UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended April 30, 2006

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                  For the Transition Period From _____ to _____

                        Commission File Number: 000-49972

                      IN VERITAS MEDICAL DIAGNOSTICS, INC.
             (Exact name of registrant as specified in its charter)


               Colorado                                       84-1579760
     -------------------------------                     -----------------
     (State or other jurisdiction of                     (I.R.S. Employer
      incorporation or organization)                    Identification No.)


The Green House, Beechwood Business Park North,
              Inverness, Scotland                            IV2 3BL
-------------------------------------------------           ----------
   (Address of principal executive offices)                 (Zip Code)

                               011 44-1463-667-347
                           --------------------------
                           (Issuer's telephone number)

                                 WITH COPIES TO:

                            Richard A. Friedman, Esq.
                      Sichenzia Ross Friedman Ference, LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                                 (212) 930-9700

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [_] No [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable date: As of June 16, 2006, the registrant
had 81,520,130 shares of common stock issued,  25,685,000 shares of common stock
held in escrow which are deemed as issued but not  outstanding,  and  55,835,130
shares of common stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]


<PAGE>

                                      INDEX

                                                                          Page
                                                                       ---------
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.                                         F-1- F-18

Item 2.  Management's Discussion and Analysis or Plan of Operations.        3

Item 3.  Controls and Procedures                                           10

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.                                                10

Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds        10

Item 3.  Defaults Upon Senior Securities                                   10

Item 4.  Submission of Matters to a Vote of Security Holders.              10

Item 5.  Other Information                                                 10

Item 6.  Exhibits.                                                         10

Signatures.                                                                11

                                      2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS

                      IN VERITAS MEDICAL DIAGNOSTICS, INC.
                         (A Development Stage Company)

                                                                                          Page
                                                                                       ----------
<S>                                                                                       <C>
Unaudited Condensed Consolidated Balance Sheet as of April 30, 2006                        F-2

Unaudited Condensed Consolidated Statements of Operations for the nine and three
    months ended April 30, 2006 and 2005 and for the period
    from March 26, 1997 (Inception) through April 30, 2006                                 F-3

Unaudited Condensed Consolidated Statements of Accumulated Other Comprehensive
    Loss for the nine months ended April 30, 2006 and 2005 and for the period
    from March 26, 1997 (Inception) through April 30, 2006                                 F-4

Unaudited Condensed Statement of Changes in Shareholders' Deficit for the nine months
    ended April 30, 2006                                                                   F-5

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months
    ended April 30, 2006 and 2005 and for the period
    from March 26, 1997 (Inception) through April 30, 2006                                 F-6

Notes to the Unaudited Condensed Consolidated Financial Statements                         F-8
</TABLE>
                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                      IN VERITAS MEDICAL DIAGNOSTICS, INC.
                         (A Development Stage Company)
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 April 30, 2006
                                  (Unaudited)

                                   ASSETS
Current assets:
<S>                                                                                    <C>
     Cash                                                                          $   101,412
     Accounts receivable                                                                89,540
     Prepaid expenses and other                                                              -
     Deferred debt issue costs                                                          83,982
                                                                                   -----------
         Total current assets                                                          274,934

Property and equipment, net (Note 3)                                                     9,468
Intangible assets:
     Patent costs                                                                       74,545
                                                                                   -----------
                                                                                   $   358,947
                                                                                   ===========

                   LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
     Accounts payable                                                              $   673,382
     Accrued liabilities                                                               967,668
     Notes payable, related party (net of discount) (Note 2)                         1,762,399
     Indebtedness to related party (Note 2)                                             19,617
                                                                                   -----------
         Total current liabilities                                                   3,423,066

Long term debt:
     Secured convertible debenture (Note 8)                                            856,500
                                                                                   -----------
         Total  Liabilities                                                          4,279,566
                                                                                   -----------

Shareholders' deficit:
     Preferred stock, $.001 par value, 50,000,000 shares authorized (aggregate
         liquidation preference $8 million) Series A Preferred stock, 34,343,662
         shares issued and
         outstanding (Note 4)                                                           34,344
     Common stock, $001 par value, 500,000,000 shares authorized
         80,700,123 shares issued, 25,685,000 held in escrow, and
         55,015,123 shares outstanding                                                  80,700
     Additional paid-in capital                                                      7,627,703
     Stock issued as security for convertible debenture (Note 8)                    (3,339,050)
     Deficit accumulated during the development stage                               (7,798,862)
     Accumulated other comprehensive loss, net of tax                                 (525,454)
                                                                                   -----------
         Total shareholders' deficit                                                (3,920,619)
                                                                                   -----------
                                                                                   $   358,947
                                                                                   ===========


     See accompanying notes to condensed consolidated financial statements.

</TABLE>

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                       IN VERITAS MEDICAL DIAGNOSTICS, INC.
                         (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)


                                                                                                                    March 26, 1997
                                                             Nine Months Ended               Three Months Ended       (Inception)
                                                                 April 30,                        April 30,             Through
                                                      ------------------------------    ---------------------------    April 30,
                                                          2006            2005               2006           2005          2006
                                                      -------------   --------------    -------------  ------------  -------------

<S>                                                        <C>             <C>               <C>            <C>           <C>
Net sales                                             $   1,077,451   $      911,104    $     311,019  $    351,202  $   3,378,128
                                                      -------------   --------------    -------------  ------------  -------------

Operating expenses:
     Cost of sales                                                -            4,617                -            38        242,097
     Research and development                               901,416          823,329          314,746       300,000      3,800,298
     Depreciation and amortization                           24,075           15,771            7,889         6,228        161,505
     General and administrative:
        Stock based compensation:
              Stock options expense                          15,563                -            3,821             -         68,261
              Consulting expense                            255,000          567,560                -             -        781,779
        Non stock based general and administrative          434,091        1,090,735          139,299       394,247      6,280,305
                                                      -------------   --------------    -------------  ------------  -------------
        Total operating expenses                          1,630,145        2,502,012          465,755       700,513     11,334,245
                                                      -------------   --------------    -------------  ------------  -------------

        Loss from operations                               (552,694)      (1,590,908)        (154,736)     (349,311)    (7,956,117)

Non operating income (expense):
     UK government grants (Note 1)                           94,458                -                -             -        289,354
     Gain (loss) on foreign exchange                         18,426          (17,000)          10,224             -       (111,689)
     Amortized debt issue costs                            (219,301)               -          (65,121)            -       (219,301)
     Gain from debt extinguishment                                -                -                -             -        662,610
     Interest expense                                      (233,177)        (116,038)         (96,429)      (38,679)      (463,719)
                                                      -------------   --------------    -------------  ------------  -------------
        Net loss before income taxes                       (892,288)      (1,723,946)        (306,062)     (387,990)    (7,798,862)
                                                      -------------   --------------    -------------  ------------  -------------

Provision (benefit) for income taxes (Note 6)                     -                -                -             -              -
                                                      -------------   --------------    -------------  ------------  -------------
        Net loss                                      $    (892,288)  $   (1,723,946)   $    (306,062) $   (387,990) $  (7,798,862)
                                                      =============   ==============    =============  ============  =============

Basic and diluted loss per share                      $     (0.0163)  $      (0.0338)   $     (0.0056) $    (0.0075)
                                                      =============   ==============    =============  ============
Weighted average common shares outstanding               54,638,212       50,991,236       55,015,123    51,627,332
                                                      =============   ==============    =============  ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                       IN VERITAS MEDICAL DIAGNOSTICS, INC.
                         (A Development Stage Company)
          CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS
                                   (Unaudited)



                                                                                          March 26, 1997
                                                             Nine Months Ended             (Inception)
                                                                  April 30,                  Through
                                                      -------------------------------      January 31,
                                                          2006             2005               2006
                                                      --------------   --------------   --------------

<S>                                                        <C>              <C>              <C>
Net loss                                              $     (892,288)  $   (1,723,946)  $   (7,798,862)
                                                      --------------   --------------   --------------

Other comprehensive loss:
     Foreign currency translation adjustment                (155,962)        (149,496)        (525,454)
                                                      --------------   --------------   --------------
         Net loss                                     $   (1,048,250)  $   (1,873,442)  $   (8,324,316)
                                                      ==============   ==============   ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                       IN VERITAS MEDICAL DIAGNOSTICS, INC.
                         (A Development Stage Company)
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
                                   (Unaudited)




                                                           Preferred Stock Outstanding                                Common Stock
                                                      Series A                    Series B                Shares         Shares
                                               Shares       Par Value       Shares       Par Value        Issued      Outstanding
                                              ---------     ---------    ----------     -----------     ----------   ------------
<S>                                             <C>             <C>          <C>             <C>           <C>             <C>
Balance July 31, 2005                        33,042,484        33,043       863,844             864     54,261,301      54,261,301

Conversion of Preferred Stock into
 Debentures                                          --            --      (863,844)           (864)            --              --
 (Note 4) (Unaudited)
Conversion of common stock into
 preferred stock (Unaudited)                  1,301,301         1,301            --              --     (1,301,178)     (1,301,178)
Shares issued as security for
 convertible debentures
  (Note 8) (Unaudited)                               --            --            --              --     25,685,000              --
Stock issued for services
 (Unaudited)                                         --            --            --              --      1,583,000       1,583,000
Stock issued for interest
 (Unaudited)                                         --            --            --              --        472,000         472,000
Foreign currency translation
 adjustment (Unaudited)                              --            --            --              --             --              --
Net loss (Unaudited)                                 --            --            --              --             --              --
                                             ----------     ---------    ----------     -----------    -----------    ------------
Balance January 31, 2006
 (Unaudited)                                 34,334,344            --    $       --              --     80,700,123      55,015,123
                                             ==========     =========    ==========     ===========    ===========    ============
Less escrowed shares
 (issued but not outstanding)                        --            --            --              --             --              --





