SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB/A

(Amendment No. 1)

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

SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended July 31, 2007

Commission File Number: 000-13176

NON-INVASIVE MONITORING SYSTEMS, INC.

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

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

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

(Address of principal executive offices) (Zip Code)

(305) 861-0075

(Company’s telephone number)

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

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

None

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

Common Stock, $0.01

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  ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation SB contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10KSB or any amendment to this Form 10KSBC.    Yes  ¨    No  x

State issuer’s revenues for its most recent fiscal year: $310,314

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of held as of October 23, 2007, was approximately $29,524,729

Solely for purposes of the foregoing calculation, all of the registrant’s directors and officers are deemed to be affiliates.

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the registrant’s Common Stock, par value $ 01 per share (the “Common Stock”), as of October 26, 2007, was 67,090,228.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

Transitional Small Business Disclosure Format:    Yes  ¨    No  x

NON-INVASIVE MONITORING SYSTEMS, INC.

Report on Form 10-KSB/A

For the Fiscal Year Ended July 31, 2007

TABLE OF CONTENTS

	Page
PART II
Item 7. Financial Statements	11
Financial Statements	F-l
Signatures	20

Forward-Looking Statements

This Report contains, in addition to historical information, forward-looking statements regarding Non-Invasive Monitoring Systems, Inc. (the “Company” or “NIMS”), which represent the Company’s expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition, business strategies, and other information and that involve substantial risks and uncertainties The Company’s actual results of operations, some of which are beyond the Company’s control, could differ materially. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Factors that could cause or contribute to such difference include, but are not limited to, history of operating losses and accumulated deficit; need for additional financing; dependence on future sales of the “Exer-Rest,” the home and clinic version of the AT-101 motion platform; competition; dependence on management; risks related to proprietary rights; government regulation; and other factors discussed herein and in the Company’s other filings with the Securities and Exchange Commission.

Explanatory Note

This Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended July 31, 2007 of the Company is being filed to modify the last paragraph of Note 13 in the Financial Statements of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2007, which was filed with the Securities and Exchange Commission on October 29, 2007 (the “Original Filing”). The last paragraph of Note 13 inadvertently did not correctly reflect the text of the audited financial statements. This amendment also sets forth on the cover page the number of shares outstanding on the latest practicable date.

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Amendment No. 1 amends Item 7 in its entirety and contains new certifications pursuant to Rules 13a-14 and 15d-14 under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002. Other than as set forth above and the inclusion of new certifications pursuant to Rules 13a-14 and 15d-14 under the Exchange Act and Section 302 of the Sarbanes-Oxley Act of 2002, no other changes or amendments to the Original Filing are being made.

This Amendment No. 1 contains only the sections and exhibits to the Original Filing that are being amended, and those unaffected parts or exhibits are not included herein. This Amendment No. 1 continues to speak as of the date of the Original Filing and the Company has not updated the disclosure contained herein to reflect events that have occurred since the date of the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s other filings made with the Securities and Exchange Commission, and is subject to updating and supplementing as provided in the periodic reports that the Company has filed and will file after the date of the Original Filing with the Securities and Exchange Commission.

2

ITEM 7. FINANCIAL STATEMENTS.

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

3

SIGNATURES

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

	NON-INVASIVE MONITORING SYSTEMS, INC.
Dated: November 2, 2007	By:	/s/ Gary W. Macleod
		Gary W. Macleod,
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the dates indicated.

	NON-INVASIVE MONITORING SYSTEMS, INC.
Dated: November 2, 2007	By:	/s/ Gary Wetstein
		Gary Wetstein,
		Chief Financial Officer and Senior Vice President

4

NON-INVASIVE MONITORING SYSTEMS, INC.

JULY 31, 2007

INDEX TO FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-1
BALANCE SHEET	F-2
STATEMENT OF OPERATIONS	F-3
STATEMENT OF SHAREHOLDERS EQUITY	F-4
STATEMENT OF CASH FLOWS	F-5
NOTES TO FINANCIAL STATEMENTS	F-6-15
EXHIBIT INDEX

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Non-Invasive Monitoring Systems, Inc.

