Stock          Stock         Capital        Deficit       Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>         <C>              <C>        <C>            <C>             <C>
Balance at July 31, 1997                $ 100      $ 62,048    $ 124,398        $     -    $ 10,693,127   $ (9,887,691)   $ 991,982

Net loss                                    -             -            -              -               -       (518,803)    (518,803)

Common stock subscribed, paid
  for, but not issued under private
  offering                                  -             -            -         40,750         203,750              -      244,500
------------------------------------------------------------------------------------------------------------------------------------

Balance at July 31, 1998                  100        62,048      124,398         40,750      10,896,877    (10,406,494)     717,679

Net loss                                    -             -            -              -               -       (568,885)    (568,885)

Issuance of common stock                    -             -       90,750        (40,750)        100,000              -      150,000
------------------------------------------------------------------------------------------------------------------------------------

Balance at July 31, 1999                $ 100      $ 62,048    $ 215,148        $     -    $ 10,996,877   $(10,975,379)   $ 298,794
====================================================================================================================================
</TABLE>

See accompanying notes.

                                      F-5
<PAGE>
<TABLE>
<CAPTION>


                                                                              NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                                                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                  Years Ended July 31, 1999 and 1998


------------------------------------------------------------------------------------------------------------------------------------
                                                                                                1 9 9 9               1 9 9 8
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>                   <C>
Operating activities
  Net loss                                                                                     $ (568,885)           $ (518,803)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
      Depreciation and amortization                                                                84,868                68,580
  Changes in operating assets and liabilities:
      Decrease in accounts and royalties receivable                                                40,361                17,908
      (Increase) in inventories                                                                   (37,665)                    -
      Decrease in prepaid expenses and other assets                                                 1,012                 6,313
      (Decrease) in accounts payable and accrued expenses                                          (4,451)              (41,333)
--------------------------------------------------------------------------------------------------------------------------------

         Net cash (used in) operating activities                                                 (484,760)             (467,335)
--------------------------------------------------------------------------------------------------------------------------------

Investing activities
  Short-term investment                                                                           200,000              (200,000)
  Purchases of property and equipment                                                              (3,584)              (23,327)
  Patent costs                                                                                    (24,933)              (63,124)
--------------------------------------------------------------------------------------------------------------------------------

        Net cash (used in) provided by investing activities                                       171,483              (286,451)
--------------------------------------------------------------------------------------------------------------------------------

Financing activities
  Proceeds from loan from shareholder                                                              29,500                     -
  Proceeds from issuance and subscription of common stock                                         150,000               244,500
--------------------------------------------------------------------------------------------------------------------------------

        Net cash provided by financing activities                                                 179,500               244,500
--------------------------------------------------------------------------------------------------------------------------------

Net (decrease) in cash and cash equivalents                                                      (133,777)             (509,286)

Cash and cash equivalents, beginning of year                                                      136,975               646,261
--------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                                            $ 3,198             $ 136,975
================================================================================================================================
</TABLE>
See accompanying notes.

                                      F-6

<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

         Organization and Consolidation. The Company manufactures, through
         third-party contractors, computer-aided continuous monitoring devices
         to detect abnormal respiratory and cardiac events using sensors placed
         upon the body's surface.

         The consolidated financial statements include the accounts of the
         Company and its wholly-owned inactive subsidiaries. All significant
         intercompany balances have been eliminated in consolidation.

         Under an agreement with SensorMedics Corp. ("SMC"), the Company
         receives royalties based on a percentage of SMC's net sales of the
         Company's products (see Note 8).

         Cash and Cash Equivalents. The Company considers all highly liquid
         investments with a maturity of three months or less from the date
         purchased to be cash equivalents.

         Inventories. Inventories are stated at lower of cost or market using
         the first-in, first-out method and consists primarily of finished
         goods.

         Property and Equipment. Property and equipment are stated at cost and
         depreciated using the straight-line method over the estimated useful
         lives of the assets as follows: three to five years for furniture and
         equipment and the shorter of three years or the lease term for
         leasehold improvements.

         Patents. Costs incurred in applying for and defending patents are
         capitalized and amortized on the straight-line method over the
         estimated useful lives of the patents.

