Response: As requested, our previous response, this response and any attachments are filed on Edgar as correspondence.

Response: As requested we have attached Form 10-K, which amends our form 10-KSB for the year ended December 31, 2004 and includes our proposed disclosures from our responses.

Response: For cost associated with collaborative arrangements, there are two forms of costs: reimbursable and non-reimbursable. Payments for reimbursable expenses are recorded as a reduction of expense and recorded as accounts receivable and non-reimbursable expenses are expensed in the period in which they are incurred. Regarding license fees, we did not earn any license fees in the period we are reporting, nor do we have any agreements that would entitle us to any licensing fees. We propose that we take out any language concerning licensing fees. We have revised our proposed disclosure to incorporate this information as follows:

The Company records revenue from product sales at the time the product is shipped and title passes pursuant to the terms of the agreement with the customer, the amount due from the customer is fixed or determinable, and collectability of the related receivable is reasonably assured. Revenue is recorded at gross, which includes all shipping and handling costs, and recognized only when the Company has no significant future performance obligation or we and the collaborative partner agree that a milestone has been achieved. Revenue from collaborative agreements is recorded when performance targets have been met. In the past, we received funds from collaborative agreements in two forms - milestone revenue based upon achieving certain performance targets and reimbursement of research and development expense. Payments for expense reimbursement are recorded as reduction of expense. Reimbursable expenses are recorded as accounts receivable and non-reimbursable expenses are expensed in the period they are incurred. Although some of the Company's products have expiration dates, the Company has not issued any credits or allowances for expired products. The Company did allow a one-time credit of $25,000 in 2003 related to test marketing of a new product by a single distributor.

If the collectability of assets received for product sales, services, milestone or license fees is doubtful, the revenues are recognized on the basis of cash received. The Company has relied upon SAB 101 and SAB 104 for its recognizing revenue and related costs

Response: We signed an agreement on 03/06/2003 with our preferred stock- holders that we would redeem certain amounts of the preferred and also that certain amounts will not be redeemable. Therefore, the classification of the redeemable convertible preferred was based on this agreement, which clearly distinguishes the preferred stock into equity and liability. The redeemable portion of the preferred stock per this agreement was therefore considered as liability and the convertible portion was considered as equity. Also, the amount in the Series A convertible preferred stock in our 2004 balance sheet does not have the characteristics of both equity and liability, therefore it is all considered as equity. Therefore we determined that SFAS 150, which was effective 05/31/2003, is not applicable in this case.

Response: Option cancellations were due both to employees leaving the company without exercising their options within the required timeframe and options that were voluntarily cancelled so that the company would have sufficient options to issue to new and existing employees (not the canceling employees). Six months prior to, and after the cancellation of those options none were issued in this interval to employees whose options were cancelled. New options issued to the employees who had cancelled their options in October 2003 had been issued to them in April 2003. This issuance was beyond the six month period before the date of cancellation and we had no agreement (written or oral) regarding reissuance or cancellation. The primary reason the options in October were cancelled was to facilitate our issuance of options to Bill Arthur (newly appointed President and Chief Operating Officer). The voluntary cancellations in 2004 were all by Keith Ignotz, again because SpectRx needed some options to issue to its employees. No further options have been issued to Keith Ignotz. Please find attached the table of options issued and cancelled during 2003 and 2004.