SecProbe.io

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Mail Stop 0306

May 5, 2005

By U.S. Mail and facsimile to (505) 858-1871

Mr. John Cousin
Chief Financial Officer
Advanced Optics Electronics, Inc.
8301 Washington NE
Suite 5
Albuquerque, New Mexico 87113

	RE:	Advanced Optics Electronics, Inc.
		Form 10-KSB for the fiscal year ended December 31, 2004
		File No. 000-24511

Dear Mr. John Cousin:

      We have reviewed your filing 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 future filings 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 on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-KSB for the fiscal year December 31, 2004

Item 6.  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Pages 13-16

1. You have consolidated the Biomoda business.  The nature of that
business is substantially different from that of your display
business.  Accordingly, MD&A should present distinct discussion of
the results of operations, financial condition and liquidity for
that
business. You should provide disclosure about the status of that
business and its plan of operation, including disclosure about how
that business is and will be financed.  Going concern issues
applicable to that operation should also be fully discussed in
expand
disclosure.
2. As a related matter, we are aware that start-up medical device
companies face significant uncertainties and that the FDA approval
process can consume substantial sums and take years to complete.
Your
expanded disclosure should more clearly address the status of this
business and the inherent risks and substantial uncertainties.

3. With respect to the display business, expand to present a
detailed
description of your plan of operation for the next twelve months.
This description should include such matters as:
a. a discussion of how long you can satisfy your cash requirements
and whether you will have to raise additional funds in the next
twelve months;
b. a summary of any product research and development that you will
perform for the term of the plan;
c. whether you expect your products will be finalized and ready
for
market (and, if not when they will be ready);
d. any expected purchase or sale of plant and significant
equipment;
and
e. any expected significant changes in the number of employees.

The expanded discussion should also present more specific detail
about your viable plan to continue as a going concern. This
discussion should be specific with regard to time frames, funding
needs and sources and other matters that impact your ability to
complete the plan. The impact if you are not successful with these
efforts should also be addressed.  Refer to FRC 607.02.  Refer
also
to Regulation S-B Item 303(a).

Results of Continuing Operations

      Loss on Contract - Page 14
4. Revise to specifically identify, describe and quantify factors
responsible for the $2.25 million loss on contract since
inception.
Also, disclose why that arrangement was not successfully
completed.

      Operating Expenses - Page 15
5. MD&A should provide an analysis of the results of operations.
That analysis should identify, quantify and describe reasons for
significant changes in financial statement items.  Your
discussion,
basically a list of changes, does not present analysis of the
results
of operations.  Please consult Financial Reporting Release No. 72
"Commission Guidance Regarding Management`s Discussion and
Analysis
of Financial Condition and Results of Operations" and
appropriately
expand.
6. Revise to clarify how conversion of debentures produced a $.6
million loss in 2004.  Clarify why there was a gain in 2003 when
about the same amount of principal was converted for substantially
more shares.

Item 8A. Controls and Procedures - Page 17
7. We see that the Chief Executive Officer and Chief Financial
Officer evaluated disclosure controls and procedures as of a date
within 90 days before the filing date of the annual report.
Revise
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-B
and
Part II.F of "Management`s Reports on Internal Control Over
Financial
Reporting and Certification of Disclosure in Exchange Act Periodic
Reports" (Release No. 33-8238).
Financial Statements

Report of Independent Registered Public Accounting Firm
8. Your auditors have expressed reliance on the report of another
firm.  Accordingly, that report must also appear in your filing
and
should be presented immediately after the report from your primary
auditors.  Refer to Rule 2-05 to Regulation S-X.

Note 1, Organization and Summary of Significant Accounting
Policies -
Page F-6

      Organization and Nature of Operations - Page F-6
9. We refer to the last sentence to the last paragraph of the
disclosure.  You indicate that Biomoda plans to "register its
product
with the FDA in 2005."  Revise to clarify what that means. We
understand that the process for obtaining product approval from
the
FDA can take years and absorb substantial sums.  Based on
Biomoda`s
recent Form 10-KSB it appears that FDA submissions and approvals
are
not imminent.  Revise to provide more complete disclosure about
the
status of Biomoda`s FDA submissions and product approvals.