We have audited the accompanying balance sheet of Non-Invasive Monitoring Systems, Inc. as of July 31, 2007 and the related statements of operations, changes in shareholders’ equity (deficiency) and cash flows for each of the years in the two year period ended July 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Non-Invasive Monitoring Systems, Inc. as of July 31, 2007 and the results of its operations and its cash flows for each of the years in the two year period ended July 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the Note 1 to the financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 2, effective August 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (R). “Share-Based Payment.”

/s/ Eisner, LLP

Eisner, LLP

New York, New York

October 29, 2007

F-1

NON-INVASIVE MONITORING SYSTEMS, INC

Balance Sheet

	July 31, 2007
ASSETS
Current assets
Cash	$	1,156,337
Restricted cash		400,000
Royalties receivable		48,756
Prepaid expenses, deposits and other current assets		29,803
Total current assets		1,634,896
Furniture and equipment, net		19,624
Other assets, net		401
Total assets	$	1,654,921
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Note payable – bank	$	500,000
Notes payable – other		20,600
Accounts payable and accrued expenses		217,677
Deferred warranty income		3,900
Total current liabilities		742,177
Deferred warranty income		2,475
Total liabilities		744,652
Shareholders’ equity
Series B Preferred Stock, par value $1.00 per share; 100 shares authorized, issued and outstanding		100
Series C Preferred Stock, par value $1.00 per share; 62,048 shares authorized, issued and outstanding		62,048
Common stock, $.01 par value per share; 100,000,000 shares authorized; 67,293,734 shares issued and outstanding		672,937
Additional paid in capital		16,374,180
Accumulated deficit		-16,198,996
Total shareholders’ equity		910,269
Total liabilities and shareholders’ equity	$	1,654,921

The accompanying notes are an integral part of these financial statements

F-2

NON-INVASIVE MONITORING SYSTEMS, INC

STATEMENTS OF OPERATIONS

Years Ended July 31, 2007 and 2006

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

The accompanying notes are an integral part of these financial statements

F-3

NON-INVASIVE MONITORING SYSTEMS, INC

STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

Years Ended July 31, 2007 and 2006

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

The accompanying notes are an integral part of these financial statements

F-4

NON-INVASIVE MONITORING SYSTEMS, INC

STATEMENTS OF CASH FLOWS

Years Ended July 31, 2007 and 2006

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

The accompanying notes are an integral part of these financial statements

F-5

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization. Non-Invasive Monitoring Systems, Inc. (the “Company”), a Florida corporation, has licensed its rights to its computer-aided continuous monitoring devices to detect abnormal respiratory and cardiac events using sensors placed on the body’s surface to SensorMedics Division of ViaSys and to VivoMetrics. The Company also concentrated on developing, marketing and selling a motion platform, therapeutic vibrator device designated the AT-101. In addition, the Company performs consultative research of diagnostic monitoring devices. The Company is now concentrating on the “Exer-Rest,” a home and clinic version of its AT-101 and seeking FDA approval to market the “Exer-Rest” for sales in the United States.

Basis of Presentation. The Company’s financial statements have been prepared and presented on a basis assuming it will continue as a going concern. As reflected in the accompanying financial statements the Company had a net loss in the amount of $1,358,692 and $613,060 for the years ended July 31, 2007 and 2006 respectively, and has an accumulated deficit of $16,198,996 as of July 31, 2007. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The Company will need to raise additional capital during fiscal year 2008. Additional debt or equity financing will be required for the Company to continue its business activities, which are currently focused on the development, marketing and production of the Exer-Rest. It is management’s intention to obtain the required additional capital needed to continue its business activities through new debt or equity financing, but there can be no assurance that it will be successful in this regard. The accompanying financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Such items include input variables for stock based compensation. Actual results could differ from these estimates.

Inventories. Inventories are stated at lower of cost or market using the first-in, first-out method.

Furniture and Equipment. Furniture and equipment are stated at cost and depreciated using the straight-line method, over the five–year estimated useful life of the assets.

Long-lived Assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In performing the review for recoverability, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the assets, an impairment loss is recognized as the difference between the fair value and the carrying amount of the asset. Management reviewed its long-lived assets and determined that no reduction should be recorded as of July 31, 2007 and 2006, respectively.

