Imaging Diagnostic Systems, Inc. (IMDS) has developed a revolutionary imaging device for the detection of breast abnormalities. CTLMTM - Computer Tomography Laser Mammography Systems will be manufactured, marketed, and sold by the company in the U.S. and international markets.

CT Laser Mammography
Computed Tomography Laser
Mammography (CTLM)

CTLM utilizes the Company’s ultra-fast laser imaging technology to acquire data to allow visualization of the interior structure of the breast. The examination procedure is simple. A woman lies down on a special table with one breast at a time suspended freely in a scanning chamber. Laser illumination is maintained as a single beam, rather than as a beam fan of previous designs. Both the detectors and the laser beam orbit around the object being scanned, and a circular array of multiple detectors acquires data at several hundred positions in the 360½ orbit. Data-acquisition time for each detector can be varied from microseconds to milliseconds, and all detectors are gated to sample at the same moment in time.

The laser beam projection apparatus and the detector ring are moved 2 mm and another slice plane of data is acquired. Data from each individual slice plane is used to reconstruct an image of the interior structure of the breast with a thickness of 2 mm. The process of moving the laser beam and detectors is repeated until the entire breast from the nipple to the chest wall is imaged. An analogy would be visualizing a loaf of bread standing on end. Each slice of the loaf represents a slice plane of the loaf. The individual slices can be taken out of the loaf, turned sideways, and the bread bonded by the crust can be seen. Similarly, each slice plane image of the scanned breast can be viewed and interpreted.

With CTLM the computer controls the entire sequence, unlike mammography where the technician’s technique is critically important to the quality of the examination,. The technician’s only tasks are to initiate the scan and assure that the woman lies still while the procedure is performed. After the first breast is scanned, the woman is moved to position her other breast within the scanning chamber. The prone position is comfortable and since no breast compression is required there is no discomfort during the examination. Lack of breast compression is a significant motivation for women to have the CTLM procedure performed. Bilateral examination of the breasts requires less than 15 minutes from undressing, scanning, and dressing.

A conventional mammography procedure produces an image of the breast looking sideways through the breast, the lateral view; and an image looking through the breast from top to bottom, the cranio-caudal view. The slice plane images initially produced by CTLM are in the horizontal plane and are not similar to the projections obtained from mammography. To allow for easier interpretation by the physician, the CTLM computer combines the slice plane data to create a 3-dimensional model of the breast in memory. The algorithm then produces slice plane images of the breast in the same projections that are seen when conventional mammography is performed.

Significant differences exist between the image obtained with conventional mammography and CTLM. Conventional mammography results in only one lateral and cranio-caudal image, and thus, a 3-dimensional object is reduced to a 2-dimensional image. On the other hand, CTLM provides a series of contiguous images that flow from the top to the bottom and from side to side of each breast. The number of lateral and cranio-caudal CTLM produced slices can be from as little as 5 or 10 for a small breast to as many as 150 for a large breast in both projections. Because the slice thickness is very thin, 2 ram, the 3-dimension breast is essentially imaged in 3-dimensions. In fact, a 3-dimensional hologram could be produced from the acquired data. The ability to localize an abnormality within the breast is greatly enhanced by the slice plane lateral and cranio-caudal images produced by CTLM.

CTLM images are stored on CD-ROM. The patient’s entire CTLM scan history can easily be stored on one CD-ROM. This feature allows the physician to recall previous studies instantly for immediate comparison with the current study, even side-by-side on the same screen. With conventional mammography, the physician would most likely have to request that the films from the patient’s previous examinations be retrieved from storage before this side-by-side comparison could be made. An additional feature is that each woman could have a duplicate CD-ROM of her studies that could be conveniently carried with her as she travels or moves to a new city.


Imaging Diagnostic Systems, Inc.: The Company merged with a public shell during April 1994.

Fiscal Year -June 30
Total Authorized Shares - 48,000,000
Shares outstanding as of July 25, 1996 - 23,021,789
Public Float - 7.2 million
Management Control - 13,517,521
Current Price - $2.81
Market Cap - $64,691,227
Current Book Value -.233
PE estimate 1997 - fiscal year June- NM
PE estimate 1998 - fiscal year June- 3.6
Dividend - NM
Long term debt - $.00
Employees - 24 & 10 consultants
Legal proceeding - none
Shareholders - 7100 beneficial shareholders

Convertible Preferred stock - On March 21, 1996 issued 4,000 shares of Series A Convertible Preferred stock under a Regulation S Securities Subscription Agreement. The agreement called for a purchase price of $1,000/share, with net proceeds to the company amounting to $3,600,000.

