CEO's Letter to Shareholders of Imaging Diagnostic Systems, Inc.

FORT LAUDERDALE, Fla., Aug. 5 /PRNewswire-FirstCall/ -- Imaging Diagnostic
Systems, Inc., (OTC Bulletin Board: IMDS)
Dear IDSI Shareholders,
As many of you know, I returned to the company three months ago to assume
the position of Interim CEO and Chairman of the Board; we have received many
phone calls from our shareholders asking essential questions about the
Company's direction and future. As my first priority, I have recently secured
a tiered debenture for up to 2 million dollars to aid in the clinical
collection of the PMA data and the submission of the PMA application.
Over the past two years, the Company had installed upgraded CTLM(R)
systems, a new study protocol utilizing a new intended use at 10 various
clinical sites throughout the United States. These sites are currently
gathering cancer cases and non-cancer cases required to support the intended
use hypothesis for the PMA application. Once the data required has been
obtained it will be tested by independent radiologists, analyzed by our
bio-statisticians and formalized into the PMA application for submission to
the Food and Drug Administration (FDA). Developing an innovative medical
imaging technology is a complicated and time-consuming process. The CTLM(R)
is a revolutionary diagnostic imaging device designed to detect breast cancer
without radiation or compression. Since the development of the first CTLM(R)
prototype, our engineering team has incorporated many improvements based on
both new and evolving technologies in lasers, computer processors, image
display, surface-mount electronics, and software. We believe we are on
schedule to complete the data collection and submit the PMA application to the
FDA in its entirety by the end of this year.
We have been fortunate enough to have a large number of longtime
shareholders. They have experienced volumes of Company history and have been
anticipating IDSI's technologic achievements and sales breakthrough. Since
commercializing the CTLM(R) in late 2002, we sold our first CTLM(R) system in
January 2003. Since that sale, we sold 12 additional units. There are
CTLM(R) systems sold or in clinical collaboration programs currently in China,
Italy, Poland, Czech Republic, United Arab Emirates, and Malaysia. Our end
users and clinical collaboration partners worldwide have completed more than
13,000 clinical scans. We have deposits for the purchase of CTLM(R) systems
from our distributors in Hong Kong and Turkey; and our Director of Global
Marketing is working with our distributors to bring their earnest leads to
sale before the end of the year. We anticipate the sale of eight CTLM(R)
systems before the end of the year in China, Italy, and the United Arab
Emirates.
Our stock price has also faced challenges over the past several years as
the Company evolved to establish itself on the market. IDSI is an
equity-funded Company. Since inception, substantially all of our necessary
funding came from the proceeds of the sale of common stock, convertible
preferred stock and convertible debentures. The convertible securities were
all converted into common stock. In essence, our common stock is our currency
and since January 2001 we have used a series of private equity credit
agreements with Charlton Avenue, LLC, an institutional investor, to raise the
capital necessary to fund the Company's operations. The use of private equity
credit agreements is dilutive as the investor sells our shares into the
market.
Cost cutting initiatives and staff reductions were initiated in April by
the time I was appointed Interim CEO and Chairman of the Board. I met with
Executive Management and we made the decision to terminate our lease pursuant
to the six-month notice provision and to lease a smaller facility. Our
current facility is 24,000 sq/ft with a base rent of $24,000 per month plus
insurance, taxes and maintenance, which we estimate to be $9,440 per month for
a total monthly cost of $33,440. Our new facility in Fort Lauderdale is 9,870
sq/ft and our total monthly rent including common area maintenance expenses
and sales tax for the first year is $10,244.23 per month. This represents a
69% savings in office rent expense and we anticipate that our electric bill
will be reduced proportionally. We have placed a temporary halt on new
projects and all efforts are directed to the PMA filing and international
sales.
In a press release dated December 27, 2007, IDSI announced the retirement
of its CEO and Director, Tim Hansen. Subsequent to Mr. Hansen's retirement,
we accepted the resignations of our three outside directors; Jay Bendis;
Patrick Gorman; and Sherman Lazrus in accordance to a request initiated by our
investment banker as a condition for additional funding.
As a co-founder of IDSI and its former Chairman of the Board and CEO, I
fought to maintain and improve the Company's financing and sales initiatives.
I immediately arranged a new Sixth Private Equity Credit Agreement for $15
million over a three-year period with Charlton Avenue LLC, who has provided
substantially all of our necessary funding for the past eight years.
Additionally, I began negotiating with other investment bankers and placement
agents that could provide alternative financing. The management dynamics of
the Company is changed. We have begun a more aggressive international sales
and marketing program to appoint new distributors, terminate non-performing
distributors and to offer introductory incentives to achieve sales. I
traveled to China to visit our Representative Office and to interview our
distributors to learn what support they need from the home office to sell
CTLM(R) systems. I also visited our clinical reference site at Tianjin Cancer
Hospital and was very pleased with the acceptance of our technology at this
prestigious hospital. Our Senior Vice President just traveled to Italy to
meet with our distributor and to visit end-users and our clinical
collaboration site at Catholic University in Rome. We will outsource
additional experts as needed to expedite the filing of the PMA.
During this process the company will continue its efforts to raise
additional funds to offset using the equity line and diluting the stock
further.
I want to personally thank all of the shareholders who have called me
since April and want to assure you that I will do my best with the help of
IDSI's management to achieve our strategic goals.
Sincerely,

Linda B. Grable
Interim CEO and Chairman of the Board

SOURCE Imaging Diagnostic Systems, Inc.

Deborah O'brien for Imaging Diagnostic Systems, Inc., obrien@imds.com