Income Taxes. The Company provides for income taxes in accordance with Statement of Financial Accounting Standard, No. 109, Accounting for Income Taxes, (“SFAS No. 109”) and related interpretations using an asset and liability based approach. Deferred income tax assets and liabilities are recorded to reflect the tax consequences in future years of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes.

As of July 31, 2007 the Company had a net operating loss carryforward of approximately $14,800,000 available to offset future taxable income for federal and state income tax purposes. The net operating loss carryforwards may be subject to limitation due to change of ownership provisions under Section 382 of the Internal Revenue Code and similar state provisions.

F-6

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

SFAS No. 109 requires the Company to recognize income tax benefits for loss carryforwards that have not previously been recorded. The tax benefits recognized must be reduced by a valuation allowance if it is more likely than not that loss carryforwards will expire before the Company is able to realize their benefit, or that future deductibility is uncertain. For financial statement purposes, the deferred tax asset for loss carryforwards has been fully offset by a valuation allowance since it is uncertain whether any future benefit will be realized.

Revenue Recognition. Revenue from product sales is recognized when persuasive evidence of an arrangement exists, the goods are shipped and title has transferred, the price is fixed or determinable, and the collection of the sales proceeds is reasonably assured. The company recognizes royalties as they are earned, based on reports from licensee(s), research and consulting revenue and warranty income on extended at 101 warranties outstanding are recognized over the term of the respective agreements.

Advertising Costs. The Company expenses all costs of advertising as incurred. There were no advertising costs incurred for the years ended July 31, 2007 and 2006.

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

Warranties. The Company’s standard warranties are one-year on all products sold and are accrued based on management’s estimates and the history of warranty costs incurred. There were no warranty costs incurred during the fiscal years ended July 31, 2007 and 2006, respectively.

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

	2007	2006
Stock Options	2,639,160	7,256,658
Warrants	325,000	9,500,000
Common stock issuable on conversion of Series C Preferred Stock	1,551,200	1,551,200

Fair Value of Financial Instruments. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of July 31, 2007. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include royalties receivable, notes payable, accounts payable and accrued expenses. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand, or bear current interest rates.

Stock Based Compensation. Effective August 1, 2006 the Company adopted SFAS No. 123R, “Share Based Payment,” which requires public companies to measure the cost of employee, officer and director services received in exchange for stock-based awards at the fair value of the award of the date of grant. SFAS No. 123R supersedes the Company’s previous accounting under SFAS No. 123, “Accounting for Stock-Based Compensation,” which permitted the Company to account for such compensation under Accounting Principles Board Opinion No. 25. “Accounting for Stock Issued to Employees.” In accordance with APB No. 25 and related interpretations, no compensation cost had been recognized in connection with the issuance of stock options, as all options granted under the Company’s stock option plan had an exercise price equal to or greater than the market value of the underlying common stock on the date of the grant.

F-7

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

The Company applied the modified prospective transition method upon adoption of SFAS No. 123R. Under the modified prospective transition method, compensation cost is required to be recorded as earned for all unvested stock options outstanding at beginning of the first year of adoption of SFAS No. 123R based upon the grant date fair value estimated in accordance with the original provisions of SFAS No. 123 and for compensation cost for all share-based payments granted or modified subsequently based on fair value estimated in accordance with the provisions of SFAS No. 123R. The Company’s financial statements as of and for the year ended July 31, 2007 reflect the impact of SFAS No. 123R but, in accordance with the modified prospective transition method, the Company’s financial statements for the prior periods have not been restated to reflect, and do not include, the impact of SFAS No. 123R.

For the year ended July 31, 2007, share-based compensation for options attributable to employees and officers was $92,024 per share, and has been included in the Company’s 2007 statement of operations. Compensation costs for stock options which vest over time are recognized over the vesting period. As of July 31, 2007 the Company had $122,700 of unrecognized compensation cost related to granted stock options that remained to be recognized over vesting periods. These costs are expected to be recognized over a weighted average period of 1.33 years.