                                                                         Deficit
                                                                       Accumulated    Accumulated
                                                        Additional        During          Other
                                                         paid-in       Development    Comprehensive
                                          Par Value      capital          Stage            Loss           Total
                                         -----------   -------------  -------------  ---------------  ------------
Balance July 31, 2005                    $    54,261   $   4,419,204  $  (6,906,574) $     (369,492)    (2,768,694)

Conversion of Preferred Stock into
 Debentures                                       --        (555,636)            --              --       (556,500)
 (Note 4) (Unaudited)
Conversion of common stock into
 preferred stock (Unaudited)                  (1,301)             --             --              --             --
Shares issued as security for
 convertible debentures
  (Note 8) (Unaudited)                        25,685       3,313,365             --              --      3,339,050
Stock issued for services
 (Unaudited)                                   1,583         389,882             --              --        391,465
Stock issued for interest
 (Unaudited)                                     472          60,888             --              --         61,360
Foreign currency translation
 adjustment (Unaudited)                           --              --             --        (155,962)      (155,962)
Net loss (Unaudited)                              --              --       (892,288)             --       (892,288)
                                         -----------   -------------  -------------  ---------------  ------------
Balance January 31, 2006
 (Unaudited)                             $    80,700   $   7,627,703  $  (7,798,862) $     (525,454)      (581,569)
                                         ===========   =============  =============  ===============  ============
Less escrowed shares
 (issued but not outstanding)                     --              --             --             --    $ (3,339,050)
                                                                                                      ------------
                                                                                                      $ (3,920,619)
                                                                                                      ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                      IN VERITAS MEDICAL DIAGNOSTICS, INC.
                          (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                                                                          March 26, 1997
                                                                             Nine Months Ended             (Inception)
                                                                                 April 30,                   Through
                                                                      ---------------------------------     April 30,
                                                                           2006             2005              2006
                                                                      ---------------  ----------------  --------------
Cash flows from operating activities:
<S>                                                                         <C>              <C>               <C>
     Net loss                                                         $     (892,288)  $    (1,723,946)  $   (7,798,862)
     Adjustments to reconcile net loss to net cash
        used by operating activities:
           Depreciation and amortization                                      24,075            15,771          159,173
           Imputed interest                                                   26,046            96,995          170,428
           Stock issued for interest expense                                  61,360                 -          147,520
           Stock issued for services                                         391,465           567,560          970,941
           Gain (Loss) on debt forgiveness                                         -                 -         (662,610)
           Changes in working capital items:
             Receivables                                                     (62,280)          246,747         (115,719)
             Prepaid expenses and other current assets                        66,419                 -           19,676
             Deferred debt issue costs                                       (84,092)                -          (84,092)
             Accounts payable                                                (28,958)         (201,180)         683,751
             Accrued expenses                                                411,233                 -          961,915
             Accounts payable (related party)                                  1,330                 -          (55,182)
             Other                                                          (163,934)                -          (94,114)

                                                                      ---------------  ----------------  ---------------
                 Net cash used in operating activities.                     (249,624)         (998,053)      (5,697,175)

Cash flows from investing activities:
     Acquisition of patents                                                  (11,620)                -          (72,359)
     Capital expenditures                                                     (3,481)          (50,800)        (154,689)
                                                                      ---------------  ----------------  ---------------
                 Net cash used in investing activities                       (15,101)          (50,800)        (227,048)

Cash flows from financing activities:
     Proceeds from bridge financing                                                -           559,746        4,378,963
     Repaymnent of advances from affiliates                                        -                 -         (728,426)
     Advances from related parties                                                 -            58,201           83,050
     Proceeds from issuance of preferred stock                                     -           303,500          813,930
     Discount on notes payable                                                50,913                 -          195,295
     Proceeds from debenture issue                                           300,000                            300,000
     Cash proceeds from debt issuance                                              -           250,000          962,495
                                                                      ---------------  ----------------  ---------------
                 Net cash provided by financing activities                   350,913         1,171,447        6,005,307

     Effect of exchange rate on changes in cash                               13,209             1,679           20,328
                                                                      ---------------  ----------------  ---------------


                 Net change in cash                                           99,397           124,273          101,412

Cash, beginning of year                                                        2,015            46,191                -
                                                                      ---------------  ----------------  ---------------



Cash, end of period                                                   $      101,412   $       170,464   $      101,412
                                                                      ===============  ================  ===============

Non-cash financing activities
     Conversion of notes payable to common stock                      $            -   $             -   $      700,000
     Conversion of preferred stock into debentures                           556,500                 -          556,500

</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       F-6
<PAGE>

                              In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements



Note 1:  Summary of Significant Accounting Policies

Organization and Basis of Presentation

Background

Effective July 31, 2004, Hall Effect Medical Products, Inc. ("HEMP"), a Delaware
corporation, merged with Sports Information Publishing Corp. ("SIPC"), which was
incorporated  under the laws of Colorado on November 7, 2003.  Subsequent to the
merger SIPC changed its name to In Vivo Medical  Diagnostics,  Inc. and later In
Veritas Medical Diagnostics, Inc. ("IVMD" "we" "us" or "our")

SIPC was  originally  incorporated  for the  purpose of  engaging  in the sports
industry.  In 2002,  SIPC  filed a Form  SB-2  registration  statement  with the
Securities  and  Exchange  Commission  relating  to  the  registration  of up to
1,000,000  previously  issued  shares  of  common  stock at a price of $0.15 per
share. The SEC declared the offering effective in August 2003.

We are a  development-stage  enterprise located in Inverness,  Scotland.  We are
developing  medical  diagnostic  products  for personal  and  professional  use.
Certain of our products under  development are based on technology that utilizes
the Hall  Effect,  discovered  more than a hundred  years ago,  for which we are
developing  practical  applications.  Prior to the  merger,  we were funded by a
private UK company,  Westek  Limited,  and Abacus Trust Company  Limited was our
majority shareholder.

Shares of our  common  stock  trade in the Over the  Counter  ("OTCBB")  market.
Because  of the  nature of the  OTCBB  market  there was only a limited  trading
market for our stock  during the  periods  presented.  For  similar  reasons the
quoted  price of our stock was  inevitably  subject to  considerable  short term
volatility.  As a result,  management  has relied on the value of  consideration
received when reporting non-monetary  transactions in the accompanying financial
statements.

Principles of consolidation

Our consolidated  financial  statements include our accounts and the accounts of
our two wholly owned foreign  subsidiaries;  IVMD UK Limited ("IVMD") and Jopejo
Limited ("Jopejo"), both UK companies. The assets and liabilities of our foreign
subsidiaries  have been  translated  from British  pounds into US dollars at the
exchange rate in effect at the balance  sheet date with the related  translation
adjustments reported as a separate component of shareholders' deficit. Operating
statement  accounts have been translated at the average  exchange rate in effect
during the period presented. All significant intercompany transactions have been
eliminated.

Basis of presentation

Our research and  development  is conducted in Inverness,  Scotland  through our
subsidiaries:  IVMD UK Limited and Jopejo Limited.  Development-stage activities
consist of raising capital,  obtaining  financing,  medical  products  research,
technical  development  and  commercialization  (being  made  market  ready) and
administrative matters. We plan to continue to raise capital through stock sales
and debt issuances to fund our development.  In addition, we obtain cash from UK
government  grants that are designed to support  employment  and  enterprise and
from commercial partners who contribute towards certain development projects. In
due course, we expect our primary revenue to consist of royalties  received from
commercial  partners in respect of the commercial  exploitation of our products,
once developed and successfully taken to market.

Inherent   in  our   development-stage   enterprise   are   various   risks  and
uncertainties,  including our limited operating  history,  historical  operating
losses,  dependence upon strategic alliances,  and market acceptance of the Hall
Effect technology. We have completed the technical development of our product (a
Prothrombin  measurement  device)  which is  presently  in the  final  stages of
commercialization,  prior to being marketed by our commercial partners,  who are
contracted to distribute the product,  for which we will receive royalty income.
We anticipate  royalty  income from this product  commencing  towards the end of
calendar  2006.  Our  ability to  generate  revenues  from  royalties  of future
products  will be  dependent  upon our  ability  to enter into  licenses,  joint
ventures or distribution  agreements with  established  businesses with existing
sales and marketing  structures  similar to the arrangement that is in place for
the Prothrombin device. Our future success will be dependent upon our ability to
develop  and  provide  new  medical   devices  that  meet   customers   changing
requirements,  including  the effective  use of the Hall Effect  technology,  to
continue to enhance our current products under development, and to influence and
respond to emerging  industry  standards  and other  technological  changes on a
timely and cost-effective basis.

