SecProbe.io

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Mail Stop 03-06
April 7, 2005
Mr. Allan L. Schwartz
Executive Vice President and Chief Financial Officer
Imaging Diagnostic Systems, Inc.
6531 NW 18th Court
Plantation, FL 33313
Re:	Imaging Diagnostic Systems, Inc.
Form 10-K for the Fiscal Year Ended June 30, 2004
Filed September 17, 2004
Quarterly Report on Form 10-Q for the period ended
December 31, 2004
File No. 000-26028
Dear Mr. Schwartz:
      We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents.  Where indicated, we think you should revise your
document
in response to these comments.  If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary.  Please be as detailed as necessary in your
explanation.  In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.
      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Fiscal Year Ended June 30, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Page 27
Results of Operations - Page 27
1. Where changes in financial statement line items are the result
of
several factors each significant factor should be separately
quantified and discussed.  For example, you say that compensation
increased "due to the recording of a stock bonus given to
employees
during the third quarter and the accrual of the payment obligation
to
Linda Grable."  However, you do not quantify the impact of each of
these factors.  Apply throughout MD&A.
Balance Sheet Data - Page 28
2. We see the significance of inventory to your assets. We also
see
that you have sold only a few units and that the timing of FDA
approval is uncertain.  Please expand MD&A to describe the
components
of inventories in more detail than as presented in Note 5.
Discuss
the nature and components of the raw materials and the status of
the
"completed units under testing." Describe why you believe the
carrying amount is recoverable, including discussion of how and
when
you expect to recover the investment.  To the extent you plan to
utilize inventories for purposes other than building assets held
for
sale, you should make clarifying disclosure. For instance, are raw
materials or completed units also used for research and
development
or other purposes? Also describe your methods and procedures for
identifying and recording inventory impairment, including
disclosure
about how your methods are faithful to the requirements of SAB
Topic
5-BB.  In light of the materiality, there should be robust
disclosure
about why your inventories are recoverable.
3. In light of the significance to your assets, tell us why you
should not present critical accounting policy disclosure about
inventories.  Refer to FR-60 and FR-72 for guidance on critical
accounting policies.  Revise or advise.
4. Confirm to us that "completed units under testing" will be
units
held for sale.  Otherwise explain to us why the related costs are
not
research and development as provided by paragraph 9 to FAS 2.
Financial Statements - Page 35
5. Please revise to include the selected quarterly financial data
required by Item 302 of Regulation S-K.
Statement of Cash Flows - Page F-14
6. We note that increases in working capital liabilities are
presented as cash outflows and decreases are presented as cash
inflows in the statement of cash flows.  Under the indirect method
described in FAS 95, increases in working capital liabilities are
normally cash inflows.  Similarly, decreases in working capital
liabilities are normally cash outflows.  Accordingly, it is not
clear
why increases in accounts payable, accrued expenses and customer
deposits are presented as cash outflows in your statement of cash
flows.  Tell us how your presentation for such liabilities is
appropriate under FAS 95. If necessary revise to comply with the
requirements of that guidance.
7. As a related matter, supplementally reconcile the cash inflow
from
inventory of $202,151 with the change in the balance sheet account
between year-end 2004 and year-end 2003.  The balance sheet change
suggests a cash outflow of $345,589.  Show us that your
presentation
for this item is appropriate under FAS 95.  If necessary revise to
comply with the requirements of that guidance.
8. We note in the supplemental disclosures of non-cash investing
and
financing activities that you issued $492,701 of common stock
through
exercise of incentive stock options.  We also note from the
statement
of cash flows that you received $492,701 of proceeds from the
exercise of stock options.  Please tell us supplementally whether
these proceeds were received in cash.  If so, why is the
transaction
disclosed as a non-cash event.  If cash was not received, then it
appears that the amount should not appear in the body of the
Statement pursuant to paragraph 32 to FAS 95. If necessary revise
to
comply with the requirements of that guidance.
Note 2(b) Revenue Recognition - Page F-17
9. In a supplemental response, fully describe the terms and
conditions of the sales recognized in 2004 and 2003.  Describe any
post sale obligations (training, installation, maintenance,
etc...),
any other post-shipment involvement and customer acceptance
protocols
associated with these sales, including how those matters were
considered in the timing and amount of revenue. Also describe
return
policies applicable to these sales, including how potential
returns
were considered in the timing of these revenues.  The supplemental
narrative should demonstrate the timing and amount of revenue for
these periods is appropriate under the requirements of SAB 104 and
FAS 48.  Update your response for any revenues recognized in 2005.
10. As a related matter, in an additional supplemental response
describe the significant terms of the agreements with
distributors,
including payment, return, exchange, price protection, discounts,
sales incentives and other significant matters.  Show us that your
disclosed policy of recognizing revenue at shipment is appropriate
under SAB 104 and FAS 48.  That response should also address the
nature, timing and extent of post shipment obligations and
customer
acceptance protocols associated with transactions with
distributors.
Note 2(e) Prototype Equipment - Page F-18
11. Tell us why the costs of prototypes should not be expensed as
research and development pursuant to paragraph 9 to FAS 2.  This
response should be detailed and specific in support of your
accounting.