Common stock sale - During the year ended June 30, 1996, the company sold, under the provisions of Regulation S, a total of 700,471 shares of common stock. The proceeds from the sale of these shares of common stock amounted to $1.5 million. The company issued an additional 2,503,789 shares ($2,778,718) of its common stock as a result of the exercise of stock options issued in exchange for services rendered during the year.

Cash - As of June 30, 1996 - $3,975,354

Transfer Agent - Jersey Transfer Trust, 201-239-2712

Auditor - Margolies & Fink, 2301 W. Sample Road, Pompano Beach, FL 33073; 305-979-5440

In order to sell the CTLM device commercially in the United States, the company must obtain marketing clearance from the FDA. The company plans to file a Pre-Market Approval Application (PMA) with the FDA to obtain marketing clearance.

On Feb, 9, 1996, IMDS's Phase I Investigational Device Exemption (IDE) application was approved by the FDA. This permit allows a device to be shipped lawfully for the purpose of conducting a clinical study.

The Phase I study will be conducted at the Strax Breast Diagnostic Institute. The study involves 50 patients.

Phase II will encompass the establishment of 4 - 6 clinical sites at major hospitals in the U.S. These clinical sites will be used to accumulate the approximately 400 - 500 clinical studies to be submitted with the PMA application. The company anticipates submitting its PMA application during fiscal 97.

Corporate Headquarters
6531 N.W. 18th St. Plantation, FL
Contact: Deborah O'Brien
800-992-9008 - 954-746-0500
Officers & Directors
Linda Grable - President, COB & Director
Richard Grable - CEO & Director
Allan Schwartz - Executive Vice President, CFO & Director


Mammography has become the standard for breast cancer screening, The technique has been refined over the past 40 years and has achieved the following status:
  • Is recommended annually for women over age 50
  • Is not recommended for women younger than 40 or for pregnant women
  • Is uncomfortable for many women because of required breast compression
  • Is difficult to perform on augmented breasts and on petite breasts
  • Quality of the examination is technique dependent
  • Cannot differentiate a cyst from a solid mass
  • Will not detect 10 out of 100 cancers
  • X-ray is one of the few known carcinogens
  • 2 - 3 procedures per hour, $90-$100 fee
  • $90,000 for a conventional system
  • $195,000 - $200,000 for a digital system


X-ray computed tomography (CT) is a technique that uses a computer to build an image of the interior of the body based on information acquired as an energy beam is passed through the body while the beam is rotated around the body
  • The image obtained is a cross-sectional display of the body
  • CT is an accepted radiological procedure
  • Provides a digital image that can be manipulated by computer to provide a widely varying appearance
  • Contrast resolution is superior to traditional radiology
  • Is not uncomfortable
  • Is not technique dependent
  • Uses x-ray
  • $300 - $400 fee
  • $350,000 - $600,000 system cost


Computed tomography Laser Mammography (CTL MTM) is a new technique in the field of medical optical imaging. Instead of x-ray, a laser beam is used to examine the breast using computed tomography techniques. CTLMTM has the following features:
  • Produces cross-sectional breast images
  • Produces traditional cranio-caudal and lateral views of the breast
  • Provides a digital image that can be manipulated by computer to provide a widely varying appearance
  • Is not uncomfortable and age is not a factor
  • Is not technique dependent
  • Can be performed as often as desired
  • Does not use x-ray
  • Can differentiate a cyst from a solid mass
  • Is not effected by breast augmentation
  • Petite breasts are easily scanned
  • 3 - 5 procedures per hour
  • $120 fee
  • $300,000 system cost


June 12, 1995 - Imaging Diagnostic Systems, Inc. has announced it has applied for and received patent pending status on its CT Laser Mammography Technology ( CTLM™). Imaging Diagnostic Systems, Inc. believes it is the first to file for a patent on the CTLM™ technology. Once the patent is issued, it offers protection on its technology for 17 years.

Feb 20, 1996 - Imaging Diagnostic Systems, Inc. received U.S. Food & Drug Administration approval of its Investigational Device Exemption (IDE) application and can begin clinical testing of its Computed Tomography Laser Mammography. The Company believes that it is the first to apply for IDE approval for medical optical imaging used for early detection of breast cancer.