                                       F-7
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


In  common  with  most  development  stage  entities  we  have  incurred  losses
(principally  represented  by  research  and  development   expenditures)  since
inception  and we have an inevitable  net capital  deficit at April 30, 2006. We
also had substantial net current  liabilities at April 30, 2006.  These factors,
among others,  raise  substantial doubt about our ability to continue as a going
concern,  in common with many  development  stage companies in our industry.  As
explained  above,  in 2004, we merged with a public shell  company.  This merger
provides us with  limited  access to the capital  markets via the OTCBB.  During
fiscal  years  2004 and 2005 and  subsequently,  we raised  limited  amounts  of
capital  by virtue of our OTCBB  quote;  we need to  continue  to raise  capital
through public or private stock offerings to finance our development  activities
and ultimately, to achieve profitability. However, there is no assurance that we
will be  successful  in our efforts to raise  capital or to become a  profitable
company.

Note 8 to these  Financial  Statements sets out details of the status of certain
capital  raisings  that  have  taken  place  recently  and the  status of future
financings which are presently being negotiated.

Use of Estimates

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

Cash and Cash Equivalents

We consider all highly  liquid  securities  with  original  maturities  of three
months  or  less  when  acquired  to be  cash  equivalents.  There  were no cash
equivalents at April 30, 2006.

Accounts Receivable

We consider all trade receivables to be fully collectible.

Property and Equipment

Property and equipment are stated at cost.  Depreciation is calculated using the
straight-line  method over the  estimated  useful  lives of the related  assets,
generally ranging from three to five years. Property and equipment under capital
leases  are  stated at the  present  value of  minimum  lease  payments  and are
amortized using the  straight-line  method over the shorter of the lease term or
the estimated useful lives of the assets.  Leasehold  improvements are amortized
using the straight-line  method over the estimated useful lives of the assets or
the term of the lease, whichever is shorter.

Patent Costs

The legal,  professional and registration costs involved in registering  patents
which are  important  to our product  development  program are  capitalized  and
written off on a straight line basis over the lesser of the estimated commercial
life or legal life of the underlying  patents,  on a patent by patent basis.  We
adopted this  accounting  policy for the first time in the balance sheet at July
31, 2005 since we  previously  judged that the costs were  immaterial.  Prior to
July 31,  2005,  we expensed  patent costs as  incurred.  Capitalized  costs are
expensed if patents are not granted.

                                       F-8
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


Impairment of Long-Lived Assets

In accordance with Statement of Financial  Accounting  Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived  Assets, we evaluate our
long-lived  assets,  including  related  intangibles,  of identifiable  business
activities for impairment when events or changes in circumstances  indicate,  in
management's  judgment,  that  the  carrying  value  of such  assets  may not be
recoverable.  The  determination of whether  impairment has occurred is based on
management's  estimate of  undiscounted  future cash flows  attributable  to the
assets as  compared  to the  carrying  value of the assets.  If  impairment  has
occurred, estimating the fair value for the assets and recording a provision for
loss if the carrying  value is greater than fair value  determine  the amount of
the  impairment  recognized.  For assets  identified  to be  disposed  of in the
future,  the carrying  value of these assets is compared to the  estimated  fair
value less the cost to sell to determine if  impairment  is required.  Until the
assets are  disposed  of, an  estimate of the fair value is  re-determined  when
related events or circumstances change.

When  determining  whether  impairment  of  one  of our  long-lived  assets  has
occurred, we must estimate the undiscounted cash flows attributable to the asset
or asset  group.  Our estimate of cash flows is based on our  assessment  of the
outcome of future trading.

Any  significant  variance  in any of the above  assumptions  or  factors  could
materially affect our cash flows, which could require us to record an impairment
of an asset.

No  impairment  charges were  recognized  during each of the nine month  periods
ended April 30, 2006 and April 30, 2005.

Deferred Offering and Debt Issue Costs

Costs incurred in connection  with proposed common stock offerings that straddle
the period end are deferred in the  accompanying  financial  statements  and are
offset  against the proceeds from the offering or written off against  earnings,
if the offering is unsuccessful, as appropriate, in future periods.

Costs incurred in arranging and raising debt are written off against income over
the expected life of the debt and shown on the balance  sheet as "Deferred  Debt
Issue Costs".

Income Taxes

We account for income  taxes under the  provisions  of  Statement  of  Financial
Accounting  Standards No. 109,  Accounting for Income Taxes (SFAS 109). SFAS 109
requires  recognition  of deferred tax  liabilities  and assets for the expected
future tax  consequences  of events  that have been  included  in the  financial
statements  or tax returns.  Under this method,  deferred  tax  liabilities  and
assets are determined  based on the difference  between the financial  statement
and tax bases of assets and  liabilities  using  enacted tax rates in effect for
the year in which the differences are expected to reverse.

Revenue Recognition

Our revenue has been generated through contribution to development projects from
commercial  partners and from UK government  grants.  We recognize  such revenue
based on the terms of the underlying agreement.

Financial Instruments and Concentration of Credit Risk

At April 30, 2006, the fair value of our financial instruments approximate their
carrying  value  based on their  terms  and  interest  rates.  All of our  trade
receivables were from one customer as of April 30, 2005.

                                       F-9
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


Stock based Compensation

We  account  for  stock-based  compensation   arrangements  in  accordance  with
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based  Compensation,"  which permits entities to recognize as expense over
the  vesting  period  the fair  value of all  stock-based  awards on the date of
grant.  Alternatively,  SFAS No. 123 allows  entities  to  continue to apply the
provisions of Accounting  Principle Board ("APB") Opinion No. 25 and provide pro
forma net earnings (loss) disclosures for employee stock option grants as if the
fair-value-based  method  defined  in SFAS  No.  123 had been  applied.  We have
elected to continue to apply the  provisions of APB Opinion No. 25 (for employee
stock option accounting only) and provide the pro forma disclosure provisions of
SFAS No. 123.

Foreign Currency Translation

Our assets and  liabilities,  which have the British  Pound as their  functional
currency,  are  translated  into United States  Dollars at the foreign  currency
exchange rate in effect at the applicable  reporting date, and the statements of
operations  are  translated at the average rates in effect during the applicable
period.  The  resulting  cumulative  translation  adjustment  is  recorded  as a
separate component of Other Comprehensive Income.

Research and Development Costs

Research and development  costs are expensed as incurred.  During the year ended
July 31, 2005 we reexamined  the method used to calculate the  proportion of our
overheads that related to research and development and have refined the basis to
provide a more  accurate  reflection  of those  costs,  this  method was used in
estimating  research and development  expenditure in the nine month period ended
April 30,  2006.  Naturally  this  involves  estimates,  but we believe that the
method which we have used fairly reflects the volume of research and development
activity  of the Group.  For  comparative  purposes,  the  Financial  Statements
include  comparative  2005  data for  research  and  development  which has been
calculated  using the same methods of  estimation  as have been employed for the
2006 financial  statements.  This  reclassification  does not impact the overall
2005 financial statements.

Earnings (Loss) per Share

Basic net income or loss per share is  computed  by  dividing  the net income or
loss  available to common  shareholders  (the  numerator)  for the period by the
weighted average number of common shares  outstanding (the  denominator)  during
the period. The computation of diluted earnings is similar to basic earnings per
share,  except  that the  denominator  is  increased  to  include  the number of
additional  common  shares  that  would  have been  outstanding  if  potentially
dilutive common shares had been issued.

At April 30,  2006,  there was no variance  between  basic and diluted  loss per
share as the securities in our capital structure are antidilutive.

Note 2:  Related Party Transactions

As of  April  30,  2006,  $19,617  was due to  related  parties.  There  were no
significant  financial  transactions  with related parties during the nine month
periods ended April 30, 2006 or 2005.

In July  2004,  Westek  agreed  to  release  us from  $2,030,298  of  previously
accumulated  advances  in exchange  for a  noninterest-bearing  promissory  note
totalling $1,800,000.  We reflected a capital contribution  totalling $2,030,298
in our financial statements at that time. The promissory note is payable in full
by September  30, 2006.  Under the terms of the note,  we are  obligated to make
repayments of the principle  amount  earlier that  September 30, 2006 out of any
equity or equity  type  financings  made  before that date by applying an agreed
percentage of the  aggregate  net proceeds  from any such equity or  equity-type
financings.  The  agreed  percentage  is 56% of any net  proceeds  which  exceed
$2,000,000  (up to  $3,000,000)  and  25% of  all  net  proceeds  in  excess  of
$3,000,000.  As of April 30,  2006,  we are  indebted to Westek in the amount of
$1,762,399, net of discount of $37,601.

                                      F-10
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


Note 3:  Property and Equipment

Major classes of property and equipment as of April 30, 2006 are listed below:

Furniture and fixtures.....................................   $        16,523
Office equipment...........................................            89,814
Plant and equipment........................................            20,939
                                                              ---------------
                                                                      127,276
Less: accumulated depreciation.............................           117,808
                                                              ---------------
                                                              $         9,468
                                                              ===============


Depreciation  expense was $24,075 and $15,771 for the nine month  periods  ended
April 30, 2006 and 2005, respectively.

Note 4:  Preferred Stock

We are authorized to issue 50,000,000 shares of preferred stock.

4% Convertible Preferred Stock

As of October 31, 2005, the Company had 34,343,662  shares of Series A 4% voting
redeemable  convertible  preferred stock outstanding.  Such shares pay an annual
dividend of 4% and are  convertible at any time at the option of the holder into
Common Stock at the rate of one share Common Stock for each outstanding share of
Series A Preferred Stock commencing October 30, 2005,  provided the Common Stock
have  traded at a price of $3.00 per share for at least 30  consecutive  trading
days,  and at any time after  January  30,  2006.  Holders of Series A Preferred
Stock have  priority over all of the shares of In Veritas  Medical  Diagnostics,
Inc. on liquidation or sale at the rate of $.233 per share. Holders are entitled
to vote on all matters as to which  Common  Stock  shareholders  are entitled to
vote.