Note 2(m) Intangible Assets - Page F-21
12. Disclose the useful lives assigned to the UL and CE approvals,
including how those lives were determined.  Also separately
disclose
the amount assigned to each asset and make disclosure about the
nature of the costs included in each asset.  You should also
expand
Note 7 to present all of the relevant disclosures from FAS 142.
13. In a supplemental response tell us why you believe the UL and
CE
approvals are intangible assets as defined in FAS 142.  Your
response
should be specific to each item. We may have further comment upon
review of your rationale.
14. It appears that the asset for the UL and CE approvals was not
amortized in fiscal 2004.  Tell us why that accounting is
appropriate
under the requirements of FAS 142. Your response should be
detailed
and specific; and we may have further comment upon review of that
response.
Note 4. Going Concern - Page F-24
15. We see the limited revenues recognized in 2003 and 2004.
Please
revise to disclose when you expect to commence your planned
principal
operations and to derive significant revenue therefrom.  That is,
clarify when you expect to exit FAS 7 reporting.
Note 9. Other Current Liabilities - Page F-27
16. In a supplemental response explain the nature and origin of
the
accrued liability for stock options.  That response should also
explain the accounting theory being applied in recording a
liability
for stock options.  Also clarify how you expect to liquidate the
obligation, including how you expect to account for that event.
You
should also make clarifying disclosure.
Note 14. Income Taxes - Page F-31
17. We see the substantial share issuances in recent periods.
Accordingly, you should make disclosure about any resulting
limitations on utilization of your operating losses.  If you
believe
there are no such limitations, confirm supplementally.
Item 9A. Controls and Procedures - Page 36
18. We see disclosure that your principal executive officer and
principal financial officer evaluated disclosure controls and
procedures as of a date within 90 days before the filing date of
the
annual report.  Please amend the filing to disclose management`s
conclusion regarding the effectiveness of disclosure controls and
procedures as of the end of the period covered by the annual
report.
Refer to Item 307 of Regulation S-K and Part III.F of Management`s
Reports on Internal Control Over Financial Reporting and
Certification of Disclosure in Exchange Act Periodic Reports,
Release
No. 33-8238, available on our website at
www.sec.gov/rules/final/33-
8238.htm.
19. Please revise the language used in the disclosure concerning
changes in internal control over financial reporting to indicate
whether there was any change to internal control over financial
reporting that occurred during the fourth quarter that has
materially
affected, or that is reasonably likely to materially affect,
internal
control over financial reporting.  Refer to the language used in
Item
308(c) of Regulation S-K as amended effective August 13, 2003.
Exhibits 31.1 and 31.2
20. We note that the certifications filed as Exhibits 31.1 and
31.2
were not in the proper form. The required certifications must be
in
the exact form prescribed by Item 601(b)(31) to Regulation S-K.
The
wording of the required certifications may not be changed in any
respect, except for the modifications temporarily permitted to be
made to the fourth paragraph as referred to in Part III.E of
Release
No. 8238. Accordingly, please file amendments to your Form 10-K
and
fiscal 2005 Forms 10-Q that include the entire filing together
with
the certifications of each of your current CEO and CFO in the form
currently set forth in Item 601(b)(31) of Regulation S-K.
Form 10-Q for the Quarterly Period Ended December 31, 2004
Item 2. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Page 9
21. Please revise to make disclosure about the reasons for
significant changes in the categories of operating expenses. In
addition, where changes in financial statement amounts are the
result
of several factors each significant factor should be quantified
and
discussed to the extent practicable.  Specific expenses included
in
these categories should also be discussed and analyzed.  MD&A
should
provide an analysis of the results of operations.  Accordingly,
MD&A
should identify, quantify and describe reasons for significant
changes in financial statement items.
Item 4. Controls and Procedures - Page 12
22. We note your disclosure that controls and procedures "are
designed to ensure that the information required to be disclosed
by a
company...is recorded, processed, summarized and reported within
required time periods."   Revise to clarify that disclosure
controls
and procedures are also designed to ensure that information
required
to be disclosed in the reports that you file or submit under the
Exchange Act is accumulated and communicated to your management,
including your chief executive officer and chief financial
officer,
to allow timely decisions regarding required disclosure.  See
Exchange Act Rule 13a-15(e).
23. We note your statement that management has concluded that
disclosure controls and procedures are effective "in providing
them
with material information relating to the Corporation known to
others
within the Corporation which is required to be included in our
periodic reports filed under the Exchange Act."  You should revise
to
clearly state, if true, whether or not your disclosure controls
and
procedures are "effective" as that term is contemplated by Item
307
to Regulation S-B.  Accordingly, you should delete the language
currently appearing after the word "effective."  If you elect to
provide further definition of what that conclusion means, that
description should, in all material respects, reflect the language
set forth in the entire two sentence definition from Exchange Act
Rule 13a-15(e).  Please revise.
*          *          *
      As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response.  You may wish to provide us with marked copies of
the amendment to expedite our review.  Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information.  Detailed cover
letters greatly facilitate our review.  Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
      In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
      You may contact Lynn Dicker at (202) 824-5264 or the
undersigned at (202) 942-2862 if you have any questions.
Sincerely,

Gary Todd
Reviewing Accountant
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Mr. Allan L. Schwartz
Imaging Diagnostic Systems, Inc.
April 7, 2005
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