If compensation expense had been determined based on the fair value at the date of the grant for awards under the stock option plan, consistent with the method described in SFAS No. 123, as amended, the Company’s net loss and basic diluted loss per common share, on a pro forma basis, would have been follows:

Net loss as reported	$	<613,060>
Add: Total stock based compensation included in reported net loss
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards		<153,375>
Proforma net loss	$	<766,435>
Net loss per share attributable to common stockholders
Basic & Diluted - as reported	$	<.012>
Basic & Diluted - pro forma	$	<.015>

Recent Accounting Pronouncements.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An interpretation of FASB Statement No. 109,” or FIN 48, which clarifies the accounting and disclosure requirements for uncertainty in tax positions, as defined. The Company does not believe adoption will have a material effect on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”, SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value. SFAS No. 157 is effective for the Company’s fiscal year beginning August 1, 2008. The Company is currently evaluating the impact of this standard on the financial statements.

F-8

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

In February 2007, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 159. “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 provides an option to report selected financial assets and financial liabilities using fair value. The standard establishes required presentation and disclosures to facilitate comparisons with companies that use different measurements for similar assets and liabilities. SFAS No. 159 is effective for the Company’s fiscal year beginning August 1, 2008, with early adoption allowed if SFAF No. 157 is also adopted. The Company is currently evaluating the impact of this standard on the financial statements.

3. ROYALTIES RECEIVABLE

The Company is a party to two licensing agreements and receives royalty income from the sale of its diagnostic monitoring hardware and software from the SensorMedics Division of ViaSys Healthcare, Inc. (“Viasys”) and VivoMetrics, Inc. (Note 11).

Royalty income from these licenses amounted to $265,080 and $223,127 for the years ended July 31, 2007 and 2006, respectively. Royalties from ViaSys amounted to $140,725 for the year ended July 31, 2007 and $133,762 in 2006. Royalties from VivoMetrics amounted to $124,355 year ended July 31, 2007 and $89,365 in 2006. Royalties receivable at July 31, 2007 were $48,756.

Cost of sales includes cost of product sales, and costs of royalties, research and consulting and warranty income. A component of cost of sales for the year ended July 31, 2006, is a provision for inventory obsolescence in the amount of $26,225 related to the mark down of the Company AT-101 inventory.

4. FURNITURE AND EQUIPMENT, NET

Furniture and equipment, net of accumulated depreciation, consists of the following at July 31, 2007:

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

Depreciation expense was $6,005 and $9,682 during the fiscal years ended July 31, 2007 and 2006, respectively.

5. OTHER ASSETS, NET

Other assets, net at July 31, 2007 consist of patents. Amortization expense was $12,816 and $2,036, during the fiscal years ended July 31, 2007 and 2006, respectively.

6. NOTES PAYABLE – RELATED PARTY

F-9

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

The Company refinanced its then existing bank debt in February 2007, at another bank by securing a $500,000 line of credit, which expires in February 2008. The debt is secured by certificates of deposit in the amount of $400,000, and bears interest at 1% per annum below prime rate.

Notes payable – other were issued to finance insurance premiums and are payable in ten monthly installments through December, 2007, with interest at 12.73 percent per annum.

At July 31, 2006, two demand notes payable to the Company’s Chairman of the Board and shareholder totaled $165,000. A $100,000 note bore interest at the prime rate plus 2% and a $65,000 note was non-interest bearing.

The notes totaling $165,000 plus cash of $10,000 were used by the Chairman in exercising his options to purchase 562,500 common shares plus 112,500 bonus common shares in October, 2006 placement. (see Note 9).

7. Deferred Extended Warranty Income

The Company has three extended warranties outstanding as of July 31, 2007 on prior sales of its AT -101. The Company amortizes the revenue from the sale of these extended warranties over the life of the agreements, which are generally three to four years. The Company recognized revenue in the amounts of $3,900 and $3,500, respectively for the years ended July 31, 2007 and 2006. Deferred warranty income totaled $6,375 as of July 31, 2007. Warranty costs were negligible for the years ended July 31, 2007 and 2006.