The aggregate of arrearages in cumulative preferred dividends on the Series A
Preferred Shares through April 30, 2006, are $27,192.

5% Convertible Preferred Stock

On April 15, 2005, we completed the sale of 863,845  units (the  "Units"),  each
Unit  consisting of one share of Series B 5% Convertible  Preferred  Stock,  one
warrant to purchase one share of the Company's common stock ("Stock  Warrants"),
and one warrant to purchase an additional  unit ("Unit  Warrants").  Such shares
pay an annual  dividend of 5% and are  convertible  at any time at the option of
the holder into Common  Stock at the rate of one share of Common  Stock for each
outstanding  share of Series B Preferred  Stock  commencing  April 15, 2005. The
Stock  Warrants are  exercisable  from April 15, 2005 until April 15, 2008 at an
exercise price of $1.50 per share, subject to adjustment.  The Unit Warrants are
exercisable for a period of 180 days from the effective date of the registration
statement at an exercise  price of $0.65 per unit,  subject to  adjustment.  All
preferential amounts to be paid to the holders of Series B Preferred Stock shall
be paid on a pari-passu  basis with any  preferential  amounts to be paid to the
holders of our Series A Preferred Stock, and prior to the common stock.

                                      F-11
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


As part the finance raising  described in Note 8 to these Financial  Statements,
in September, 2005 the Company entered into a Securities Purchase Agreement (the
"Accredited  Investor  Purchase  Agreement") with the investors (the "Accredited
Investors")  in its  April  2005  financing  pursuant  to which  the  Accredited
Investors agreed to exchange the securities that they purchased for an aggregate
of  $556,500  principal  amount  of  Debentures.  Specifically,  the  Accredited
Investors  agreed to exchange an aggregate of 863,845  units (the  "Units"),  as
well as a warrant to purchase an  additional  Unit for an  aggregate of $556,500
principal  amount  of  Debentures.  Each  Unit  consisted  of  one  share  of 5%
convertible  preferred stock of the Company,  $.001 par value per share, and one
warrant to purchase one share of the Company's common stock.

Note 5:  Common Stock

We are  authorized to issue  500,000,000  shares of common  stock.  Prior to the
merger  discussed  in Note 7, we valued the shares of common  stock based on the
value of the  services.  After the merger,  we valued the shares of common stock
based on the quoted  market  price of the stock.  No units of common  stock were
issued  during the three month  periods  ended April 30, 2006. In the nine month
period  ended  April 30,  2006 we  issued  1,583,000  units of  common  stock in
exchange for services;  and we issued  472,000 units of common stock in exchange
for  interest.  In the nine month period  ended April 30, 2005 we issued  60,096
units of common  stock to the  arrangers  of bridge  finance  for  services  and
794,550 in exchange for services provided.

Note 6:  Stock Options

Stock Options - Employees

During May 2004,  the Company  granted  9,659,000  common  stock  options to two
officers with an exercise price of $1.00 per share.  The Company's  common stock
had no traded  market value on the date of grant.  The market value of the stock
was determined to be $1.00 per share based on estimates made by the directors at
that time.  3,219,666  options vest on May 26,  2006,  an  additional  3,219,666
options vest on May 26, 2007,  and the final  3,219,668  options vest on May 26,
2008.  The  intrinsic  value of these  options was $.-0- (i.e.  the  exercise or
strike price exceeds the market price).

The Company adopted and reserved  21,434,788 shares of Common Stock for issuance
under its 2005 Stock  Incentive  Plan.  Under the plan,  options  may be granted
which are intended to qualify as Incentive  Stock  Options  under Section 422 of
the Internal  Revenue Code of 1986 or options  which are not intended to qualify
as Incentive  Stock Options  under  Section 422 of the Internal  Revenue Code of
1986.

The 2005 Stock  Incentive Plan and the right of  participants  to make purchases
thereunder  are intended to qualify as an "employee  stock  purchase plan" under
Section 423 of the  Internal  Revenue Code of 1986,  as amended.  The 2005 Stock
Incentive  Plan is not a  qualified  deferred  compensation  plan under  Section
401(a) of the Internal  Revenue Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").

On June 1, 2005, the Company issued 400,000  options to its employees  under the
plan,  with an exercise  price of $0.55 per share.  The market  price on June 1,
2005  was also  $0.55  per  share.  These  options  were  determined  to have an
intrinsic  value of $-0- (i.e.  the exercise or strike price  exceeds the market
value)

                                      F-12
<PAGE>


                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


On January 1, 2006 the Company issued 365,000 options to its employees under the
plan,  with an exercise price of $0.04 per share,  which was the market price on
that day. These options were determined to have an intrinsic value of $ -0-.

Pro forma information regarding net income and earnings per share is required by
SFAS 123 as if the Company had accounted for its granted stock options under the
fair value method of that Statement.  The fair value for the options granted was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions:

For options issued in May 2004:

       Risk-free interest rate..............................          2.25
       Dividend yield.......................................          0.00%
       Volatility factor....................................          0.00%
       Weighted average expected life.......................        5.years



For options issued in June 2005:

       Risk-free interest rate...............................         4.35%
       Dividend yield........................................         0.00%
       Volatility factor.....................................        55.10%
       Weighted average expected life........................       5.years



For options issued in January 2006:

       Risk-free interest rate...............................         4.25%
       Dividend yield........................................         0.00%
       Volatility factor.....................................        50.00%
       Weighted average expected life........................       5.years


The  Black-Scholes  options  valuation model was developed for use in estimating
the fair value of traded  options,  which have no vesting  restrictions  and are
fully  transferable.  In addition,  option valuation models require the input of
highly  subjective  assumptions  including the expected stock price  volatility.
Because the Company's stock options have characteristics significantly different
from  those of traded  options,  and  because  changes in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its stock  options.  The pro forma net loss and pro
forma basic and diluted loss per common share using the assumptions  noted above
for the nine month periods ended April 30, 2006 and 2005 is as follows:

                                      F-13
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
                                                               For the 9 month period ended
                                                                         April 30,
                                                            -----------------------------------
                                                                  2006              2005
                                                            ----------------- -----------------

<S>                                                         <C>                     <C>
Net loss, as reported.............................          $       (892,288) $     (1,723,946)
                                                            ================= =================

Pro forma net loss................................          $       (892,288) $     (1,723,946)
                                                            ================= =================

Basic and diluted net loss per common
   share, as reported.............................                    -0.016            -0.338
                                                            ================= =================

Pro forma basic and diluted net loss
   per common share...............................                    -0.016            -0.338
                                                            ================= =================
</TABLE>

Stock Options - Nonemployees

During the year ended  July 31,  2005,  the  Company  committed  to grant to two
non-employees 250,000 options to purchase its Common Stock. The options carry an
exercise price of $0.55 per share.  100,000 options vested July 1, 2005,  50,000
options vest May 16, 2006,  and 100,000  options vest July 1, 2006.  The options
were granted on June 1, 2005. No options have yet been exercised.

The Company's common stock's traded market value on the date of grant was $0.55.
The weighted average exercise price and fair value of these warrants on the date
of issue were $0.55 and $0.29, respectively.

The fair value for the warrants  granted during the year ended July 31, 2005 was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions:

       Risk-free interest rate.......................   4.35%
       Dividend yield................................   0.00%
       Volatility factor.............................  55.10%
       Weighted average expected life................ 5 years


On January 1, 2006 the Company committed to grant to two  non-employees  options
to purchase 350,000 units of its Common Stock at an exercise price equal to then
market price of $0.04. These options vest on January 1, 2007.

The Company's common stock's traded market value on the date of grant was $0.04.
The weighted average exercise price and fair value of these warrants on the date
of issue were $0.04 and $0.019, respectively.

The fair value of the warrants issued on January 31, 2006 was estimated,  at the
date of the  grant,  using  the  Black-Scholes  option  pricing  model  with the
following assumptions:

       Risk-free interest rate......................   4.25%
       Dividend yield...............................   0.00%
       Volatility factor............................  50.00%
       Weighted average expected life............... 5 years

                                      F-14
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


Stock Warrants

During the year ended  July 31,  2005,  the  Company  committed  to grant to its
financial  representative,  Westor  Capital  Group,  Inc.,  warrants to purchase
61,769 shares of the  Company's  common  stock.  The warrants  carry an exercise
price of $1.50  per  share,  vest on the date of grant  and  expire on April 15,
2008.  The warrants  were granted on April 11, 2005.  No warrants  have yet been
exercised.

The Company's common stock's traded market value on the date of grant was $1.01.
The weighted  average  exercise  price and weighted  average fair value of these
warrants at the date of their grant were $1.50 and $0.29, respectively.