June 11, 1996 - Imaging Diagnostic Systems, Inc. announced the appointment of two managers who will assume the responsibilities for the Research and Development and Engineering Operations. Valey Kamalov is a specialist in high-speed lasers. He will take responsibility for the firm's laser and optical research. Jay Sailer, formerly with Siemens Medical Systems, is Manager of Software Development.

June 19, 1996 - Imaging Diagnostic Systems, Inc. has announced that it has developed a new detector for near-infrared breast imaging that demonstrates sensitivity and signal-to-noise characteristics several orders of magnitude (approximately 10,000 times) better than any previously reported. Management stated that a novel reconstruction algorithm accompanies this detector, and that these object detectability improvements come at a significant reduction in manufacturing complexity and cost.

This new detector will be ready for first human trials within five days.

July 23, 1996 - IMDS announced that it has signed an exclusive marketing agreement with EuroTrade & Finance Co., one of the largest distributors of medical equipment in Italy. The contract represents an estimated $4 million in revenue for IMDS.

ETF represents other medical companies, such as Instrumentarium, Shiminadza and XITEC.

Additionally, a contract was signed to deliver three systems to Syria.

According to management due to recent technological breakthroughs of the company's state-of-the-art imaging system, delivery of overseas orders will begin during fiscal 1997.

July 29, 1996 - IMDS announced that it has purchased a 25,000 square foot building for $1.25 million where it will be relocating its world headquarters.

The additional space will be used to accommodate all growing phases of operations including software development, assembly, training and administrative expansion.


Geared towards "risk tolerant investors". Attractive growth potential exists during the next 18 to 24 months. IMDS is considered speculative and all risk adverse accounts should fully understand all the adversities of investing in micro-mini caps. (Note: we continue to monitor IMDS shares in our 900# portfolio for percentage gain performance.) More speculative accounts might consider 5/8 FIMG, 3/8 IMDS. Most speculative accounts might consider 1/2 FIMG and 1/2 IMDS.


The market for the Company's product is characterized by rapid and significant changes in competitive technologies, evolving medical industry standards and the frequent introduction of new products. IMDS's success will depend in part on its ability to respond to the needs of the medical community, marketing campaigns and medical and technological changes.

We believe that IMDS can live up to the demands. The management of IMDS believes that the larger number of aging baby boomers, coupled with increased breast cancer screening rates and education, will lead to an increase in the diagnostic procedures. The direct costs for screening, diagnosis and treatment of breast cancer in the U.S. were estimated at approximately $8.5 billion in 1995, of which $1.7 billion was spent on screening-related procedures, and $4.2 billion was spent on diagnostic-related procedures. In response to increased public and political awareness of breast cancer in the 1990s, federal research expenditures for breast cancer have increased dramatically in the last six years.

To sum it up, IMDS has focused its product development for the past several years on a less-invasive and more cost effective alternative to complement conventional methods and procedures, as well as to be used alone. We believe that IMDS's imaging technology has the potential to surpass all other breast cancer screening technologies due to earlier detection, higher resolution and being more cost effective.


First and foremost, investors should realize that IMDS had anticipated production and sales of its state-of-art Computed Tomography Laser Mammography device during 1996. Due to numerous enhancements with respect to quality, speed, accuracy, size reduction and new laser, the company concluded that a temporary short fall of revenues and earnings near term was worth the delay so that the company could introduce the most efficient state-of-art medical device available for detecting breast cancer.

U.S. Clinical testing will continue during fiscal 97, with anticipated PMA approval during the fourth quarter of fiscal 97 and domestic revenue and earnings to commence during fiscal 1998. It should be noted that during fiscal 97 some international sales are expected.

If you are looking for true blue fundamentals at this stage of the game, read no further; but if the subject matter that is included in this anecdotal report sparks some interest due to the enormity of the medical problem and the vast amount of endless dollars that are available, then IMDS deserves a serious look and then a look again.

The product is cutting edge technology, an optical imaging system called Computer Tomography Laser Mammography or CTlM. It appears once IMDS's diagnostic tool receives FDA marketing clearance, a new era of mammography will emerge and obsolete the competition.