         Long-Lived Assets. The Company reviews long-lived assets for impairment
         whenever events or changes in circumstances indicate that the carrying
         amount of an asset may not be recoverable.

                                      F-7

<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

         Use of Estimates. The preparation of financial statements in conformity
         with generally accepted accounting principles requires management to
         make estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the financial statements and the reported
         amounts of income and expenses during the reporting period.
         Actual results could differ from those estimates.

         Fair Value of Financial Instruments. The carrying amount of cash and
         cash equivalents, accounts receivable, accounts payable and accrued
         expenses approximate fair value because of their short duration. In
         addition, the loan payable to shareholder approximates fair value
         because of the rate of interest.

         Income Taxes. The Company accounts for income taxes under Statement of
         Financial Accounting Standards (SFAS) No. 109, Accounting for Income
         Taxes. Under SFAS 109, deferred income tax assets and liabilities are
         determined based upon differences between financial reporting and tax
         basis of assets and liabilities and are measured using the enacted tax
         rates and laws that will be in effect when the differences are expected
         to reverse.

         Warranties. The Company warrants its products for one year. In the
         opinion of management, warranty costs will not be material.
         Accordingly, no provision for warranty costs has been recorded.

         Revenue Recognition. The Company recognizes revenue when products are
         shipped or as royalties are earned. If installation is required as a
         condition of sale, revenue is recognized when the installation has been
         completed.


                                      F-8
<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

1.       ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

         Earnings Per Share. The Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 128. This statement requires the
         presentation of basic and diluted net income per share. Basic net
         income per common share is computed using the weighted average number
         of common shares outstanding during the period. Diluted net income per
         share is computed using the weighted average number of common and
         dilutive common equivalent shares outstanding during the period.
         Conversion of convertible preferred stock has not been considered in
         the calculation of loss per common share because the conversions would
         be anti-dilutive or would have no effect. The restated basic and
         diluted earnings or loss per share to be reported under SFAS No. 128
         does not differ from amounts reported under existing accounting rules
         for all periods reported by the Company through July 31, 1999.

         Research and Development Costs. Research and development costs are
         expensed as incurred.

         Year 2000. The Company developed and implemented a plan to deal with
         the Year 2000 problem and converted its computer systems and products
         to be Year 2000 compliant. The conversion efforts were completed by mid
         1999. The Year 2000 problem is the result of computer programs being
         written using two digits rather than four to define the applicable
         year. In addition, the Company is working with its suppliers to ensure
         their compliance with Year 2000 issues in order to avoid any
         interruptions in its business.


2.       GOING CONCERN - UNCERTAINTY

         As shown in the accompanying consolidated financial statements, the
         Company's significant operating losses and negative cash flows raise
         substantial doubt about the Company's ability to continue as a going
         concern. The Company is seeking to generate revenues through licensing
         agreements and funding through research and consulting agreements (see
         Note 9). Failure to secure necessary financing might result in a
         reduction or curtailment of operations. There can be no assurance that
         the Company will be able to successfully implement its plans, or if
         such plans are successfully implemented, that the Company will achieve
         its goals.

                                      F-9
<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

2.       GOING CONCERN - UNCERTAINTY (Cont'd)

         The accompanying consolidated financial statements have been prepared
         assuming that the Company will continue as a going concern and do not
         include any adjustments to reflect the possible future effects on the
         recoverability and classification of assets, or the amounts and
         classifications of liabilities that might result from the outcome of
         this uncertainty.


3.       DEFERRED INCOME TAXES

         At July 31, 1999, the Company has available net operating loss carry
         forwards of approximately $9,976,000, which will expire as follows:
         $804,000 in 2001, $429,000 in 2002, $755,000 in 2004, $190,000 in 2005,
         $2,072,000 in 2006, $1,736,000 in 2007, $1,651,000 in 2008, $861,000 in
         2009, $5,000 in 2010, $398,000 in 2012, $519,000 in 2013 and $556,000
         in 2014.

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amount of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. The significant component of the Company's net deferred
         income tax resulted from net operating losses of approximately
         $3,786,000 and was fully allowed for at July 31, 1999.