The fair value for the warrants  granted during the year ended July 31, 2005 was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions:

           Risk-free interest rate...........................      4.35%
           Dividend yield....................................      0.00%
           Volatility factor.................................     55.10%
           Weighted average expected life....................    3.years


As explained in Note 8, on September 9, the Company issued to Montgomery  Equity
Partners Ltd three-year  warrants to purchase  350,000 shares of Common Stock at
$0.001 per share. These warrants were granted as part of the arrangement fee for
the  issuance  of the Secured  Convertible  Debenture  described  in Note 8. The
Company's common stock's traded market value on the date that the negotiation of
this  transaction  was  completed  (August 25) of grant was $0.13.  The weighted
average  exercise  price and fair value of these  warrants  at the date of their
grant were $0.001 and $0.076, respectively.

The fair value for these warrants was estimated at the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

          Risk-free interest rate............................      4.18%
          Dividend yield.....................................      0.00%
          Volatility factor..................................     88.40%
          Weighted average expected life.....................    3.years



The following schedule summarizes the changes in the Company's outstanding stock
awards:


                                      F-15
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements
<TABLE>

                                                  Options Outstanding              Weighted Average
                                       ------------------------------------------   Exercise Price
                                            Number of          Exercise Price          Per Share
                                              Shares              Per Share
                                       ---------------------   ------------------
<S>                                             <C>                   <C>                <C>
Balance at July 31, 2005                          10,370,769   $  0.55 to $  1.50  $            0.94
   Awards granted....................                350,000   $            0.001  $           0.001
   Awards granted....................                715,000   $               04  $            0.04
   Awards exercised..................                      -                       $               -
   Awards cancelled/expired..........                      -                       $               -
                                       ---------------------                       -----------------

Balance at April 30, 2006............             11,435,769   $ 0.001.to.$  1.50  $            0.85
                                       =====================                       =================
</TABLE>


Note 7:  Income Taxes


A reconciliation of U.K. statutory income tax rate to the effective rate follows
for the nine month periods ended April 30, 2005 and 2006:

<TABLE>
<CAPTION>
                                                                 Nine Month Period ended
                                                                        April 30,
                                                         -------------------------------------
                                                               2006                2005
                                                         -----------------   -----------------
<S>                                                              <C>                 <C>
U.K. statutory federal rate.............................            30.00%              30.00%
Net operating loss for which no tax
        benefit is currently available..................           -30.00%             -30.00%
                                                         -----------------   -----------------
                                                                     0.00%               0.00%
                                                         =================   =================
</TABLE>

At April 30, 2006,  deferred U. K. income taxes were $-0-.  U.K.  pretax losses
were  approximately  $400,000  and  $300,000,  respectively,  for the nine month
periods ended April 30, 2005 and 2006.

At April 30, 2006 and April 30, 2005, we had net operating tax losses  available
for  carryfoward  and offset against future taxable profits arising in the UK of
approximately $5.0 million and $4.5 million respectively.

Note 7:  Acquisitions

July 22, 2004

On July 22, 2004, Jopejo Limited and IVMD UK, Inc. and HEMP entered into a share
purchase  agreement  whereby  HEMP  purchased  100  percent  of the  issued  and
outstanding  preferred  and ordinary  shares of both Jopejo  Limited and IVMD UK
Limited  (formerly  Hall Effect  Technologies  Limited) for 8,000,000  shares of
convertible  Series A  preferred  stock,  $0.001 par value.  HEMP also agreed to
become a co-obligor of approximately $1.8 million in debt obligations to Westek.
As part of the acquisition, HEMP issued 3,000,000 shares of common stock to HEMP
TL, an employee  benefit plan valued at $3,000 by the Board of Directors  and an
addition  6,000,000  shares of common stock to certain  individuals for services
valued at $6,000 by the Board of Directors.

As a result of these transactions, Jopejo limited and IVMD UK, Inc. became
wholly owned subsidiaries of HEMP.

                                      F-16
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


July 30, 2004

On July 30, 2004, HEMP exchanged 100 percent of its outstanding shares of common
stock  for  38,397,164  shares  of the  common  stock  and  100  percent  of its
outstanding  shares of preferred stock for 34,363,662  shares of preferred stock
of SIPC.  This  acquisition  has been treated as a  recapitalization  of HEMP, a
Delaware  corporation,  with SIPC the legal  surviving  entity.  Since SIPC has,
prior to the recapitalization,  minimal assets (consisting primarily of cash and
trade payables) and no operations,  the  recapitalization has been accounted for
as the sale of  10,550,000  shares of HEMP  common  stock for the net  assets of
SIPC. Costs of the transaction have been charged to the period.


Note 8: Secured Convertible Debenture and Related Financings

On September 7, 2005,  the Company  entered into a Standby  Equity  Distribution
Agreement  (the  "Distribution  Agreement")  with  Cornell  Capital  Partners LP
("Cornell")  providing for the sale and issuance to Cornell of up to $10,000,000
of  Common  Stock  over a period of up to 24 months  after  the  signing  of the
Distribution Agreement.  Under the Distribution Agreement,  the Company may sell
to Cornell up to $500,000  in shares of its common  stock (the  "Common  Stock")
once every five trading  days at a price of 97% of the lowest  closing bid price
(as reported by Bloomberg  L.P.),  of the Common Stock on the  principal  market
where the Common Stock is traded for the five consecutive trading days following
a notice by the Company to Cornell of its intention to sell shares.  The Company
will  also  pay  a 5%  commitment  fee  upon  each  sale  of  shares  under  the
Distribution  Agreement.  Cornell  has  agreed not to short any of the shares of
Common Stock. In addition as part of the commitment fee arrangements the Company
issued 472,000 shares of the Company's Common Stock to Cornell.


Also on  September  7, 2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Purchase  Agreement")  with  Montgomery  Equity  Partners Ltd.
("Montgomery"),  an  affiliated  fund of Cornell,  providing for the sale by the
Company to Montgomery of its 18% secured convertible debentures in the aggregate
principal amount of $750,000 (the  "Debentures") of which $300,000 was funded on
September  7, 2005;  $200,000  was to be funded two  business  days prior to the
Company's  completion of its audited  financial  statements  for the fiscal year
ended July 31, 2005, and; $250,000 was to be funded within five business days of
the date the Registration  Statement is declared effective by the SEC. Under the
Purchase  Agreement,  the Company also issued to Montgomery  three-year warrants
(the "Warrants") to purchase 350,000 shares of Common Stock at $0.001 per share.

In addition to the  foregoing,  the Company  entered into a Securities  Purchase
Agreement (the "Accredited Investor Purchase Agreement") with the investors (the
"Accredited  Investors")  in its April 2005  financing  (which is  described  in
Footnote  4 to these  Financial  Statements)  pursuant  to which the  Accredited
Investors  agreed  to  exchange  the  securities  that  they  purchased  in such
financing  for  an  aggregate  of  $556,500   principal  amount  of  Debentures.
Specifically,  the  Accredited  Investors  agreed to  exchange an  aggregate  of
863,845 units (the "Units"), as well as a warrant to purchase an additional Unit
for an aggregate of $556,500 principal amount of Debentures. Each Unit consisted
of one share of 5% convertible  preferred stock of the Company,  $.001 par value
per share, and one warrant to purchase one share of the Company's common stock.

The Debentures  mature on the first anniversary of the date of issuance and bear
interest  at the annual  rate of 18% in cash.  The  Company is  required to make
monthly  interest  payments  commencing on October 7, 2005,  and to make monthly
principal payments commencing on March 7, 2006.

Holders may convert,  at any time, the principal  amount  outstanding  under the
Debentures into shares of Common Stock, at a conversion price per share equal to
$0.144,  subject to adjustment,  which  approximated  to the market price of the
Company's  common stock on the date that the  negotiation of the transaction was
completed (which was August 25). Upon three-business day advance written notice,
the  Company  may redeem the  Debentures,  in whole or in part.  The  redemption
amount will be calculated at 112% of the Debentures' face value.

                                      F-17
<PAGE>

                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements


As further  security for its obligations  under the above mentioned  facilities,
the Company has deposited into escrow 25,685,000  shares of common stock,  these
shares are deemed issued but not outstanding.

Subsequent to the  completion of the Standby Equity  Distribution  Agreement and
the sale of the 18% secured  convertible  debentures  pursuant to the Securities
Purchase  Agreement  in  September  2005,  the  Company  prepared  and  filed  a
registration  statement on Form SB-2 (File No.  333-128321)  with the Securities
and Exchange Commission for the purpose of registering the securities underlying
such financing transactions.  In connection therewith,  the Company has received
comments from the Commission  indicating that, in the  Commission's  view, based
upon the  structure  of the  transactions,  the  Company  may not  register  the
securities sold in the financing transactions. On March 6, 2006, we withdrew the
registration  statement on Form SB-2 (File No.  333-128321) by filing a Form R-W
with the Commission. As a result, the Company has not been able to draw down any
further  amounts  under the  Debenture  and is in  discussions  with the various
potential investors regarding raising alternative financing. No assurance can be
given  as to  when,  or  if,  these  possible  alternative  financings  will  be
completed.  In the  meanwhile,  because of the  failure to  complete  the entire
financing transaction envisaged in the September 2005 financing, the Company has
been unable to pay interest and principal  payments on the debentures drawn down
under this financing.


Note 9: Defaults Upon Senior Securities

As explained  above,  the Company has been unable to pay interest and  principal
repayments  when due under  the terms of its  September,  2005  financing  (also
describe  above).  As of April 30, 2006, the arrears of due but unpaid  interest
was $63,750 and the arrears of unpaid but due principal were $173,600.