Since introduced last November, 1995, IMDS has made numerous design changes, which have dramatically enhanced the reliability, speed, size, quality and cost of their product. This, of course, resulted from raising over $5 million during the past year. An extremely bullish development. Smart money saw huge potential and jumped quite enthusiastically.

It should be noted that the company has no long-term debt, and as of June 30th still had a war chest of approximately $4 million dollars. A new facility is being readied for IMDS' manufacturing, research and administrative needs. The land and new headquarters were purchased for $1.25 million in cash.

The company has a cutting edge technological diagnostic tool that will save countless lives, ample money, new facility, competent management, and a pending NASDAQ small-cap listing. It is only 6 - 9 months before clinical studies from the CTLM Breast Imager are submitted with a PMA (Pre-Market Approval Application) to the FDA, and a marketing clearance is granted.

From an abstracted fundamental view, all the ducks are finally in place and now investors must continue to show patience.

Upon reviewing of Chart F, investors have an opportunity to examines a cross-section of medical imaging companies. Interestingly, except for FIMG, the remaining three examples trade at aggressively higher PE multiples even for 1998 earnings estimates. IMDS believes during fiscal 1998 that revenues will balloon from a few million during fiscal 1997 to an eye-popping $67 million with earnings/share of approximately 78. Based upon our current price of $2.81, IMDS sports an estimated PE valuation of 3.6x. When we averaged our group of four, namely FIMG, HOLX, POSI and TKN, an estimated PE average of 27.25 resulted.

As fiscal 98 closes in and IMDS stays on schedule, it is in our opinion that dramatic share appreciation could be anticipated. If we were to assign a conservative PE valuation of 10 to IMDS due to the length of time we must wait for true revenue and earnings, then our share valuation could approach $8.00, a 184% appreciation over current levels. If we assigned a PE valuation similar to the SP 500, that is, a value of around 16, then our share valuation would approach $12.50, a huge 345% appreciation from current levels. If we assigned the average PE value from four peer companies, that is, 27.25, to IMDS, then our share valuation could approach $21.25 or a 656% share appreciation.

This quick number crunching is not meant to hype or misinform, but instead to instill huge upside potential exists during the next couple of years.

As you may recall, S.A. Advisory recommended IMDS last year at this time at around $.78. IMDS proceeded to climb rapidly to $3.00. We then sold half of our position. IMDS continued to head toward $9.00 by late winter of 1996. The stock now has fallen dramatically from its recent high, a staggering 67%. From all indications, downside risk seems limited and we still hold 1/2 of our initial position.

Investors looking for greater diversification should consider adding a position of IMDS to their portfolio that is geared towards investing in unproven companies. To reiterate, the true fundamentals are cloudy at best near term, but they have cash, no debt, management and a state-of-art imaging tool. IMDS deserves a serious LOOK!!

Company Symbol Current Price Earnings/share E for fiscal 1997 & PE Est. Earnings/share E for fiscal 1998 & PE Est.
1. Fischer Imaging Corp. FIMG
6 5/8 .64 FY 96 Dec
PE - 10.2
.89 FY 97 Dec
PE -3.6
2. Hologic, Inc. HOLX
24 .97 FY 96 Sept
PE - 24.7
1.23 FY 97 Sept
PE - 19.5
3. Positron Corp POSI
2 7/8 (.81) FY 96 Dec
.15 FY 97 Dec
PE 19.1
4. Thermotrex TKN
39 7/8 .41 FY 96 Dec
PE - 97.2
.63 FY 97 Sept
PE - 63
AVERAGE PE : 27.25
  1. Fischer Imaging Corp. designs, manufactures and markets specialty and general purpose x-ray imaging systems for the diagnosis and treatment of disease. These products are used primarily in the diagnosis and treatment of breast cancer, heart and vascular disease.
  2. Hologic, Inc. develops, manufactures and markets proprietary x-rays and ultrasound systems.
  3. Positron Corp. designs, manufactures, markets and services its POSICAM™ systems, are medical imaging devices, using PET technology.
  4. Thermotrex - The company's principal product line consists of screening and diagnostic mammography equipment.

Statement of Operations
1997E 1998E
Revenues $1,750,000 $66,940,000
Net Income (Loss) ($3,271,419) 17,956,995.42
Income/Sh (Loss) (.14) .78
Shares outstanding 23,021,789 23,021,789
Year End June 30
Copyright © 1996 S.A. Advisory