8. INCOME TAXES

At July 31, 2007 and 2006, the Company has available net operating loss carry forwards of approximately $14,800,000 and $13,600,000 respectively which expire in various years through 2027. The net operating loss carry forwards may be subject to limitation due to change of ownership provisions under section 382 of the Internal Revenue Code and similar state provisions.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant component of the Company’s deferred income tax assets would result from the net operating losses and amounted to approximately $5,900,000 and $5,300,000 at July 31, 2007 and 2006, respectively.

A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a full $5,900,000 valuation allowance at July 31, 2007 ($5,300,000 at July 31, 2006) was necessary. The increases in the valuation allowance for the years ended July 31, 2007 and 2006 was $600,000 and $300,000, respectively.

9. SHAREHOLDERS’ EQUITY

August, 2005 Equity Financing

Effective August 18, 2005 the Company closed on a financing transaction with a group of private investors for $1,000,000. The financing consisted of the sale of two components: (a) an aggregate of 21,000,000 shares of the Company’s common stock; and (b) Warrants to receive an aggregate of 9,500,000 shares of common stock, with an exercise price of $0.15 and an expiration date February 18, 2007.

The shares of the Company’s common stock underlying the securities sold in this transaction may be registered for resale on a registration statement to be filed by the Company if the investors holding at least 50% of the securities request such registration. That right expires when the common stock becomes eligible for resale pursuant to Rule 144(k) under the Securities Act of 1933. In addition, for a period of five years, the investors shall have unlimited “piggy-back” rights for the shares of common stock in the Company’s registration statements which permit the sale of securities to the public (excepting Form S-8).

F-10

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

The total financing of $1,000,000 included the conversion to common stock, of $100,000 bridge loans from shareholders outstanding as of July 31, 2005. One bridge loan in the amount of $50,000 was converted at $.05 per share and the other bridge loan for $50,000 was converted $.025 for a total of 3,000,000 shares.

October, 2006 Equity Financing

Effective October 16, 2006 the Company accepted $2,199,541 for the exercise of outstanding options and warrants held by Board members and private investors. In addition, the Chairman of the Board utilized outstanding notes totaling $165,000 to purchase common stock. As a result of the exercise, 14,616,005 shares of the Company’s common stock, 0.01 par value (“Common Stock”) were issued to the exercising optionholders and warrantholders.

The Options and warrants were issued pursuant to an offer by the Company to certain optionholders and warrantholders to grant exercising optionholders and warrantholders upon exercise an additional number of common stock equal to 20% of the shares received upon exercise (“Bonus Shares”).

Options to purchase 3,105,004 shares of common stock were exercised at exercise prices ranging from $0.145 to $0.50 and warrants to purchase 9,175,000 shares of common stock were exercised at an exercise price of $0.15. An additional 601,001 Bonus Shares were issued to exercising optionholders and an additional 1,835,000 Bonus Shares were issued to exercising warrantholders.

The exercised warrants were issued pursuant to Stock Purchase Agreement dated August 1, 2005 between the Company and various private investors. The exercised options were issued to directors and others in connection with, among other things, a private placement in 2002, options to Directors in lieu of salary and certain guarantors of the Company’s debt. The Company recorded $296,451 of compensation and interest expense for the year ended July 31, 2007 for the fair value of bonus shares issued to directors and guarantors of the Company’s indebtednesss.

Directors including a director holding more than 10% of the outstanding common stock a (“10% Holder”) exercised in the aggregate, options to purchase 2,189,164 shares of common stock and received 437,833 Bonus Shares for payment of $592,084. A 10% Holder exercised warrants to purchase 3,250,000 shares of common stock and received 650,000 Bonus Shares for payment of $487,500. Warrants to purchase 125,000 shares that may be deemed to be beneficially owned by an officer of the Company were exercised for the payment of $18,750 and 25,000 Bonus Shares were issued on account of such exercise.

Pursuant to the offer, the company also accepted an additional $25,000 from an exercising optionholder for the exercise of options to purchase 62,500 shares of Common Stock and the issuance of 12,500 Bonus Shares.

During the third quarter ended April 30, 2007, the Company also accepted an additional $25,000 from an exercising optionholder, for the exercise options to purchase 62,500 shares of common Stock.