                                      F-18
<PAGE>


                      In Veritas Medical Diagnostics, Inc.
                          (A Development Stage Company)
       Notes to the Unaudited Condensed Consolidated Financial Statements



Note 11: Subsequent Events

Royalty Participation Agreement

On May 5, 2006,  In Veritas  Medical  Diagnostics,  Inc.  ("In  Veritas"  or the
"Company")  completed the sale of a percentage of future royalties pursuant to a
Royalty  Participation   Agreement  (the  "Agreement")  with  The  Rubin  Family
Irrevocable Stock Trust (the "Investor").

The  royalties to be paid  pursuant to the  Agreement are derived from a license
agreement  with  Inverness  Medical  Innovations,  Inc.  (the  "IMI  Agreement")
pursuant  to  which  the  Company  will  receive  royalties  from  the sale of a
Prothrombin blood clotting measuring device (the "IMI Royalties).

Pursuant to the  Agreement,  the Company  received a sum of $250,000 in exchange
for 5.56% of the future IMI  Royalties  received by the Company,  subject to the
terms and conditions set forth in the Agreement  (the "Royalty  Payments").  The
Royalty  Payments shall be paid to the Investor within 15 days of the end of the
month in which the Company receives future IMI Royalties. The Company shall have
the option to terminate the Agreement at any time, without penalty,  by making a
lump sum payment to the Investor  equal to 300% of the funds  received  from the
Investor  pursuant  to the  Agreement,  less an amount  equal to the  difference
between (x) the Royalty  Payments  made to and  received by the Investor and (y)
$250,000.

Resignation of an Officer

Effective  May 9,  2006,  Brian  Cameron  resigned  as a member  of the Board of
Directors and as Chief Operating Officer of In Veritas Medical Diagnostics, Inc.
There was no  disagreement  between Mr. Cameron and the Company which led to his
resignation. Under the terms of his contract Mr. Cameron was entitled to receive
the sum of (pound)75,000  ($137,000) which is being paid to him over a six month
period.  This  payment is being  treated as a post  period end event,  since the
effective  date of his  resignation  was subsequent to the date of the financial
statements,  and the entire termination  payment will be expensed in the quarter
ended July 30, 2007.

                                      F-19



<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
LIQUIDITY AND CAPITAL RESOURCES

Forward-Looking Statements

The  information in this quarterly  report contains  forward-looking  statements
within the meaning of the Private Securities litigation Reform Act of 1995. This
Act  provides  a "safe  harbor"  for  forward-looking  statements  to  encourage
companies to provide  prospective  information  about themselves so long as they
identify these statements as forward looking and provide  meaningful  cautionary
statements  identifying  important  factors that could cause  actual  results to
differ from the projected results. All statements other than these statements of
historical  fact made in this report are forward  looking.  In  particular,  the
statements herein regarding  industry prospects and future results of operations
or financial position are forward looking statements. Forward-looking statements
reflect  management's  current  expectations and are inherently  uncertain.  Our
actual results may differ significantly from management's expectations.

The following  discussion and analysis  should be read in  conjunction  with the
financial statements of In Veritas Medical Diagnostics, Inc., included herewith.
This  discussion  should not be  construed  to imply that the results  discussed
herein will necessarily continue into the future, or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of our management.

Overview

In Veritas Medical Diagnostics, Inc. (formerly In Vivo Medical Diagnostics, Inc.
and Sports Information and Publishing Corp.) and its subsidiaries (the "Company"
or  "the  Group")  is a  development-stage  enterprise  that is  engaged  in the
development of lateral  applications of novel measurement  techniques in medical
devices with `near-patient'  (i.e. point of care) testing  applications.  We are
developing  medical  diagnostic  products  for personal  and  professional  use.
Several of the products for which we are developing  practical  applications are
based on technology  that utilizes the Hall Effect,  a physical  phenomenon that
measures the  electrical  activity as it relates to magnetic  fields,  which was
discovered more than a hundred years ago. We are also  developing  products that
utilize novel signal processing for the late-term pregnancy market.

                                       3
<PAGE>

Our business model entails (i) researching and developing  product  applications
and (ii) the  design,  engineering  and  testing of the final  product  prior to
market launch,  usually in partnership with a marketing partner that has a track
record in marketing and  distribution,  prior to market launch.  Revenue streams
include   consulting   and   development   fees  during  the   development   and
commercialization  stages  of  the  product  lifecycle,  also  supported  by  UK
government  grants (which represent the dual sources of income from inception to
today)  followed,  in future,  by  royalty  income  receivable  out of the sales
revenues  generated on the sale of the final product by our commercial  partner,
which we anticipate will become the most substantial revenue source as the Group
becomes established.

The Company was originally  incorporated  under the laws of Colorado on March 1,
2001 under the name  Sports  Information  Publishing  Corp.  for the  purpose of
engaging in sports prognostication. In July 2004, the Company entered into Share
Exchange  Agreement pursuant to which the Company acquired all of the issued and
outstanding shares of Hall Effect Medical Products,  Inc.  ("HEMP"),  a Delaware
corporation, from the security holders of HEMP.

We currently have two operating subsidiaries,  IVMD(UK) Ltd. ("IVMD") and Jopejo
Ltd.  ("Jopejo"),  both of which are incorporated  under the laws of England and
Wales and based in Inverness,  Scotland. IVMD(UK) has a platform of patents from
which to exploit unique  commercial  applications.  Jopejo is a biotech research
company utilizing similar development techniques.  The fundamental premise is in
the transfer of  measurement  technology,  the principles of which are known and
established in the world of physical  science,  into medical devices with global
near-patient applications.  This is done through the creation of novel, patented
methods  and  apparatus  for which  IVMD is the sole  owner of the  intellectual
property.

Products and Services

We currently  have  applied for eleven  patents (see list below) from granted to
pending, covering the generic application of our products and technology. We are
currently working on a number of additional  patents for submission during 2006.
We have allowed two additional patents to lapse because we believe that they are
no longer  core to our  business  and have no  commercial  value for us. We have
engineered prototypes on three distinct products:

o a prothrombin  device for measuring the clotting or coagulation  time of blood
in patients at risk of heart disease and stroke - a critical  measurement  for a
condition affecting millions worldwide

o a suite of products for fetal heart  monitoring  and  predicting  the onset of
labor several weeks in advance of the commencement of labor pains

o a low cost,  sensitive  immunoassay  system that can be applied to any type of
marker eg cardiac disease, HIV and Drugs of Abuse

o a device to establish proof of principle, and a prototype to demonstrate a low
cost and non-harmful alternative to conventional X-ray imaging

We have also established the concept and are developing proof of principle for
other low-cost and safe magnetic detection systems for additional applications,
including:

o a  minimally-invasive,  rapid and accurate  system for  detection of compounds
within blood

o a non-invasive  glucose  monitoring  system for diabetics  which can be merely
clipped to a  patient's  ear lobe (or other area with  blood rich  tissue)  and,
without  taking  blood from the patient,  will measure  levels of glucose in the
blood;

o a rapid, non-invasive monitoring device for osteoporosis

o a surgical instrument positioning system.

Several product  applications are at advanced stages of market readiness and the
first product to use our  technology,  a  Prothrombin  measurement  device,  was
launched  into the market in the second  quarter of our 2006  fiscal year and is
expected to begin generating a royalty revenue stream for the Company.  However,
the  amount  and  timing  of any  projected  royalties  is  dependent  upon  the
performance of our marketing partner,  Inverness Medical Innovations,  and there
can be no assurances that any royalties will materialize.


Results of Operations

Three Months Ended April 30, 2006 compared to Three Months April 30, 2005

Revenues

During the three months ended April 30, 2006,  we had sales of $311,019.  During
the three months ended April 30,  2005,  we had sales of $351,202.  Our revenues
consisted  primarily  of  income  received  under  development   contracts  with
commercial partners.


                                       4
<PAGE>


Depreciation Expenses

Depreciation  expenses for the three  months  ended April 30, 2006  increased to
$7,889 from $6,228 for the three months ended April 30, 2005.

General & Administrative Expenses

General and  administrative  expenses  for the three months ended April 30, 2006
decreased  from  $394,247 for the three months ended April 30, 2005 to $139,299.
This decrease  reflects efforts to reduce general and  administrative  expenses,
combined with substantial transaction costs incurred in 2005.

Research & Development Expenditure

Research and  development  activity  remains strong with no  significant  change
between periods. During the three months ended April 30, 2006, we spent $314,746
on research and  development  compared to $300,000 during the three month period
ended April 30, 2005.

Net Income (Loss)

Net loss for the three months ended April 30, 2006 was $306,062 as compared to a
net loss of $387,990 for the three months ended April 30, 2005.  The  difference
is caused mainly by (i) one time legal and other  professional  costs associated
with finance raising activities during the second and third quarters of our 2005
fiscal year and (ii) a general  tightening  of the  company's  overhead  costs ,
offset by slightly lower revenues and larger interest and debt  arrangement cost
in 2006.

Nine Months Ended April 30, 2006 compared to Nine Months Ended April 30, 2005

Revenues

During the nine months ended April 30, 2006 we had sales of  $1,077,451.  During
the nine months ended April 30, 2005,  we had sales of $911,104.  This  increase
represents  a generally  higher  level of billable  development  activity in the
current  period  compared to the same period in the previous  year. Our revenues
consisted  primarily  of  income  received  under  development   contracts  with
commercial partners.