         SFAS 109 requires a valuation allowance to reduce the deferred tax
         assets reported if, based on the weight of the evidence, it is more
         likely than not that some portion or all of the deferred tax assets
         will not be realized. After consideration of all the evidence, both
         positive and negative, management has determined that a $3,786,000
         valuation allowance at July 31, 1999 is necessary to reduce the
         deferred tax assets to the amount that will more likely than not be
         realized. The change in the valuation allowance for the current year is
         $155,000.


4.       PREFERRED STOCK

         The Series B Preferred Stock has a liquidation preference of $100 per
         share and provides for a noncumulative dividend of $10 per share, if
         declared.


                                      F-10
<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

4.       PREFERRED STOCK (Cont'd)

         The Series C Preferred Stock has a liquidation preference of $1 per
         share and provides for a noncumulative dividend of $.40 per share, if
         declared. No preferred stock dividends have been declared.

         Holders of the Company's Series B and Series C Preferred Stock are
         entitled to one vote for each share held.


5.       COMMON STOCK

         In March 1999, the Company issued 5,000,000 shares of common stock for
         $150,000.

         On April 30, 1998, the Company completed a private offering of
         4,074,997 shares of common stock to certain directors, officers and
         employees of the Company at $.06 per share, for total proceeds of
         $244,500. The shares were issued on December 23, 1998.


6.       STOCK OPTIONS

         The Company has a Stock Option Plan (the Plan) for key officers and
         employees. The Company has reserved 250,000 shares of Common Stock for
         issuance under the Plan. No options are outstanding as of July 31,
         1999. No options have been granted since the Plan's inception.


7.       RELATED PARTY TRANSACTIONS

         A shareholder loaned $29,500 to the Company during July 1999.
         Subsequent to July 31, 1999, an additional $46,500 was loaned to the
         Company. The loans are unsecured with interest at 12%.

                                      F-11
<PAGE>
                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

7.       RELATED PARTY TRANSACTIONS (Cont'd)

         The Company is entitled to receive royalties from products sold by
         certain former shareholder/officers that were developed by the Company
         in prior years. In connection with these agreements, the Company earned
         royalties of approximately $12,000 and $14,400 during the years ended
         July 31, 1999 and 1998, respectively.


8.       OTHER INFORMATION

         During the years ended July 31, 1999 and 1998, one customer (SMC)
         accounted for 42% and 68% of product sales, respectively, and accounted
         for 85% and 87%, respectively, of royalty income. This customer
         represented 35% of the accounts and royalties receivable balance at
         July 31, 1999.
<TABLE>
<CAPTION>

         Accrued expenses at July 31, 1999 consisted of the following:
<S>                                                                                                 <C>
               Accrued wages                                                                        $ 27,232

               Accrued professional fees                                                              24,000
               ---------------------------------------------------------------------------------------------

                                                                                                    $ 51,232
               ---------------------------------------------------------------------------------------------
</TABLE>


         Rent expense required by a month-to-month lease was $35,762 and $34,120
         for the years ended July 31, 1999 and 1998, respectively.


9.       SUBSEQUENT EVENTS

         On November 2, 1999, the Company entered into a license agreement and a
         research and consulting agreement with LifeShirt.Com, Inc.
         ("LifeShirt"), a related entity in the development stage. Under the
         license agreement, the Company granted LifeShirt the exclusive
         world-wide right and license to certain technology in order to develop,
         design, make, use, sell and service certain products in exchange for
         23.5% of the founders' shares of LifeShirt and a

                                      F-12

<PAGE>

                          NON-INVASIVE MONITORING SYSTEMS, INC. AND SUBSIDIARIES
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

9.       SUBSEQUENT EVENTS (Cont'd)

         royalty equal to 3% of LifeShirt's gross revenues from sales with a
         minimum royalty of $250,000 in the second year. In addition, the
         Company retained the right to market and sell the LifeShirt system and
         its components solely to hospitals.

         In addition, the Company retains title and interest in and to any and
         all derivative patents related to the products incorporated within the
         LifeShirt System in exchange for a royalty of 5% of the Company's sales
         of certain products and services. The license agreement is for a period
         of 10 years.

         Under the research and consulting agreement, LifeShirt will pay the
         Company $268,000 with $10,000 due within 10 days of the execution of
         the agreement and $43,000 per month thereafter, for six months, for the
         Company to develop the LifeShirt System.




                                      F-13