A former employee of the Company exercised 50,000 options in a cashless transaction and received 44,057 shares of the Company’s common stock during 2007.

F-11

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

10. STOCK OPTIONS

Stock Options

The following table summarizes the transactions of the Company’s stock options for the two-year period ended July 31, 2007:

	Number of Shares	Weighted Average Exercise Price
Options outstanding, July 31, 2005	6,124,160	$	0.411
Options granted	1,593,331		0.291
Options exercised	—		—
Options forfeited	-460,833		0.335
Options outstanding, July 31, 2006	7,256,658		0.39
Options granted	—		—
Options exercised	-3,217,504		0.399
Options forfeited	-1,399,994		0.4
Options outstanding, July 31, 2007	2,639,160	$	0.359

The following table sets forth the range of exercise prices, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price as of July 31, 2007:

Options Outstanding					Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Life (years)	Number of Shares	Weighted Average Price
14.5¢ - 15¢	266,660	$	0.150	1.682	266,660	$	0.150
30¢ - 40¢	1,662,500	$	0.369	1.575	1,162,500	$	0.314
50¢ - 75¢	710,000	$	0.600	4.873	710,000	$	0.551
Total	2,639,160	$	0.390	3.337	2,139,160	$	0.372

The Company estimates the fair value of stock options using a Black-Scholes valuation model consistent with provisions of SFAS No. 123(R). Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 107 and the Company’s prior period pro forma disclosures of net loss, including the fair value of stock-based compensation. Key input assumptions used to estimate the fair value of stock options include the expected term until exercise of the option, expected volatility of the Company’s stock, the risk free interest rate, option forfeiture rates and dividends, if any. The expected term of the option is based on a historical weighted average of exercised options. The expected

F-12

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

volatility is derived from historical volatility of the Company’s stock on the U.S. Over the Counter market for a period that matches the expected term of the option. The risk-free interest rate is the yield from a treasury bond or note corresponding to the expected term of the option. The Company has not paid dividends and does not expect to pay dividends in the future.

Compensation costs for the stock options with graded vesting are recognized over the vesting period. As of July 31, 2007, there was $122,700 of unrecognized costs related to granted options. These costs are expected to be recognized over a weighted average period of 1.33 years.

No options were granted during the year ended July 31, 2007. There were 3,217,504 options exercised during the year ended July 31, 2007. The total intrinsic value of stock options exercised for the year ended July 31, 2007 was $1,586,827.

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

Warrants

The Company has 325,000 warrants outstanding at July 31, 2007. The warrants have an expiration date of August 17, 2009 and are exercisable at $.15. The warrants were all issued as part of the August, 2005 equity financing.

Common Shares Reserved

The following is a summary of the Company’s reserved Common Stock shares as of July 31, 2007.

Options issued and outstanding	2,639,160
Options available under the 2000 Stock Plan	1,900,000
Warrants	325,000
Conversion of Class C Preferred Shares	1,551,200
	6,415,360

F-13

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

Legal Settlement. During the year ended July 31, 2006, the Company settled a severance pay dispute with a former employee for $10,000 in cash and 93,750 shares of the Company’s Common Stock with a fair market value of $30,000.

PREFERRED STOCK

Holders of Series B Preferred Stock and Series C Preferred Stock are entitled to vote with the holders of common stock as a single class on all matters.

Series B Preferred Stock is not redeemable by the Company, and has a liquidation value of $100.00 per share, plus declared and unpaid dividends, if any. Dividends are non cumulative, and are at the rate of $10.00 per share, if declared.

Series C Preferred Stock is redeemable by the Company at a price of $.10 per share upon 30 days prior written notice. This series has a liquidation value of $1.00 per share, plus declared and unpaid dividends, if any. Dividends are non-cumulative, and are at the rate of $.10 per share, if declared. Each share of Series C Preferred Stock is convertible into 25 shares of the Company’s common stock upon payment of a conversion premium of $4.20 per share of common stock. The conversion rate and the conversion premium are subject to adjustment in the event of stock splits, stock dividends, reverse stock splits and other events, as defined.

No preferred stock dividends have been declared as of July 31, 2007.