Depreciation Expenses

Depreciation  expenses  for the nine months  ended April 30, 2006  increased  to
$24,075 from $15,771 for the nine months ended April 30, 2005.

General & Administrative Expenses

General and  administrative  expenses  for the nine months  ended April 30, 2006
decreased from  $1,090,735 for the nine months ended April 30, 2005 to $434,091.
This change reflects efforts to reduce to general and  administrative  expenses,
combined  with  substantial  transaction  costs  incurred  during the nine month
period ended April 30, 2005 in connection with financing activities.

Research & Development Expenditure

Research and  development  activity  remains strong with no  significant  change
between  periods.  During the nine months ended April 30, 2006 we spent $901,416
on research and development  compared to $823,329 in the nine month period ended
April 30, 2005.

Net Income (Loss)

Net loss for the nine months  ended April 30, 2006 was $892,288 as compared to a
net loss of $1,723,946  for the nine months ended April 30, 2005.  This decrease
is caused  mainly by (i) legal and  other  professional  costs  associated  with
finance  raising  activities  during the second and third  quarters  of our 2005
fiscal year,  (ii) a general  tightening of the company's  overhead costs during
2006 and (iii) increased revenues in 2006 over 2005.

Liquidity and Capital Resources

We have  limited  assets and  limited  revenues.  At April 30,  2006,  we had an
accumulated deficit from inception of $7,798,862.  As a result, our auditors, in
their report on our financial statement for the fiscal year ended July 31, 2005,
have  expressed  substantial  doubt  about our  ability to  continue  as a going
concern.

                                       5
<PAGE>


The Company's  primary  needs for  liquidity  and capital  resources are for the
funding of  salaries,  administrative  expenses  and  research  and  development
activities.  At April 30,  2006,  the Group had a cash  balance of $101,412  and
current liabilities of $3,423,066. The Company's cash balances at April 30, 2006
are not sufficient to support  operations for the next twelve months and it will
therefore be necessary for the Company to continue to seek additional  financing
in the form of equity and debt, further grants from the UK government and income
from  development  contracts  with  new and  existing  commercial  partners.  As
explained in Note 8 to the Unaudited Condensed Consolidated Financial Statements
(set out in Item 1 above) and further  explained in the section  below  entitled
"Recent Financings", the Company has been active, and continues to be active, is
seeking to secure new sources of financing.

Critical Accounting Policies

Principles of consolidation

Our consolidated  financial  statements include our accounts and the accounts of
our two wholly owned foreign  subsidiaries;  IVMD UK Limited ("IVMD") and Jopejo
Limited ("Jopejo"), both UK companies. The assets and liabilities of our foreign
subsidiaries  have been  translated  from British  pounds into US dollars at the
exchange  rate in  effect  at  April  30,  2006  with  the  related  translation
adjustments reported as a separate component of shareholders' deficit. Operating
statement  accounts have been translated at the average  exchange rate in effect
during the period presented. All significant intercompany transactions have been
eliminated.

Basis of presentation

Our research and  development  is conducted in Inverness,  Scotland  through our
subsidiaries:  IVMD UK Limited and Jopejo Limited.  Development-stage activities
consist of raising capital,  obtaining financing,  medical products research and
development  and  administrative  matters.  We plan to continue to raise capital
through stock sales and debt issuances to fund our development.  In addition, we
expect to obtain additional  capital from UK government grants that are designed
to support employment and enterprise and from commercial partners who contribute
towards  certain  development  projects.  In the  future,  we expect our primary
revenue to consist of royalties received from commercial  partners in connection
with the  commercial  exploitation  of our  products.  However,  there can be no
assurance  that  our  products  will be  introduced  to,  or  accepted  by,  the
commercial marketplace.

Inherent   in  our   development-stage   enterprise   are   various   risks  and
uncertainties,  including our limited operating  history,  historical  operating
losses,  dependence  upon  strategic  alliances,  and market  acceptance  of our
patented core technologies. Our ability to generate revenues from royalties will
be  dependent  upon our  ability  to enter  into  licenses,  joint  ventures  or
distribution  agreements  with  established  businesses  with existing sales and
marketing  structures.  Our future success will be dependent upon our ability to
develop  and provide new medical  devices  that meet the  changing  needs of the
marketplace,  including the effective use of our patented core technologies,  to
continue to enhance our current products under development, and to influence and
respond to emerging  industry  standards  and other  technological  changes on a
timely and cost-effective basis.

We have incurred  losses  (principally  represented by research and  development
expenditures)  since  inception  and we have a net capital  deficit at April 30,
2006 of $3,920,619. We also had substantial net current liabilities at April 30,
2006. These factors,  among others, raise substantial doubt about our ability to
continue as a going concern,  in common with many development stage companies in
our industry.  As explained  above,  in 2004,  we merged with a publicly  traded
shell company.  As a result,  we obtained  limited access to the capital markets
via a listing on the Nasdaq Over the Counter  Bulletin  Board  (OTCBB).  We have
raised limited  amounts of capital by virtue of our OTCBB listing.  However,  we
need to continue to raise capital  through public or private stock  offerings in
order  to  finance  our  development  activities  and  ultimately,   to  achieve
profitability.  However, there is no assurance that we will be successful in our
efforts to raise capital or to become a profitable  company. As explained above,
while there can be no assurance, we currently expect that by the last quarter of
calendar 2006 ongoing  royalty  income will start to flow from our first product
to enter the market.

Use of Estimates

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

Research & Development Expenditure

Research & Development expenditure is written off as it is incurred.

Revenue Recognition


We recognize  revenue in accordance with SEC Staff  Accounting  Bulletin No. 104
"Revenue  Recognition  in Financial  Statements"  (SAB 104).  Arrangements  with
multiple  elements are  accounted for in  accordance  with Emerging  Issues Task
Force Issue No. 00-21, Revenue Arrangements with Multiple Deliverables,  or EITF
00-21. We consider this  methodology to be the most appropriate for our business
model and current revenue streams.

Currently our only revenue streams relate to research and development  contracts
under  which we enter into  collaborative  agreements  with  medical  technology
companies  where the other party  generally  receives  exclusive  marketing  and
distribution rights for certain products for set time periods and set geographic
areas. The terms of the  collaborative  agreements  typically include funding of
certain research and development efforts and royalties on product sales.

                                       6
<PAGE>


Revenue from research  funding is recognized when the services are performed and
is  typically  based on the fully  burdened  cost of a  researcher  working on a
collaboration plus reimbursement of other costs incurred

Currently  we receive  revenue  mainly from  contracts  which we enter into with
commercial  partners who work with us to develop new  products  which employ our
core technology.  This revenue is generally in the form of contribution  towards
development  costs that we incur and is  accounted  for in  accordance  with the
underlying  contracts.  In the future we anticipate  the nature of our principle
revenues changing from contribution  towards development  expenditure to royalty
income from developed  products,  this change will not take place until products
that are currently in  development  have been completed and are taken to market.
Whilst there can be no assurance we currently expect our first royalty income to
commence in the last quarter of 2006.

Recent Financings

Royalty Participation Agreement

On May 5, 2006,  In Veritas  Medical  Diagnostics,  Inc.  ("In  Veritas"  or the
"Company")  completed the sale of a percentage of future royalties pursuant to a
Royalty  Participation   Agreement  (the  "Agreement")  with  The  Rubin  Family
Irrevocable Stock Trust (the "Investor").

The  royalties to be paid  pursuant to the  Agreement are derived from a license
agreement  with  Inverness  Medical  Innovations,  Inc.  (the  "IMI  Agreement")
pursuant  to  which  the  Company  will  receive  royalties  from  the sale of a
Prothrombin blood clotting measuring device (the "IMI Royalties).


Pursuant to the  Agreement,  the Company  received a sum of $250,000 in exchange
for 5.56% of the future IMI  Royalties  received by the Company,  subject to the
terms and conditions set forth in the Agreement  (the "Royalty  Payments").  The
Royalty  Payments shall be paid to the Investor within 15 days of the end of the
month in which the Company receives future IMI Royalties.

The  Company  shall  have the option to  terminate  the  Agreement  at any time,
without  penalty,  by making a lump sum payment to the Investor equal to 300% of
the funds received from the Investor  pursuant to the Agreement,  less an amount
equal to the difference between (x) the Royalty Payments made to and received by
the Investor and (y) $250,000.


September 2005 Financing

Standby Equity Distribution Agreement

On September 7, 2005,  the Company  entered into a Standby  Equity  Distribution
Agreement  (the  "Distribution  Agreement")  with  Cornell  Capital  Partners LP
("Cornell")  providing for the sale and issuance to Cornell of up to $10,000,000
of  Common  Stock  over a period of up to 24 months  after  the  signing  of the
Distribution Agreement.  Under the Distribution Agreement,  the Company may sell
to Cornell up to $500,000  in shares of its common  stock (the  "Common  Stock")
once every five trading  days at a price of 97% of the lowest  closing bid price
(as reported by Bloomberg  L.P.),  of the Common Stock on the  principal  market
where the Common Stock is traded for the five consecutive trading days following
a notice by the Company to Cornell of its intention to sell shares.  The Company
will  also  pay  a 5%  commitment  fee  upon  each  sale  of  shares  under  the
Distribution  Agreement.  Cornell  has  agreed not to short any of the shares of
Common Stock. In addition as part of the commitment fee arrangements the Company
is to issue 472,000 shares of the Company's Common Stock to Cornell.