Note 3, Patents (Intangible Assets) - F-15
10. Revise to disclose the gross carrying amount and accumulated
amortization for the patents.  Also provide clarifying disclosure
about the nature of the patents, including identification of the
applicable business units. Refer to SFAS 142.

Note 5, Investment in Genomed, Inc. - Page F-16
11. You state that the investment in Genomed is accounted for
under
the cost method.  As set forth in footnote 2 to paragraph 3a to
SFAS
115, marketable securities include restricted securities when the
sales restriction lapses within one year.  Article I to your
agreement with Genomed indicates that the restricted period is one
year.  It appears that cost method accounting is not appropriate
as
of December 31, 2004.  Either revise to account for the investment
as
a marketable security under SFAS 115 or tell us why that
accounting
is not required by GAAP.

12. We see your limited resources, losses, operating cash burn and
going concern audit report. We also see that this investment is
your
most significant asset and that Genomed is in essence a start-up
business. Expand MD&A to disclose, in reasonable detail, why you
made
this investment, including how and when expect recover the cost.
Also
provide some disclosure about the nature and status of Genomed`s
business. The expanded disclosure should clearly describe why you
elected to invest such a substantial sum in this development stage
business while your own products do not appear ready for sale.
That
is, why were these funds not invested in your business plan as
described in Item 1?

Note 7, Variable Interest Entity - Page F-16
13. In a supplemental response, fully explain how you interpreted
and
applied the guidance from FIN 46 in concluding that you should
consolidate Biomoda.  This response should be detailed and
specific.

Note 9, Convertible Debentures - Page F-18
14. In a supplemental response, show us how you measured the loss
and
gain on conversion of debentures in 2004 and 2003.  For each year
and
for each instrument, explain the terms of conversion in sufficient
detail to explain the calculations.

Note 11, Stockholders` Equity - Page F-20
15. Expand to more fully comply with the disclosure requirements
of
SFAS 7.  Under that guidance you should disclose the following
from
inception:
a. For each issuance, the date and number of shares of stock,
warrants, rights, or other equity securities issued for cash and
for
other consideration.
b. For each issuance, the dollar amounts (per share or other
equity
unit and in total) assigned to the consideration received for
shares
of stock, warrants, rights, or other equity securities.
c. For each issuance involving noncash consideration, the nature
of
the noncash consideration and the basis for assigning amounts.

16. With respect to shares issued in non-cash arrangements
(services,
for instance), you should provide reasonably detailed description
of
what you received in return. The disclosure about how you measured
the amounts recorded should be detailed and specific.

Note 12, Impairment of Assets - Page F-25
17. With respect to the investment impairments, revise the notes
to
financial statements as follows:
a. Describe the underlying facts and circumstances leading to the
impairments;
b. Disclose the method and significant assumptions used to
determine
fair value;
c. Clarify why you presented this charge as an operating expense
while gains and losses on other securities are reported as non-
operating income or expense.

Note 13, Commitments and Contingencies - Page F-25
18. Expand to provide a more specific description of the
circumstances leading you to file suit in December 2004. Clarify
the
nature of the "intentionally tortuous conduct." Also clarify the
involvement of the other entity.  Who is that party, how are they
related to your company and what is their interest in the matter?
Also clarify the involvement of the "co-defendants" from whom you
apparently won a judgment. Why are the co-defendants not referred
to
in the paragraph where you discuss the litigation?
19. In a supplemental response, tell us how you accounted for the
settlement and support that your accounting complies with GAAP.

*    *    *    *

      As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested supplemental
information.  Detailed cover letters greatly facilitate our
review.
Please file
your cover letter on EDGAR.  Please understand that we may have
additional comments after reviewing your responses to our
comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
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 filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff 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 our review of your filing or in
response to our comments on your filing.

      You may contact Patrick Enunwaonye, Staff Accountant, at
(202)
824-5529 or me, at (202) 942-2862 if you have questions regarding
comments on the financial
statements and related matters. In this regard, do not hesitate to
contact Brian Cascio,  Accounting Branch Chief , at (202) 942-1791
with any other concerns.

							Sincerely,

							Gary Todd
							Review Accountant
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Mr. John Cousin
Advanced Optics Electronics, Inc.
May 5, 2005
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