11. RELATED PARTY TRANSACTIONS

The Company has approximately a 2% nondiluted and 1.1% fully diluted interest in LifeShirt.com, Inc. (now known as VivoMetrics, Inc.), a related entity. The son-in-law of Dr. Marvin A. Sackner (the Chairman of the Board and shareholder in the Company) is the Chief Operating Officer and a founder of VivoMetrics, Inc. Dr. Sackner currently serves as a member of the Scientific Advisory Board of VivoMetrics, Inc. The Company’s interest in Vivometrics, Inc. is carried at a zero valuation.

The Company assigned all of its rights, title and interest in certain patents and intellectual property as well as a non-exclusive, worldwide license under these items to VivoMetrics, Inc. in consideration for a royalty of 3% of VivoMetrics, Inc.’s gross revenues from sales of certain products. The minimum royalty in the second year was $250,000. The underlying agreement, executed October 28, 1999, is for a period of 10 years. Under the agreement with VivoMetrics, Inc., VivoMetrics, Inc. grants to the Company the non-exclusive, worldwide right and license to use of patents and software for a period of ten years. If VivoMetrics, Inc. fails to earn gross revenues of $200,000 from the commercial sale of certain products and/or services to hospitals following the 2002 calendar year, the Company has the right to sell certain products to hospitals for the following three years in exchange for a royalty of 5% of the gross revenues the Company earns on these sales. The Company is not currently active in this regard.

Dr. Sackner also personally leases office space used by the Company in North Bay Village Florida. Under an arrangement with the Company, the Company reimburses Dr. Sackner for the cost of the space on a month to month basis. The amount reimbursed was $20,369 and $19,649 for the years ended July 31, 2007 and 2006 respectively.

12. COMMITMENTS AND CONTINGENCIES

Leases.

The Company leases office space in Sarasota, Florida. The lease expires in November 2008. The minimum future rental payments are $2,608 per month through November 2008 ($41,728 in aggregate).

Rent expense was approximately $50,986 and $35,430 for the years ended July 31, 2007 and 2006, respectively.

F-14

NON-INVASIVE MONITORING SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

JULY 31, 2007

13. SUBSEQUENT EVENTS

On September 4, 2007, the Company executed a Product Development and Supply Agreement with Sing Lin Technologies Co. Ltd., a company based in Taichung, Taiwan (“Sing Lin”).

Pursuant to the Agreement, the Company consigned to Sing Lin the development and design of the second generation Exer-Rest™ and Somno-Ease devices. Sing Lin will manufacture the Company’s’ patented Exer-Rest™ motorized platform. This motion platform has the appearance and functionality of either a cot or twin bed in standard and extra-long dimensions.

The Exer-Rest™ will be marketed and sold in the Canada, UK, Europe, Latin America and India by the Company and in the Far East by SingLin. The Company will receive a royalty on each device sold by Sing Lin.

The Company must pay Sing Lin $150,000 upon execution of the Agreement; $150,000 upon final approval by the Company of the product prototypes and $100,000 upon delivery of the product sample. These amounts are to be applied toward tooling development and other tooling costs.

Under the Agreement, the Company grants Sing Lin for the term of the agreement, the exclusive distribution rights, for the Products in certain countries in the Far East, including, Taiwan, China, Japan, South Korea, Malaysia, Indonesia and certain other countries. Sing Lin has agreed not to sell the Products outside its geographic areas in the Far East.

The Agreement commences as of September 3, 2007 and has a term that extends three years from the acceptance of the first-run of production units by NIMS. Thereafter, the Agreement automatically renews for successive one year terms unless either party sends the other a notice of non-renewal.

In the event of termination or expiration of the Agreement, Sing Lin has agreed to sell certain hardware and software to NIMS, so that NIMS can continue to sell the Products to its customers.

The company has committed to purchase approximately $2.2 million of Exer Rest and Somno-Ease units, within one year of acceptance of the final product. The company expects final approval of products in the third quarter of fiscal 2008. Additionally, the company has agreed to purchase $3.5 million and $7.5 million of these products in 2009 and 2010, respectively.

F-15

Exhibit Index

31.1	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002