18% Secured Convertible Debentures

Also on  September  7, 2005,  the Company  entered  into a  Securities  Purchase
Agreement  (the  "Purchase  Agreement")  with  Montgomery  Equity  Partners Ltd.
("Montgomery"),  an  affiliated  fund of Cornell,  providing for the sale by the
Company to Montgomery of its 18% secured convertible debentures in the aggregate
principal amount of $750,000 (the  "Debentures") of which $300,000 was funded on
September  7,  2005;  $200,000  shall be funded two  business  days prior to the
Company's  completion of its audited  financial  statements  for the fiscal year
ended July 31, 2005, and;  $250,000 shall be funded within five business days of
the date the Registration  Statement is declared effective by the SEC. Under the
Purchase  Agreement,  the Company also issued to Montgomery  three-year warrants
(the "Warrants") to purchase 350,000 shares of Common Stock at $0.001 per share.

In addition to the  foregoing,  the Company  entered into a Securities  Purchase
Agreement (the "Accredited Investor Purchase Agreement") with the investors (the
"Accredited  Investors") in its April 2005 financing  (described below) pursuant
to which the Accredited  Investors  agreed to exchange the securities  that they
purchased in such  financing  for an aggregate of $556,500  principal  amount of
Debentures.  Specifically,  the  Accredited  Investors  agreed  to  exchange  an
aggregate of 863,845  units (the  "Units"),  as well as a warrant to purchase an
additional  Unit for an aggregate of $556,500  principal  amount of  Debentures.
Each  Unit  consisted  of one  share of 5%  convertible  preferred  stock of the
Company, $.001 par value per share, and one warrant to purchase one share of the
Company's common stock.


                                       7
<PAGE>


The Debentures  mature on the first anniversary of the date of issuance and bear
interest  at the annual  rate of 18% in cash.  The  Company is  required to make
monthly  interest  payments  commencing on October 7, 2005,  and to make monthly
principal payments commencing on March 7, 2006.

Holders may convert,  at any time, the principal  amount  outstanding  under the
Debentures into shares of Common Stock, at a conversion price per share equal to
$0.144,  subject to adjustment.  Upon three-business day advance written notice,
the  Company  may redeem the  Debentures,  in whole or in part.  The  redemption
amount will be calculated at 112% of the Debentures' face value.

As further  security for its  obligations  under the Purchase  Agreement and the
Accredited  Investor Purchase  Agreement,  the Company has deposited into escrow
25,685,000  shares (the  "Escrow  Shares") of common  stock.  The Escrow  Shares
shares are deemed issued but not outstanding.

Current Status of September 2005 Financing

Subsequent to the  completion of the Standby Equity  Distribution  Agreement and
the sale of the 18% secured  convertible  debentures  pursuant to the Securities
Purchase  Agreement  in  September  2005,  the  Company  prepared  and  filed  a
registration  statement on Form SB-2 (File No.  333-128321)  with the Securities
and Exchange Commission for the purpose of registering the securities underlying
such financing transactions.  In connection therewith,  the Company has received
comments from the Commission  indicating that, in the  Commission's  view, based
upon the  structure  of the  transactions,  the  Company  may not  register  the
securities sold in the financing transactions. On March 6, 2006, we withdrew the
registration  statement on Form SB-2 (File No.  333-128321) by filing a Form R-W
with the Commission. As a result, the Company has not been able to draw down any
further  amounts  under the  Debenture  and is in  discussions  with the various
potential investors regarding raising alternative financing. No assurance can be
given  as to  when,  or  if,  these  possible  alternative  financings  will  be
completed.  In the  meanwhile,  because of the  failure to  complete  the entire
financing transaction  contemplated in the September 2005 financing, the Company
has been unable to pay interest and principal  payments on the debentures  drawn
down under this financing.

April 2005 Financing

On April 15, 2005, we completed the sale of 863,845  units (the  "Units"),  each
Unit  consisting of one share of 5% convertible  preferred stock of the Company,
$.001 par value per share (the "Preferred  Stock"),  and one warrant to purchase
one  share  of the  Company's  common  stock  (the  "Warrants"),  to  accredited
investors  pursuant for an aggregate  purchase price of approximately  $561,500.
The aggregate purchase price consisted of the sale of $401,500 of Units for cash
and the sale of $160,000 of Units for the forgiveness of debt. In addition, each
purchaser of a Unit received a warrant to purchase an additional Unit (the "Unit
Warrants").  The  aforementioned  securities  were  sold in  reliance  upon  the
exemption  afforded by the  provisions of Regulation  D, as  promulgated  by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.

Off Balance Sheet Arrangements

We do not have any off balance sheet  arrangements  as of January 31, 2006 or as
of the date of this report.

Recent Accounting Pronouncements

Statement of Financial  Accounting  Standards No. 123 (revised 2004) Share-Based
Payment (SFAS 123R) establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services.  It also
addresses  transactions  in which an entity incurs  liabilities  in exchange for
goods or  services  that are  based on the  fair  value of the  entity's  equity
instruments or that may be settled by the issuance of those equity  instruments.
This  Statement  focuses  primarily on accounting for  transactions  in which an
entity obtains  employee  services in  share-based  payment  transactions.  This
Statement  does not change  the  accounting  guidance  for  share-based  payment
transactions  with parties  other than  employees  provided in Statement  123 as
originally issued and EITF Issue No. 96-18,  "Accounting for Equity  Instruments
That Are Issued to Other Than  Employees for Acquiring,  or in Conjunction  with
Selling,  Goods or Services." This Statement does not address the accounting for
employee share ownership plans, which are subject to AICPA Statement of Position
93-6,  Employers'  Accounting for Employee Stock Ownership Plans. The Company is
required to adopt SFAS 123R effective August 1, 2006. The standard provides for
a prospective application. Under this method, the Company will begin recognizing
compensation  cost for equity based  compensation for all new or modified grants
after the date of adoption. In addition, the Company will recognize the unvested
portion  of the grant  date fair value of awards  issued  prior to the  adoption
based on the fair values previously calculated for disclosure purposes.

In May 2003,  the  Financial  Accounting  Standards  Board  issued  Statement of
Financial Accounting Standard ("SFAS") No. 150, Accounting for Certain Financial
Instruments with  Characteristics  of both Liabilities and Equity.  SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument this is within its scope
as a liability.  Many of those instruments were previously classified as equity.
SFAS No. 150 is effective for financial  instruments  entered into after May 31,
2003,  and otherwise is effective at the  beginning of the first interim  period
beginning  after June 15,  2003,  except for  mandatorily  redeemable  financial
instruments  of  nonpublic  entities.   For  nonpublic   entities,   mandatorily
redeemable  financial  instruments  are  subject  to SFAS No.  150 for the first
period beginning after December 15, 2003.  Adoption of SFAS No. 150 will require
us to report any cumulative  redeemable preferred stock and any cumulative Class
C redeemable preferred stock outstanding at the time of adoption as a liability.

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<PAGE>


ITEM 3. CONTROLS AND PROCEDURES

(a)  Evaluation  of  Disclosure  Controls and  Procedures.  As of the end of the
period covered by this report, we conducted an evaluation, under the supervision
and with the  participation  of our chief executive  officer and chief financial
officer of our disclosure  controls and procedures (as defined in Rule 13a-15(e)
and Rule 15d-15(e) of the Exchange Act). Based upon this  evaluation,  our chief
executive  officer and chief  financial  officer  concluded  that our disclosure
controls and procedures are effective to ensure that information  required to be
disclosed  by us in the reports that we file or submit under the Exchange Act is
recorded, processed,  summarized and reported, within the time periods specified
in the Commission's rules and forms.

(b) Changes in internal  controls.  There was no change in our internal controls
or in other  factors  that could affect  these  controls  during our last fiscal
quarter that has  materially  affected,  or is  reasonably  likely to materially
affect, our internal control over financial reporting.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As explained under "Recent Financings" above, the Company has been unable to pay
interest and  principal  repayments  when due under the terms of its  September,
2005 financing (also described  above).  As of April 30, 2006 the arrears of due
but unpaid  interest was $63,750 and  principal  repayment  arrears  amounted to
$173,600.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None.

ITEM 5. OTHER INFORMATION

Effective  May 9,  2006,  Brian  Cameron  resigned  as a member  of the Board of
Directors and as Chief Operating Officer of In Veritas Medical Diagnostics, Inc.
There was no  disagreement  between Mr. Cameron and the Company which led to his
resignation.

ITEM 6. EXHIBITS

EXHIBITS



10.1    Royalty  Participation  Agreement (as  incorporated by reference to Form
        8-K filed with the Securities & Exchange Commission on May 11, 2006).

31.1    Certification  by John Fuller,  President and Chief  Executive  Officer,
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2    Certification  by Martin Thorp,  Chief  Financial  Officer,  pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002.

32.1    Certification  by John Fuller,  President and Chief  Executive  Officer,
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2    Certification  by Martin Thorp,  Chief  Financial  Officer,  pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002.

ITEM 7. SIGNATURES

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<PAGE>


                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                      IN VERITAS MEDICAL DIAGNOSTICS, INC.

June 19, 2006



                       By:   /s/ John Fuller
                       ----------------------------
                       John Fuller
                       Chief Executive Officer

                       /s/ Martin E. Thorp
                       ----------------------------
                       Martin E. Thorp
                       Chief Financial Officer


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